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IoT Impact on Worldwide Markets
Internet of Things (IoT) is an emerging technology domain that attracts different industries with wide variety of applications growing day after day. Several researchers and research institutions forecast that the IoT market is expected to reach..
9/2/20216 min read
Internet of Things (IoT) is an emerging technology domain that attracts different industries with wide variety of applications growing day after day. Several researchers and research institutions forecast that the IoT market is expected to reach a value of USD 1,386 billion by 2026 at a Compound Annual Growth Rate (CAGR) of 10.53~24.9% with different estimates. If you are considering opening a tech business, or if you are interested in technology in general, fasten your seat belts and enjoy the journey in IoT markets with us
1) What is Internet of Things?
Internet of things is connecting devices, people, data and generally “things” with each other through a network. This connection between things allow them to communicate together to perform various functions.
The core idea behind internet of things is connecting billions of “smart things” together through the internet to gather data from the environment, analyze and transfer the acquired data and then give feedback to the environment. This feedback gives the possibility to monitor, control and automate objects to perform several tasks. This technology characterized as the disruptive technology for solving recent society challenges including connected healthcare, smart cities, industrial IoT, pollution monitoring, transportation and logistics, smart utilities, smart homes and etc.
2) IoT Growth, Potential Economic Impact and McKinsey Report
This report studied about 150 different cases and found the above forecasted figures and justified them. The report also stated where the value potential of internet of things came from. Below are some of McKinsey interesting findings [1]
This report studied about 150 different cases and found the above forecasted figures and justified them. The report also stated where the value potential of internet of things came from. Below are some of McKinsey interesting findings
2.1) Interoperability
Interoperability is a key factor in maximizing the value of IoT, about 40% of the potential value can be achieved by allowing different IoT systems to work together. The figure below illustrates this fact.
2.2) Predictionand Optimization
Most of IoT gathered data are not used effectively. In fact, an oil rig with 30,000 sensors will examine only 1% of the data and that is because these data are used to detect and control irregularities and not for optimization and prediction where you can get the best of IoT.
2.3) IoT in Advanced and Developing Countries
Vast amount of value can be achieved by IoT in advanced and developing economies. For the forecast period (2015-2025), more value can be unlocked through advanced economies, although the volume of IoT deployment could be larger in developing economies. The figure below demonstrates this estimate and illustrates it.
2.4) B2B Applications (business to business)
The economic impact of business to business (B2B) applications is significantly higher than consumer application impact and, the value where consumer devices can be connected to B2B systems is even higher.
3) Future Opportunities
Internet of Things ports are opened to all kinds of sailors in the whole world, there is a laying opportunity in every country. As we said earlier, the potential impact is very high, and the applications variety is too wide. Thus, even if you do not have special skills or tech background, you can invest in IoT markets and with the right timing and choices you will find the success you seek. In this section, we will mention some of investments opportunities which have a potential growth in the near future.
3.1) Human Health and Wellness
Great potential opportunities in human wellness markets are improving human health and increasing productivity. Three main investment opportunities in this sector are:
Wearables: worn or carried devices such as smart watches and wristbands.
Implantables, injectables and ingestibles: Swallowed, inserted or injected smart devices.
• Non-wearable measurement devices: Devices that collect and transmit data periodically via diverse communication protocols like Bluetooth and Wi-Fi. These devices are not attached directly to human body. One example is Bluetooth Pulse Oximeter.
3.1.1) Wearables
According to International Data Corporation (IDC), worldwide shipments of wearables reached 444.7 million units during 2020. McKinsey estimates that the number of connected wearables will exceed 1.3 billion unit in 2025. According to previous stats, wearables market is a promising opportunity but with very high competition.
3.1.2) Implantables, Injectables and ingestibles
Implantables, Injectables and ingestibles smart pills and nanobots have the ability to replace some of the traditional surgeries with the advantage of faster recoveries, reduced risk of complications and relative reduced costs. Although these devices did not reach the clinical trial stages, wide spread adoption value after fine tuning could be higher than the other technologies discussed in here.
3.1.3) Non-wearable measurement devices
McKinsey estimates that using IoT devices to monitor and treat illness could have $170 billion to $1.1 trillion per year at 2025. This value would arise from improving quality of life and extending healthy life spans for patients with chronic illnesses and reducing cost of treatment. This potential value includes non-wearable and wearable devices also.
3.2) Smart Homes
There are a lot of investment opportunities in Home IoT, McKinsey estimates that Home IoT have a potential impact of $200 to $350 billion annually in 2025 mainly in chores automation, energy management usage-based design, pre-sales analytics, personal loans and security and safety. The below figure illustrates this prediction well.
With respect to chores automation, smart home appliances could collect data and analyze them to schedule automated chores based on homeowner preferences. For example, making daily coffee at 7:00 AM in the morning or vacuuming the dining room at nightNeedless to say, coffee making, and vacuuming doesn’t need human intervention with the presence of IoT technology. In fact, robotic vacuum cleaners accounted for 18% of vacuum cleaners selling for more than $200 in US at 2014.
Furthermore, energy management could have significant savings for homeowners by implementing the use of sensors and predictive algorithms. For example, smart thermostat could analyze users’ behavior and adjust the temperature based on occupancy which grants enormous energy saving for cooling and heating.
For the safety and security, the help of sensors, cameras and IoT predictions can sense risks and issue alerts to fire, police or ambulance. A lot of home owners are already using security cameras for their safety matters, child monitoring and even leisure. Combining IoT technology with cameras could give remote control, live monitoring and easy access. An important fact to mention here is although IoT technology is really promising for home applications, people may hesitate to use such technology if they feel that their data and privacy is at risk.
3.3) Retail Store
Automated checkouts, customer tracking, layout optimization, real-time personalized promotions and inventory optimization are the key drivers for retail environment IoT applications.
For example, in automated checkouts, IoT technology could reduce checkout queue times up to 80%, reduce cashier labor costs by 75% which would result in $150~$380 billion of savings annually at 2025 as McKinsey estimates. This could be by fully automating the checkout process by scanning the content of shopping carts and automatically withdrawing it from customers’ bank accounts allowing the customer to walkout without pausing.
Also, IoT technology could be the bridge between online shopping and traditional retail by implementing “omni-channel” strategy. For example, guiding a customer inside the shop to an item that he searched online by texting him a personalized promotion message to make the purchase in-store that day. A lot of ideas and opportunities are available within this sector of IoT, a single google search will give you tons of data for this market.
3.4) Offices
The use of IoT technology at offices have a potential impact of $70 ~ $150 billions per year at 2025. Big part of this impact is through energy savings and human productivity enhancement.
In fact, commercial spaces account for 20% of energy consumption in advanced economies and about 16.7% in developing economies. Around half of this energy consumption comes from offices mainly from heating, cooling and lighting unoccupied spaces. With smart energy management systems, we can reduce around 20% energy consumption in such places producing $11.7 ~ $ 20.5 billion of potential impact per year in 2025.
Human productivity enhancement is another market with great potential in office spaces. IoT technology could track employees’ performance and could increase it leading to business enhancement in general.
Another potential saving is through smart security monitoring like face and pattern recognition software. This could cut manpower cost in monitoring to 50% leading to $6 billion of saving per year in 2025. Below figure shows offices applications potential impact and it is estimated to be $70 ~ $150 billions a year in 2025.
3.5) Others
There are limitless investments opportunities in IoT applications other than mentioned like factories, worksites, health and safety, vehicles, cities, environment and agriculture. If you want to expand your knowledge about these opportunities, the above mentioned McKinsey report is a great source for that. Other sources to expand your horizon in this topic are academic researches like the ones in IEEE Xplore, Research Gate, Science Direct, World Bank Group OKR, The Learning and Technology Library and Emerald Insight to name a few.
Sources
https://www.idc.com/getdoc.jsp?containerId=prUS47534521
Presentation at 17th Annual Needham Growth Conference, January 14, 2015. GfK, NPD, iRobot data
The Internet of Things: Mapping the value beyond the hype
