The internet of things (IOT) industry has received a major boost as the market analysts IDC predict the connected device and connectivity market will reach more than $427 billion ( £306 billion) by 2021. That represents a 33 percent increase from 2017 and is being fueled by developments in technology and business models that create greater value for consumers.

Currently the IoT market is still in the experimental stage with revenues totalling $11.9 billion ( €10.6 billion) in 2018. The adoption of IoT will largely be driven by security threats and by the continued rise of interest in wearables, smart cities and services, the analysts say. At the same time, IOT devices have improved in technical quality, with capabilities expanding to support every aspect of life, including health and wellness.

The analysts say IoT vendors are facing increased pressure from customers to achieve profitability and scale. Customers want less complex integration of IOT products, and the focus must now turn to user experience, maintaining strong technical differentiation and creating better value for customers.

Today’s commercial enterprise IoT offerings are still focused on fully integrated cloud platforms and security, while new investment and partnerships are now focused on software and services for consumer usage.

Demand for enterprise IoT appliances and applets has risen significantly, though sales are still limited due to higher than expected costs. The major drivers for this category remain companies focusing on in-house technology, but there are increasing consumer consumer touch points being used to develop the capabilities of the appliance.

Cloud-based platforms are the major growth driver in the IoT market, IDC predicts. Companies of all sizes, including government, care institutions, enterprise and small and medium-sized companies, have signed cloud-based agreements, regardless of their location, as part of a bid to reduce overall costs and reduce reliance on external services. The market shows no signs of slowing in 2019, with channel expansion into O&M, enterprise and professional services fueling this market.

There is also an increasing focus on mobility as mobile operators look to expand their mobile into a multichannel, IOT-linked market in a bid to drive the evolution of their networks to a maturity point to support customer expectations.

The IDC analysts said that IOT is showing profitability in its final phase as vendors reduce costs and scale up. However, the IOT market is still in its experimental stage, and IT organizations are still managing new entrants and learning how to engage with the ecosystem.

IDC analysts say it’s likely that 2019 will see IOT reach profitability across most industries, but the industry as a whole is not yet fully united around an industry-wide perspective.

“New investments and business models may lack the support of cross-industry leaders to move IoT growth beyond prototype and proof-of-concept phases,” said Byron Charles, research director, Worldwide Connected Devices, IDC. “IT organizations that find themselves part of fragmented ecosystems, such as small businesses and public sector organizations, will require new ways to approach the IoT and find their place within the marketplace. Leaders will push for a clear way to support the next wave of growth in the market, one that achieves customer expectations while maximizing program and success cost efficiencies.”

Download the report here.

IDG News Service

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