What Is the Growth Rate of IoT Markets?

Worldgrowth

By: R. Scott Raynovich

Justifying the hype about IoT markets.

There has been a huge amount of hype about the potential growth rate of the Internet of Things (IoT) and Industrial IoT (IIoT) markets. Can it all be justified? There is a lot of credible analysis showing that these markets will create trillions of dollars in value. 

To a certain extent, the hype is justified, as the IoT is already having a multibillion-dollar effect on how businesses are run -- and businesses are certainly investing billions. The direct return on investment (ROI) will be proven by how connectivity to more "things" will deliver more efficient business operations or increased client value. The potential to have a profound impact on many industrial segments, ranging from healthcare to retail, will no doubt yield efficiencies with potentially trillions of dollars in economic gains.

Impact of IoT

Why would the impact be that large? Looking at it by industry, if the IIoT has the potential to improve efficiency by just a few percentage points, it could reach trillions of dollars in impact. For example, in manufacturing, the NAPM estimates that for every $1.00 spent in manufacturing, another $1.81 is added to the economy. In the most recent data, manufacturers contributed about $2 trillion to the U.S. economy alone, according to the National Association of Manufacturers. Just a 2 percent improvement in efficiency would yield $240 billion in benefit. 

There have been many studies of IoT and IIoT predicting large economic impacts. For example, McKinsey, in a bottom-up analysis, concluded that the IoT in total has a potential economic impact of $3.9 trillion to $11.1 trillion a year by 2025. That would represent up to 11 percent of the world economy. The highest of these gains will likely occur in factories, says McKinsey, accounting for $1.2 trillion to $3.7 trillion in value accrued

The next largest gainers, according to McKinsey, include cities (smart city efforts) at $900 billion to $1.7 trillion, healthcare and healthcare monitoring at $200 billion to $1.6 trillion, retail at $400 billion to $1.2 trillion, and outdoor vehicle logistics and navigation at $600 billion to $900 billion.

Market Estimates for IoT and IIoT

Here is a collection of some other market size estimates for IoT and IIoT:

  • Industrial data is growing twice as fast as any other sector, according to Cisco Systems. Less than 3 percent of that data is tagged or used in any meaningful fashion, according to Cisco. Cisco predicts the global IoT market will be $14.4 trillion by 2022.
  • Cisco Consulting Services finds that there is a combined total of $19 trillion in IoT value at stake in the private ($14.4 trillion) and public ($4.6 trillion) sectors.
  • Investment in the IIOT is expected to top $60 trillion during the next 15 years, according to GE. And by 2020, more than 50 billion assets will connect to the Internet.
  • IoT-related value-added services are forecast to grow from $50 billion in 2012 to $120 billion in 2018, attaining a 15.71 percent CAGR in the forecast period, according to ABI research and Woodside Capital Partners. 

For a more detailed analysis of the IIoT market, purchase our Ultimate Industrial Internet of Things (IIoT) Report, which covers a wide range of communications and cloud technologies that are being applied to businesses around the world to provide connectivity, analysis, automation, and optimization of a range of industrial applications (50 Pages).