ChannelLife NZ - The $3T opportunity that isn’t: IoT opportunity ‘dramatically over-inflated’

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The $3T opportunity that isn’t: IoT opportunity ‘dramatically over-inflated’

Suggestions that the internet of things presents a $3 trillion market opportunity are unrealistic and ‘dramatically’ over-inflated according to Strategy Analytics, which says the market is more likely to be around $0.3 trillion by 2025.

A report from the advisory services and consulting company, which surveyed IT decision makers across the United States, United Kingdom, France and Germany earlier this year, concludes that IoT deployments remain limited and largely in trial or development phases, and pours cold water on the $3 trillion figure sometimes touted, pointing out that global IT spend in 2015 was US$3.3 trillion.

“Can IoT really be bigger than the entire IT industry?,” questions Harvey Cohen, Strategy Analytics president.

He says estimates that put the IoT market value at US$3 trillion or more ‘have a credibility problem’.

“The economic value potential of IoT is indeed huge, but the opportunity for suppliers of products and services is likely to be measured in US$ billions, not trillions.”

Instead, Strategy Analytics has put the figure at $0.3 billion, or 7% of all IT spend, by 2025. Of that, the company says services will continue to be the biggest revenue opportunity, accounting for 64% of spend, or US$219 billion, by 2025.

“The opportunity for professional services from vendors like IBM, HP, Cisco, SAP, Microsoft as well as Accenture, Cap Gemini and others is significant, but competition is intense,” Strategy Analytics says.

Cohen says despite the competition, professional services is attractive for firms who are seeing enterprise software sales stagnating.

The report says more than 70% of current IoT deployments in the United States, for example, involve less than 500 devices, and two-thirds of companies spent less than $100,000 on IoT projects. Globally, 35% of firms with IoT deployments had less than 100 devices connected.

“Claims that the IoT market has progressed from experimental to mainstream are just not supported by Strategy Analytics voice of the buyer data yet,” says David Kerr, a vice president at Strategy Analytics.

“IoT must compete for a share of the total IT budget; businesses and public entities move slowly and are not easily convinced by vague claims of future economic benefit,” Kerr says.

The company says there are still ‘many’ roadblocks to IoT, including security, integration with legacy systems, the proliferation of standards, privacy concerns, compliance issues and the skill sets needed to extract value from the huge volume of data produced.

Andrew Brown, Strategy Analytics IoT executive director, says no one vendor or supplier has all the skills to deliver, support and maintain highly complex IoT solutions.

“Partnerships and alliances will be critical,” Brown says.

“While the opening moves have been taken we are still early in the dance. None of the barriers are insurmountable with the right partnerships, the appropriate understanding of business motivations and requirements, and an ability to provide consistent support across hardware, software and services.”

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