Report says IoT will generate revenue exceeding US$300billion by 2020

According to a recent Gartner report, IoT (excluding PCs, smartphones and tablets) will grow to 26 billion units installed by 2020.

This growth will represent a 30-fold increase from 0.9 billion in 2009, according to the report.

It also found IoT product and service suppliers will generate incremental revenue exceeding US$300billion, mostly in services, in 2020.

Peter Middleton, research director at Gartner, said: “The growth in IoT will far exceed that of other connected devices. By 2020, the number of smartphones tablets and PCs in use will reach about 7.3 billion units.

“In contrast, the IoT will have expanded at a much faster rate, resulting in a population of about 26 billion units at that time.”

Automation sensors and applications

Due to the low cost of adding IoT capability to consumer products, Gartner expects that “ghost” devices with unused connectivity will be common.

This will be a combination of products that have the capability built in but require software to “activate” it and products with IoT functionality that customers do not actively leverage.

In addition, enterprises will make extensive use of IoT technology, and there will be a wide range of products sold in various markets, such as advanced medical devices; factory automation sensors and applications in industrial robotics; sensor motes for increased agricultural yield; and automotive sensors and infrastructure integrity monitoring systems for diverse areas, such as road and railway transportation, water distribution and electrical transmission.

Middleton added: “By 2020, component costs will have come down to the point that connectivity will become a standard feature, even for processors costing less than US$1. This opens up the possibility of connecting just about anything, from the very simple to the very complex, to offer remote control, monitoring and sensing.

Intelligent products

“The fact is, that today, many categories of connected things in 2020 don’t yet exist. As product designers dream up ways to exploit the inherent connectivity that will be offered in intelligent products, we expect the variety of devices offered to explode.”

The IoT encompasses hardware (the things themselves), embedded software, communications services and information services associated with the things.

Gartner refers to the companies that provide the hardware, software and services as IoT suppliers. The incremental IoT supplier revenue contribution from IoT in 2020 is estimated at US$309billion.

Economic value-add (which represents the aggregate benefits that businesses derive from the sale and usage of IoT technology) is forecast to be US$1.9 trillion across sectors in 2020. The verticals that are leading its adoption are manufacturing (15%), healthcare (15%) and insurance (11%).

Manufacturing systems

IoT value-add is composed of the combination of mature IoT, which is already yielding benefits, and a high-growth emerging IoT opportunity.

It is derived from a combination of sector-specific technology (such as connected, automated manufacturing systems), and more generic, widely used technology, such as the suite of “smart building” technologies, including light-emitting diode (LED) lighting and smart HVAC systems.

The report also noted that IoT will facilitate new business models, such as usage-based insurance calculated based on real-time driving data, as well as support a large range of health and fitness devices and services, combined with medical advances, leading to significant benefit to the healthcare sector.

Emerging connected sensor technology will also lead to value creation in utilities, transportation and agriculture.

Written from press release by Leah Alger