Over the past few years, one of the hottest topics in the technology industry has been the phenomenon of the “Internet of Things”. With the advances in technology, the conversation has shifted from a theoretical model to actual physical implementations. It is the next phase in the Information Revolution. As more and more people realise the potential of this technology, the IoT phenomenon is truly about to explode in the industry and public consciousness.
The State Of The IoT Industrial Landscape
RFID tags are one of the key enablers in an IoT setup. Now, RFID technology is progressively becoming cheaper to mass produce. As a consequence, the IoT industry is predicted to experience tremendous growth and adoption over the following years. In fact, Bain forecast annual revenues upwards of $470 billion for IoT software and hardware vendors by 2020! In addition, data from Juniper Research depicts that nearly 12.5 billion business assets in retail sector will be connected to IoT platforms by 2021. The exploded adoption of IoT can be visualised with the fact that there would be 350% rise in the number of retail devices connected to IoT platform between 2016 and 2021.
The research firm also adds that, in retail, retail businesses will need to integrate the data collected from IoT assets with enterprise solutions to achieve next level of growth. Integration of enterprise solution with IoT assets in itself would be a big opportunity for IoT enablers. The spendings on software for ERP to integrate the data collected from IoT assets in the Retail sector is estimated to grow from $1.5 billion in 2017 to $11.3 billion annually by 2021.
This kind of growth is unprecedented. Business Insider estimates that IoT will become the largest device market in the world by 2019 at nearly double the size of the smartphone, PC, tablet, wearable and connected car market combined. From 2016 to 2021, the market size is estimated to grow to a staggering $661.74 billion at a Compound Annual Growth Rate (CAGR) of 33.3%.
So what is the driving force behind the tremendous growth of the IoT industry? Let us have a look.
Key Growth Drivers
Advancements in hardware and lowering costs – Computer hardware and network technology has progressed at a tremendous rate over the past few decades. As predicted by Moore’s law, chips are getting smaller. Metcalfe’s law has seen network value increase with each additional network node, and Koomey’s Law has seen batteries getting smaller. With increasingly lower costs and mass availability of essential hardware like RFID tags, IoT enabled devices are primed for mass manufacture and consumer adoption.
Ubiquitous adoption of gateway devices – The IoT is completely reliant on control hubs or gateways for any sort of functional implementation. Personal devices such as smartphones and tablets are perfectly suited to this function. The almost universal presence and ever increasing adoption of these devices are the key enablers for the IoT.
Expanded wireless/broadband connectivity and the implementation of IPv6 protocols – The world is increasingly becoming more and more connected via the spread of the internet. The International Telecommunication Union reports that while 40% of the global population is connected to the internet as of today, this number is set to rise to 57% by 2019. Coupled with the advancements in wireless technologies like Wi-Fi and Bluetooth, efficient device-to-device communication is becoming easier by the day.
Another big requirement for the implementation of IoT devices is the ability to differentiate each device. The implementation of Ipv6 protocols has helped immensely with this. Ipv6 supports 128-bit addresses, allowing each device to have its own distinct IP address.
Increased investment in the IoT – Corporations are beginning to realise the enormous potential of the IoT. Companies like Dell, IBM etc are investing heavily in IoT-based technology. General Electric forecast investment in Industrial Internet of Things (IIoT) to cross $60 trillion in the next 15 years! This kind of investment and commitment is driving significant innovation and progress in the IoT industry.
Cloud Computing – As one would expect, mass scale implementation of IoT will generate an enormous amount of data. The storage and processing of this data is only feasible on the cloud computing model. We have made significant strides in cloud technology in the past decade. This will be essential to the growth and adoption of the IoT.
Despite its enormous potential, the IoT is still in its infancy. It lacks a common set of standards and technologies for compatibility. An effort needs to be made to standardise the IoT to enable interoperability and ease of use.
Other significant hurdles include issues around data management of such high volumes, security and consumer privacy. The IoT is based on big data, and the potential for abuse is very real.
- The IoT is set to become the biggest device market in the world by 2019.
- Business models will change to adapt to the IoT. This includes the rise of “Product as a Service” business models.
- The fall in hardware and networking costs is the key driver enabling the IoT.
- Security and privacy concerns are the biggest issues plaguing the IoT presently.