Freight Monitoring, Industry 4.0 and Smart Grids: Main Drivers for EMEA’s IoT Spending until 2020

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A few days ago I had the opportunity to participate in a very interesting Webinar organised by IDC’s Customer Insights and Analysis Group having as topic the evolution on worldwide IoT market spending.

What is impressive to Internet of Thinks market, comparing with other IT areas, is his extraordinary dynamicity. Everybody see in IoT a huge development potential based on diversity of technologies and large applicability ability. Practically every industry vertical is ready to adopt a wide spectrum of technologies. Starting from everything can be connected and everything could be smart, to the opportunity of intelligent analysis of huge amount of data, until the best BI and predictive tools to put in value the golden core of information and knowledge, every business and industrial process could be improved. Our lives could be improved. Citizen’s lives could be improved…

But who is generating this spectacular development of the market? The Internet of Things (IoT) is not a simple trend or a huge opportunity.  IoT market is a complex ecosystem with multiple specialisations and thousands of players, including sensors device vendors, IoT infrastructure providers, software developers, and Cloud services providers. For the enterprise ecosystem, IoT is also representing the interference between Business, Operations, and Information Technology levels.

Deserving such impressive potential and diversity, the new IoT concepts started to be developed. In an IDC’s definition, Internet of Things is “a network of networks of uniquely identifiable endpoints (or things) that communicate without human interaction using IP connectivity (…) locally or globally”. Starting from the market development perspectives, IDC specialists are trying to better understand the IoT phenomena, being involved in a large spectrum of studies and researches covering worldwide, regional and ecosystem technology breakouts forecasts, various analysis of technology components and regular executive surveys related to IoT adoption, preferences, and platform deployments.

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Source: IDC

IDC’s “Worldwide Semiannual Internet of Things Spending Guide” provides guidance on the expected technology opportunity around this market at a regional and total worldwide level. Segmented by industry, use case, and technology component, this guide provides IT vendors with insights into this rapidly growing market and how the market will develop over the coming year. During the “Worldwide IoT Spending Guide Review” webinar from January 11, IDC’s specialists from Customer Insight and Analysis Group discussed IoT adoption and emerging use cases, presented worldwide and regional market snapshots, and the newest research conclusions.

The market figures are impressive. According to IDC, until 2020 the worldwide Internet of Things market will grow to almost $1.3 trillion, 70% of spending will be net new, and the installed base of consumer IoT devices will exceed the installed base of smartphones and tablets combined.

Focusing on the European market evolution related to IoT platform adoption, interesting is two different surveys covering Western Europe and Central East Europe revealed almost similar results: 25% of Western European and CEE Enterprises will adopt or expand IoT technology in the next year. The big surprise is more than 20% organisations from Western Europe and 15% from CEE are already using IoT components but aren’t interested in more development…

Looking to vertical forecasts, IDC studies reveal that the worldwide top ten fastest growth use cases are more aligned to consumer spending than enterprise… In store contextual marketing, smart homes, connected vehicles, and personal wellness are the areas with the biggest average rate development in 2015-2020 period. IoT investments will reach $1.29 trillion in 2020. With more than 37.6% of this pie, Asia Pacific area leads the regional spending forecast, followed by North America, Latin America, West Europe (19.6%), Japan, and CEMA (2.5%) {1}.

Other important evidence revealed by the studies is asset-intensive industries drive the global major shares of IoT forecast spending. The top three vertical and associated industries spending in 2020 will be manufacturing (with 22% shares), cross industries (12%), and transportation (10%):

  1. Manufacturing (22%)iot-idc-freight
  • Food Traceability
  • Maintenance & Field Service
  • Manufacturing Operations
  • Production Asset Management
  1. Cross Industries (12 %)
  • Connected Vehicles
  • Smart Buildings
  • Staff Identification

 Transportation (10%)

  • Air Traffic Monitoring
  • Fleet Management
  • Freight Monitoring

From technologies perspective, software and services gain in technology spending share, comparing with hardware and connectivity – affected by device diversity and cost reductions, despite the essential roles of IoT receptors and mobile communication.

Looking to our region, IDC research identifies the same development trends estimated in previous studies, with a projection of 1.4 Billion connected things by 2020, and a CEE IoT market opportunity of 24 Billion dollars. Despite de name associated with the Internet, IoT is more than a simple connectivity. Any IoT system is a conglomerate between devices, platforms, applications and services enabling enable a world of connected things {2}

Concentrating on EMEA area, the IoT use cases receiving the greatest levels of investment from CEE organisations across these three industry segments are:

  • Freight Monitoring— leading IoT spending in EMEA, is using RFID, GPS, GPRS, and GIS technologies to create monitoring systems based on intelligent recognition, location, tracking, and real-time communications via wireless, satellite or other channels.
  • Manufacturing Operations— fuelled by German Industry 4.0 initiative, are supporting digital manufacturing technologies using intelligent and interconnected tools (sensors, actuators, drives, vision/video equipment) to enable the different components from manufacturing process  (machine tools, robots, industrial process equipment) to autonomously exchange information, trigger actions, and control each other independently.
  • Smart Grid– where smart field devices owned by the utility companies are used to control and optimise power, water and other resources flow to assure efficient, safe, and reliable service. Utility-owned, in-home devices could be included in this category when are used for grid operations.
  • Smart Buildings and Connected Vehicles are other important investment areas in the near future

idc-milan-statement“The Internet of Things is one of a handful of technology areas that are set to drive IT growth and innovation in the coming decade, and it both enables and is fueled by digital transformation,” appreciate  Milan Kalal, program manager of Internet of Things research with IDC CEMA. “The IoT market is driven by companies’ focus on business optimisation and productivity, the increasing attention to customer experience, and the growing availability of technologies, while security concerns and budget constraints inhibit adoption” {3}

The IoT use cases that will experience the greatest revenue growth over the 2016-2020 forecast period are smart buildings, smart grid (gas), insurance telematics, and connected vehicles. In addition, eight other IoT use cases will see revenue growth of more than 100% during this time.

“Companies will spend large amounts on IoT solutions, and the market potential is significant for vendors that have the right capabilities and understand how to position themselves in the emerging ecosystems,” says Kalal. “IoT adoption and use cases strongly vary across industry sectors, with flourishing opportunities both on the business and consumer sides. There has been an explosion of industry-specific pilots in the past months — the next steps now for adopters is understanding how to make IoT have a deeper impact on their business activities and extrapolating bang for the buck from their IoT investments.” {3}

IoT Market Expectation in CEE – by 2019

  • 25 Billion – the number of fibre connections
  • 25 Million – annual spending on connected vehicles
  • 42 Million – annual in-store offer revenue
  • 65 Million – annual omnichannel revenue
  • 19 Million – annual telehealth systems revenue
  • 49 Million – annual smartphone shipments

 Source: The Future of Connected Life in CEE, IDC April 2016 {4}

References

{1} Marcus Torchia (IDC US), Nigel Wallis (IDC Canada), Andrea Siviero (IDC West Europe), and Milan Kalal (IDC CEMA) – “Worldwide IoT Spending Guide Review”, IDC Webinar, January 11, 2017

{2} Milan Kalal – “Capturing the IoT Opportunity”, IDC IoT Forum, Bucharest, November 24, 2016

{3} Milan Kalal – “The Internet of Things in Central and Eastern Europe – Driving Change, Bringing Opportunity”, IDC CEMA Article, September 2016

{4} Radu Crahmaliuc – “IDC IoT Forum Bucharest 2016: Transforming Business and Improving Citizen’s Lives”, cloud☁mania, December 12, 2016

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About Radu Crahmaliuc
Independent IT&C analyst, digital transformation & Cloud computing evangelist, start-ups developer, freelancer, storyteller, events moderator & keynote speaker

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