The Internet of Things is not one market but a set of overlapping markets with strong connections to the data center and analytics. These markets can be thought of as battlegrounds that span consumer, enterprise/industrial, network and gateway, analytics, and autonomous applications. In the aggregate these markets will generate $520 billion in spending in 2021, more than double the $235 billion spent in 2017, with industrial/enterprise accounting for about two-thirds of that. And, although adoption expectations have dampened somewhat in the past two years, customers are planning more proofs of concept, and corporate IT departments expect to devote, on average, 25% of their budgets to IoT and analytics in 2020, up from 18% in 2018.
Customers now say that cloud service providers and analytics and infrastructure software vendors have the most influence over their IoT investments. Customers’ priorities are also beginning to shift; for example, while predictive maintenance emerged early as an attractive use of IoT technology, interest in that application is waning as the ROI proves problematic. But interest in remote monitoring is on the rise, because it is an easily integrated or standalone application. And edge analytics, which places processing power closer to the sensors and cameras that collect data, is also gaining more interest, from customers and vendors alike.
Bain research finds that the same barriers that gave customers pause in 2016 hold true today: cybersecurity, integration and ROI. Of those, security concerns may loom largest. In order for IoT markets to develop in the years ahead, vendors should focus on getting a few verticals right, paying close attention to what customers really want and need; work with partners to develop cost-effective end-to-end solutions; and prepare to scale by removing barriers to adoption. As vendors gain more experience in addressing operational considerations, they can translate that experience into repeatable playbooks that address customers’ security, integration and ROI concerns.