IDATE has published its analysis of and forecasts for the global Internet of Things (IoT) market. An opportunity to deliver a synthesis of the Institute’s many reports on the matter (smart cars, M2M, smart grids, smart cities, smart toys…) to examine a market which, although developing rapidly, still raises a host of questions: is it really taking off, and how fast? Which business models seem the most reliable? Which market players and countries are in the best position to benefit from this new stage in the Internet’s evolution?
Although the Internet of Things is a powerful concept, it is not necessarily a market in and of itself. IoT encompasses a very disparate array of fields that need to be examined separately, to obtain an accurate understanding of their particular features, and their true growth potential.
IDATE DigiWorld forecasts that the global IoT market will grow from a base of 42 billion objects in 2015 to 155 billion in 2025, which translates into an average annual increase of 14%.
- Unsurprisingly, the Internet of Objects (IoO) represents the bulk of the IoT market (80%), thanks to its widespread adoption by a number of sectors, and to the very low cost of tags.
- The Connected information devices segment is the second largest in terms of volume, representing 13% of connected things, and set to grow by an average 13% a year up to 2025.
- M2M (machine to machine) represents only 6% of connected things today.
- And the smallest market in terms of volume is also the newest: Wearables & connected objects with 1% in 2015. But it is also the market that will grow the fastest over the next 10 years: by an average 30% per annum up to 2025.
World Internet of Things market, 2013-2025
Compared to the size of the Internet of Objects and Connected information devices segments, the rest of the market is splintered between a host of vertical markets:
- the utilities market is reporting rapid growth, stimulated by regulations and public policies;
- the electronic equipment and automotive markets are also among the largest today, while the consumer electronics industry is incorporating connectivity into more and more traditional products, such as cameras.
The different sectors’ contribution to the global Internet of Things market, in 2015
Is the IoT market changing shape?
To provide a clearer strategic analysis of this disparate set, IDATE has chosen to break down the Internet of Things market into four key areas. A distinction can be drawn between consumer and business products, on the one hand, and between the different types of connectivity, on the other:
• silo connectivity: a close loop of dedicated links between objects and servers, using direct connectivity or a hub, e.g. a smart meter or a payment terminal;
• interconnected connectivity: different types of communication between the objects themselves, mainly through the same hub, e.g. appliances in the home such as a washing machine that signals the end of the cycle on the TV screen.
The report provides a detailed analysis of the resulting, four key IoT markets:
- M2M, which covers production loops and closed loops based on applications;
- Wearables and connected objects which, by definition, do not talk to each other;
- Industrial Internet, which refers to the smart factory concept, with interactions between multiple applications that need to optimise their internal processes;
- The smart home, a concept under which applications can communication with one another without having to go through the Internet.
The Internet of Things market
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The main advantage for telcos is the high quality of data, particularly real-time location data collected through the mobile, a precious data source unavailable to the OTT players. Having an already established payment connection and related data is also a precious asset, not necessarily available to the likes of Google and Facebook who do not require payment for the use of their services. Conversely, scale is an issue where Google and Facebook are on a different scale; these are global juggernauts.