When everything is connected

Joseph Waring

The Internet of Things (IoT) market, after years of disappointment, is finally on track to post healthy growth rates over the next decade.

Gartner expects IoT to have an installed base of 26 billion units in 2020, with products and services valued at $300 billion. The connectivity component alone is expected to be valued at $13.5 billion in three years.

The firm defines IoT as "the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment." It excludes PCs, tablets and smartphones.

Component costs are coming down to the point that connectivity will become a standard feature, says Gartner research director Peter Middleton. "Even for processors costing less than $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."

IDATE forecasts the worldwide M2M market (a subset of IoT) to grow 13% annually between now and 2017, when it hits $54 billion. By volume, shipments will rise 30% per year to 470 million modules in 2017. The firm said the two-thirds of revenue last year was generated by software and IT developments.

The automotive, consumer electronics and utilities sectors are currently the key growth drivers, but as M2M moves to additional verticals, IDATE expects the market to accelerate over the next five years.

Asia Pacific, led by China, will dominate in total shipments while Europe will be the largest by value. China last year overtook the US to become the No 1 cellular M2M market by installation.

On the connectivity side, Analysys Mason expects the M2M market to generate $15 billion of cellular revenue worldwide in 2018. That's up from $5 billion last year.

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