Rapid growth of the In­ter­net of Things will add eco­nomic value: Gart­ner

The ag­gre­gate ben­e­fit that busi­nesses de­rive from the sale and use of IoT tech­nol­ogy is fore­cast to hit USD 1.9 tril­lion across all sec­tors in 2020

InformationWeek - - An­a­lyst An­gle -

he In­ter­net plays an in­creas­ingly im­por­tant role in the mod­ern world. The In­ter­net of Things (IoT) ex­tends that role to an in­creas­ingly di­verse range of de­vices and com­mu­ni­ca­tions streams, many of which will be es­sen­tially ma­chine-toma­chine com­mu­ni­ca­tions, rather than in­volv­ing a per­son at ei­ther end­point.

Gart­ner de­fines the IoT as the net­work of phys­i­cal ob­jects that con­tain em­bed­ded tech­nol­ogy to com­mu­ni­cate and sense or in­ter­act with their in­ter­nal states or the ex­ter­nal en­vi­ron­ment. It en­com­passes hard­ware (the “things” them­selves), em­bed­ded soft­ware, com­mu­ni­ca­tions ser­vices and in­for­ma­tion ser­vices as­so­ci­ated with the things. The growth of such things will be rapid, such that the IoT’s growth will far ex­ceed that of other con­nected de­vices. Gart­ner fore­casts that, in 2020, the num­ber of smart­phones, tablets and PCs in use will be 7.3 bil­lion. But the IoT will ex­pand much faster, to about 26 bil­lion units in the same year.

By 2020, com­po­nent costs will have de­clined to the point that con­nec­tiv­ity be­comes a stan­dard fea­ture, even for pro­ces­sors cost­ing less than USD 1. This will raise the pos­si­bil­ity of con­nect­ing just about any­thing, from the very sim­ple to the very com­plex, to of­fer re­mote con­trol, mon­i­tor­ing and sens­ing.


Gart­ner es­ti­mates that the IoT will add USD 309 bil­lion to the com­bined rev­enue of hard­ware, soft­ware and ser­vices sup­pli­ers in 2020. For ex­am­ple, LED light bulbs are only just com­ing to the mar­ket, and the early mod­els are not net­worked. By adding IoT ca­pa­bil­ity, LED light­ing sup­pli­ers can charge higher prices for their prod­ucts. About 15 per­cent of LED lamps will con­tain con­nec­tiv­ity tech­nol­ogy by 2020 and will there­fore be part of the IoT. This amounts to more than 1 bil­lion con­nected lamps. The use of LEDs re­sult in con­sid­er­able en­ergy sav­ings, com­bined with elec­tronic con­trol­la­bil­ity. About 90 per­cent of the en­ergy sav­ings will be in con­sumer mar­kets, with com­mer­cial, street and area light­ing ac­count­ing for the rest. The en­ergy sav­ings are so great that gov­ern­ments will en­cour­age the use of LED lamps through sub­si­dies and forced use.

Eco­nomic “value-add” — the ag­gre­gate ben­e­fit that busi­nesses de­rive from the sale and use of IoT tech­nol­ogy — is fore­cast to hit USD 1.9 tril­lion across all sec­tors in 2020, ac­cord­ing to Gart­ner. The in­dus­tries that are cur­rently lead­ing its adop­tion are man­u­fac­tur­ing (15 per­cent), health­care (15 per­cent), and in­sur­ance and bank­ing and se­cu­ri­ties (11 per­cent). The bank­ing in­dus­try, for ex­am­ple, has widely em­ployed con­nected ATMs and point-of-sale (POS) tech­nol­ogy to de­liver op­er­a­tional sav­ings and en­hance rev­enue op­por­tu­ni­ties. The bank­ing and se­cu­ri­ties in­dus­try will con­tinue to in­no­vate around mo­bile and mi­cro­pay­ment tech­nol­ogy us­ing con­ve­nient POS ter­mi­nals, and will in­vest in im­proved phys­i­cal se­cu­rity sys­tems and smart-build­ing tech­nol­ogy.

The health­care sec­tor will see a wide range of in­no­va­tions, from per­sonal med­i­cal de­vices such as wear­able wire­less mon­i­tors and sen­sors to smart pills, con­nected med­i­cal in­stru­ments and di­ag­nos­tic equip­ment, as well as im­plantable tech­nol­ogy. How­ever, it will take longer than ar­eas such as light­ing to move into the main­stream be­cause of reg­u­la­tions. Nev­er­the­less, the new IoT tech­nolo­gies will add USD 285 bil­lion of health­care provider value to the global econ­omy by 2020.

As hard­ware costs fall and so­lu­tions pro­lif­er­ate, the bulk of the rev­enue op­por­tu­nity falls to ser­vice providers. Although the in­dus­try will ben­e­fit tremen­dously from IoT tech­nol­ogy, con­sumer end users will drive al­most two-thirds of IoT sup­plier rev­enue.

Peter Mid­dle­ton

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