- IoT, an explanation
- The impact of IoT on the world
- Sectors that will benefit from the IoT growth
Ever since the evolution of the internet, the world has been shifting towards the digital and IoT promises to turn everything around to a lot more digitally savvy in the next decade. IoT has the potential to generate large-scale efficiencies within industries and homes. It is a driver of growth for innovation, optimization, automation and transformation. The technology will lead to better business models, revenue streams and techniques that will eventually have a potential to transform the world. IoT has the capability to unlock value in every sector of the economy and should result in a larger integration of the operational world with technology.
What is IoT?
IoT is a system of interrelating computing technologies, a network of sensors, RFID (Radio Frequency Identification) tags and actuators, network connectivity and software that work together, which enables objects to gather and transfer data without a reliance on human interface. This can be any object that has been assigned an IP address and has the ability to transfer data over the internet. It will allow unstructured data to be transmitted and analysed in a real-time to derive insights that can impel a huge revolution for mankind. Hence, with the exponential growth in the number of connected devices in the past years, the momentum is set to gain further impetus.
How does it work?
In the contemporary world, devices are increasingly gaining aptness to connect and collect data. A sensor placed inside an object capture data of processes and transmit this through the internet. This data is then stored in cloud servers or in a remote location. The data is analysed with the support of an IoT platform utilising analytical techniques and machine cognitive capabilities to observe trends and patterns. This analysis is used to derive insights to improve the processes, which ultimately leads to tangible benefits for the stakeholders. IoT technology consists of hardware for sensors and connected devices along with the software, applications and platforms. The development of machine cognitive capabilities can result in an automated analysis of data and will lead to more effective real-time insights.
How will IoT revolutionize the world?
IoT applications span across industries and sectors. The scope of the technology has expanded rapidly with the rise of Industry 4.0 (integration of software and automation in manufacturing). The continuous collection and analysis of data became a reality with IoT, which can help in the expansion of the current productive potential and can also significantly lower the costs. Moreover, any object with the technology to connect with the internet will result in a huge potential to develop projects and applications and will also improve upon the present working models. IoT platforms are providing methods to develop and deploy enterprise-level IoT solutions and these are also facilitating business enterprise transformation. Furthermore, applications of IoT are unique and are case specific and there is a substantial rise in the number of IoT projects globally. The insights derived from the data are cashed in by stakeholders to transform processes. Few of the major IoT applications that are being used nowadays are smart homes, wearable technology, smart cities, smart meters, Industrial IoT, connected cars, connected healthcare, smart retail, smart farming and smart transportation. IoT applications are expected to cover more sectors in the future and their utilisation will grow with the innovation of developers and transformation of businesses. IoT trends are increasing, especially in the case of manufacturing, logistics, utilities and consumer applications. These sectors are anticipated to be the largest user of the IoT technology in the upcoming years.
Industrial Manufacturing can derive huge benefits from inventory, a supply chain and fixed asset management. The use of sensors in manufacturing plants can help create a lean production process, more secure facilities, improved inventory control and reduced manufacturing downtime.
Logistics, the transportation sector can gain from a supply chain, inventory and fleet management. Logistics data can result in better optimisation of industrial production and order flow. IoT can help maintain a better control of fleet position, movement and may eventually result in better-optimised transportation matrix.
Utilities can benefit from facility, energy and security management. The technology can help consumers improve their utilisations and facilitate load management with the help of smart meters and grids. Additionally, utility companies will be able to improve their distribution planning by factoring in the actual trends for consumers.
Consumers will drive the IoT demand in future with the growth of several smart home applications and devices. The data collected from the users can help consumers optimise according to their needs, resulting in efficiencies and cost savings. Similarly, utilisation cases are projected to witness a huge jump in forthcoming years and the benefits will have a strong multiplier effect on people's utility, economy and the environment.
Which sectors will benefit from IoT growth?
In addition, the number of connected devices saw a strong growth and it is likely to surpass 30 billion (2020) and 70 billion (2025). The IoT device market will also foresee a growth at a CAGR of 35% (2014-19). The overall forecast for the IoT market is between $6 to $14 trillion by 2025.
The market opportunity comprises growth in both the hardware and software demand. Hence, as more devices get linked, the demand for network data, sensors, platforms and software should observe a boost. The market for IoT devices is expected to outgrow all the other internet devices. The technology is yet to be fully implemented and is a proof of it being in the concept stage. A large-scale implementation is already underway with smart cities developing across the globe, heightened demand for smart home products, implementation of Industry 4.0 and improvements in wearable technology. The sectors that are projected to benefit from the implementation of IoT are the semiconductor, network operators, network infrastructure, connected device manufacturers and software service (IoT platform companies) industries.
The semiconductor industry saw growth in the revenue, primarily due to the mounting penetration of smartphones and computers around the world. The global semiconductor sales saw compounded annual declines of 2.5% (2010-12). The revenue growth rebounded and achieved a CAGR of 7.9% (2012-14). The international sales are stable, YOY, following the FY 2014. The present demand for devices is anticipated to reach a saturation at the current levels, the industry can benefit from increased demand for the IoT hardware. IoT endpoints and devices use semiconductors and this provides a huge opportunity for manufacturers.
Network operators and infrastructure industry
Globally, the network demand has seen a low growth rate and operators are seeking new avenues for the growth. The global telecommunication services revenue grew at a CAGR of 1.28% (FY 2013-16) after a decline for two consecutive years. IoT will be a big source of demand for the network data as the number of devices connected through the internet grows. The growth in the demand for network data will, in turn, create a demand for network infrastructure as devices will require a continuous and improved connectivity.
IoT device manufacturers
Further, all devices have the potential to be modelled with a software and connectivity. The number of connected devices is presumed to grow at a CAGR of 17.21% (FY 2015-25). The IoT device market is projected to be the largest segment of the internet device market and will exceed both smartphones and PCs. This opens up scape for innovative ways to transform devices from basic versions to software-driven ones. Devices in all sectors such as consumer durables, healthcare, machinery, automobiles, consumer wearables, etc. have the potential to create new revenue streams as companies begin to develop their product innovations towards a more connected variant.
Technology services industry
There will be a big rise in revenue growth from the IoT and this will mainly occur to the technology services companies. The global IT services spending grew at a CAGR of 5.51% between FY 2010-13, this was followed by two consecutive annual declines during FY 2013-2015. The IT spending growth saw a good recovery in FY 2016, growing 3.2%, YOY. The software is critical to the successful implementation of IoT, this offers a huge space for the technology industry to develop software and provide end to end architecture (IoT platforms) to support the process. Technology services will see a boost on most fronts with the major drivers being cloud services, software and applications for devices, IoT platforms, big data analysis, machine learning and consulting services for business transformations. Large tech giants like IBM, Microsoft, Amazon, etc. are providing IoT platforms to develop and deploy applications for enterprise transformation and the trend of integrating platforms with machine cognitive intelligence can play a vital role in shaping the future of IoT projects.