In June 2014, International Data Corporation forecasted that the market for the Internet of Things would reach an astounding $7.1 trillion six years from now. Even though the research firm has made a downward adjustment to its earlier $8.9 trillion estimate, it is still a big number. It begs the question of whether IDC gave out an accurate forecast, or if it was simply trying to drum up interest and support for the IoT after including it in its third platform, putting it in the same league as social media, mobile computing, big data and cloud computing.
Is the $7.1 trillion estimate possible? Or is it an overblown estimate that the IDC made?
The thing with the Internet of Things is that these devices are touted as having a low footprint, which translates to low cost and low power. And this is where the perceived incongruence lies. A lot of experts and industry observers are announcing different numbers for the Internet of Things market.
Sheer volume
One way to explain the exorbitant optimism when it comes to the Internet of Things is the expected explosion in the number of devices that would be connected to the Internet. Gartner announced that the year 2009 saw 2.5 billion connected devices in the market. That number is expected to rise to at least 30 billion connected devices. A good majority of these devices are not even available today. The growth in the number of connected devices and IoT will begin to grow faster than traditional IT industries in 2017, or in two to three years’ time.
But even with at least 30 billion devices, does it justify the projected $7.1 trillion in yearly sales that was forecasted by IDC?
The answer is yes, because a single embedded device contains different components, and includes the thing itself, the infrastructures used, connectivity services and the other elements in an Internet of Things device. In fact, the IDC lists the following components of the IoT market:
- Professional and security services
- Applications
- Social business and analytics
- Platforms for apps, services and devices
- Connectivity
- Intelligent devices and systems
Where are we now?
To further appreciate how accurate these shocking numbers can be, let us take a look at what we do know. IDC estimates that at the year-end of 2013, there were 9.1 billion Internet of Things devices installed around the world. The company expects that the installed base for Internet of Things would grow at a rate of 17.5% CAGR per year, topping 28.1 billion units in 2020.
From a revenue standpoint, 2013 saw close to $2.0 trillion in sales. IDC expects that sales in three years would reach $3.8 trillion, and then $5.6 trillion in 2019.
Looking at it this way, $7.1 trillion six years from now is not such a shocker.
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