IN THE HIGH-STAKES INTERNET OF THINGS GAME, ANNUAL REVENUES ARE POISED TO REACH $450 BILLION BY 2020 WITH CONSUMER APPLICATIONS TAKING A BACK SEAT TO OPPORTUNITIES IN THE ENTERPRISE
Ongoing research from Bain & Company finds customers look to incumbents to maximize the value of their IoT initiatives, but these incumbents are also struggling to gain a foothold amid rapid changes
San Francisco – July 26, 2017 – Consumer markets are already buzzing with the Internet of Things (IoT) devices, applications and innovations. Yet, wearable health monitors, telematic devices that help insurers monitor driving habits, and in-home personal assistants, such as Alexa, represent only the tip of the IoT iceberg. The real business opportunity lies with the enterprise, even as many IoT vendors struggle to prioritize investments across industries and speciﬁc uses, decide on the best offerings, and adapt their commercial models accordingly.
Based on its extensive research and more than 60 use cases, Bain & Company, in an ongoing series of perspectives, estimates that IoT – sensors and smart devices, combined with advanced analytics and cloud services to make sense of all the data – has driven more than $75 billion in M&A investments by major vendors and $30 billion from venture capital ﬁrms. Overall, according to Bain, annual revenues are poised to reach~$450 billion by 2020. Many executives are already investing significantly in IoT, but few have a clear roadmap to fully capitalize on the opportunities ahead. Understanding where battlegrounds are emerging, how platform dynamics will shape competition and profitability, and what barriers exist to adoption (for example, security and interoperability) will help companies determine where to invest and what capabilities are required to win.
Bain identifies five major IoT “battlegrounds” as: 1) Consumer; 2) Enterprise and Industrial; 3) Network and Gateway; 4) Analytics, where the bulk of the IoT value will accrue; and 5) Autonomous – e.g., cars, drones, etc.
“We don’t view the Internet of Things as a single market. Instead, we view IoT as several overlapping technology platform battlegrounds and dozens of market segments – each with strong connections to the data center and analytics – which creates room for many winners across different verticals, use cases, and geographies,” said Ann Bosche, a partner in Bain’s Technology Practice and an IoT expert. “However, not all opportunities in the Internet of Things are created equal. Vendors must prioritize investments in those areas that are most attractive to customers, in terms of their willingness and ability to adopt them. As we’ve seen, this is often easier said than done.”
In spite of all the attention focused on disruptive IoT start-ups, Bain finds that technology and telecom incumbents have some natural advantages in this rapidly evolving area. They have established customer relationships, the ability to integrate with existing operational and information technology systems (to ensure the data and analytics lead to decisions in the field), and trusted security. As a result, customers look to them – especially cloud-service providers, major analytics vendors, network equipment vendors and industrial equipment OEMs—to overcome IoT barriers to adoption. In a Bain survey of more than 170 IoT and analytics solutions vendors and more than 500 executives looking to deploy these solutions, 46 percent of customers said they expected cloud vendors to have the most influence over the IoT products and solutions that they choose, followed by analytics and infrastructure software vendors at 41 percent and network hardware vendors at 35 percent.
However, these incumbents are also struggling to provide simplified solutions. While most are optimistic about the cost reduction and new revenue opportunities provided by IoT, many find it difficult to get a foothold and develop a coherent strategy. Recent research on IoT from Bain finds that only about 10 percent of companies have made it beyond the planning and proof-of-concept stage, and only about 20 percent expect to implement solutions at scale by 2020. In that same survey of more than 170 IoT and analytics vendors, respondents identified their top IoT challenges as where to focus, how much to invest and what standards to use and drive.
“Incumbents are well positioned to be winners, but they must act aggressively, ‘pick their lanes’ about where to compete, and execute well,” said David Crawford, who leads Bain’s Technology Practice in the Americas. “They have to avoid spreading themselves too thin across verticals, or investing in use cases with insufficient attention or focus. An apt analogy is a doctor that lacks a specialty but still attempts to treat everything from the heart to the hand. Attempting to address too many areas at once without depth in any specific area could put patients at a significant risk.”
Specifically, Bain recommends balancing both short- and long-term bets by targeting a particular battleground, selecting three to ﬁve speciﬁc use cases and developing solutions tailored to address those with a set of partners that make the end to end solution easy to adopt. Longer term, vendors can use the momentum in a few verticals to expand and widen the focus.
Doing so can help vendors shape a strategy in the context of the IoT battlegrounds, which will be critical for executives to position their companies for leadership, particularly as IoT continues to gain traction and influence most industries.
Editor’s Note: To arrange an interview with Ms. Bosche or Mr. Crawford, please contact Dan Pinkney at email@example.com or +1 646 562 8102.
# # #
Sobre a Bain & Company
Somos uma consultoria global que auxilia empresas e organizações a promover mudanças que definam o futuro dos negócios. Com 65 escritórios em 40 países, trabalhamos em conjunto com nossos clientes como um único time, com o propósito compartilhado de obter resultados extraordinários, superar a concorrência e redefinir indústrias. Em 2022, a Bain completa 25 anos de atuação na América do Sul, trabalhando fortemente em conjunto com as maiores companhias líderes de seus segmentos. Complementamos nosso conhecimento especializado integrado e personalizado com um ecossistema de inovação digital a fim de entregar os melhores resultados, com maior rapidez e durabilidade.
Com o compromisso de investir mais de US$1 bilhão em serviços “pro bono”, em 10 anos, usamos nosso talento, conhecimento especializado e percepção em prol de organizações que enfrentam atualmente os desafios urgentes relacionados ao desenvolvimento socioeconômico, meio ambiente, equidade racial e justiça social. Recentemente, recebemos a classificação ouro da EcoVadis, plataforma líder em classificações de desempenho ambiental, social e ético para cadeias de suprimentos globais, o que nos coloca entre os 2% melhores de todas as companhias.
Desde nossa fundação em 1973, medimos nosso sucesso pelo de nossos clientes e temos o orgulho de manter o mais alto nível de satisfação em nossa indústria. Saiba mais em www.bain.com.br e em nosso LinkedIn Bain & Company Brasil.