Framingham, Mass. - The global Internet of Things (IoT) market is forecast to grow from $655.8 billion in 2014 to $1.7 trillion in 2020 with a compound annual growth rate (CAGR) of 16.9 percent, driven by devices, connectivity, and IT services, according to new research from International Data Corporation (IDC).
Devices, connectivity, and IT services are estimated to account for more than two-thirds of the worldwide IoT market in 2020, with devices - modules/sensors - representing 31.8 percent of the total. IDC said it expects IoT purpose-built platforms, application software, and "as a service" offerings to capture a larger percentage of revenue by 2020.
IDC released three new IoT reports that define the market and identify opportunities. These include IDC's Worldwide Internet of Things Taxonomy, 2015, Worldwide Internet of Things Forecast, 2015–2020, and the Worldwide IoT Spending Guide by Vertical.
IDC's IoT taxonomy covers hardware, software, services, and connectivity technologies as well as vertical industries and use cases, while the IoT forecast includes the installed base by region as well as revenue projections by region and technology. The IoT Spending Guide focuses on 25 of the fastest growing IoT use cases in 11 vertical industries, including consumer, retail, healthcare, government, manufacturing, transportation, and other industries. It also sizes IoT opportunities across the technology stack, said IDC.
"While wearable devices are the consumer face of the Internet of Things, and where recognition of IoT appears to begin, the real opportunity remains in the enterprise and public sector markets," said Vernon Turner, senior vice president and research fellow (IoT), Enterprise Systems, in a statement. "The ripple effect of IoT is driving traditional business models from IT-enabled business processes to IT-enabled services and finally to IT-enabled products, which is beginning to disrupt the IT status quo."
Here is IDC’s IoT definition: IDC defines the IoT as a network of networks of uniquely identifiable endpoints (or "things") that communicate without human interaction using IP connectivity. IDC has identified the IoT ecosystem as containing a complex mix of technologies including, but not limited to, modules/devices, connectivity, IoT purpose-built platforms, storage, servers, security, analytics software, IT services, and security. It is important to note that autonomous connectivity is a key attribute within IDC's definition and, at this point, we do not count smartphones, tablets, or PCs within our IoT forecast.
"IDC's Internet of Things taxonomy is intended to provide a framework to categorize and relate technology and industry-specific aspects of this burgeoning market," said Carrie MacGillivray, program vice president, IoT and Mobile research, in a statement. "For 2015, the taxonomy includes a view to the horizontal technology stack of hardware, software, services, and connectivity as well as a vertical view to the industries and use cases that IDC is forecasting in the IoT market."
IDC also released a new wearables report, Worldwide Wearable Applications Forecast, 2015-2019 (IDC #256165), that forecasts the number of third-party applications for smart wearable devices to grow from 2,500 in 2014 to 349,000 in 2019. While most of these apps will be consumer focused, said IDC, it also expects a large opportunity for enterprise-oriented applications.
The market targeting enterprise applications is forecast to account for 10 percent of the total number of applications in 2015 and reach 17 percent in the final years of the forecast period. However, IDC believes enterprise workflows are high value targets.
"Applications designed for wearable devices deployed to address specific enterprise workflows are the highest value targets for developers in the wearable technology space in the near term," said John Jackson, research vice president, Mobile and Connected Platforms at IDC, in a statement. "IDC believes that enterprises will find numerous points of intercept for existing and new workflows and are prepared to invest substantially in wearable solutions that deliver potentially transformative productivity and competitive benefits."