A new report by International Data Corporation (IDC) provides a forecast that illustrates which vertical industries show the greatest market opportunity over the next several years.
According to the report, “Worldwide Internet of Things Spending by Vertical Market 2014-2017 Forecast,” as the Internet of Things (IoT) market starts to coalesce in both concept and solution offering, vendors are recommended to take the next step and look at this huge IT opportunity in a more realistic framework. As exciting as the overall opportunity for the IoT market currently is, understanding the vertical ramifications is paramount. All of the greatest IoT IT opportunities–including the connected home, smart meters, the connected car, and the smart grid as well as personal wellness and connected health–are driven from a vertical market perspective.
IDC defines the Internet of Things concept as a wired or wireless network connecting devices, or “things,” that is characterized by autonomous provisioning, management, and monitoring. IoT already impacts our everyday life down to the smallest processes. The vertical opportunity that arises from IoT is already in play, but only if the need for vertical expertise is recognized and offered. Realizing the existence of vertical opportunity is the first step to understanding the impact _ and therefore market opportunity that exists _ for IT vendors.
Findings in the report include:
– IDC looked at the components, processes, and IT support for IoT and expects the technology and services revenue to expand from $4.8 trillion in 2012 to $7.3 trillion by 2017 at an 8.8% compound annual growth rate (CAGR), with the greatest opportunity initially in the consumer, discrete manufacturing, and government vertical industries.
– The IoT/M2M market is growing quickly, but the development of this market will not be consistent across all vertical markets. Industries that already “understand” IoT will see the most immediate growth, such as industrial production/automotive, transportation, and energy/utilities. However, all verticals will reflect great opportunity.
– IoT is a derivative market containing many elements, including horizontal IT components as well as vertical and industry-specific IT elements. It is these vertical components where IT vendors will have to distinguish themselves to address industry-specific IoT needs.
– IoT opens up many IT vendors to the consumer market, providing B2B2C services to connect and run homes and automobiles–all the places that electronic devices will have a networking capability.
According to the report, the first step to understand how vendors can position themselves will be to understand the components of the IoT/M2M IT ecosphere. Because this is a derivative market, there are many opportunities for vendors to offer parts or product suites that cover the needed IoT IT set. And vendors will have incentive to do so due to rapid growth, which will occur as industries see the convenience, productivity, and efficiency that IoT brings to business processes. Accordingly, while horizontal-focused IT vendors will look to offer IoT solutions that appeal to many industries, there will also be impetus to offer vertical-focused solutions that make IoT tangible for both industries applications (M2M) and consumer needs (B2B2C).