The internet of things (IoT) industry has entered a recovery phase after the “disappointment” of failing to live up to its growth promise between 2015 and 2017.
According to analyst firm Technology Business Research (TBR), larger tech players are likely to decrease their IoT businesses and investments while smaller companies will “disappear or get eaten by bigger fish” due to their non-differentiated portfolios.
However, the last one and a half years have seen “increased sanity and smarter messaging around IoT” which has led to a rise in smaller projects, which are likely to grow over time.
“Many IT and operational technology (OT) vendors were disappointed — and some incurred damage or had to scramble to realign — as the IoT opportunity failed to live up to inflated expectations prevalent between 2015 and 2017,” said analyst Daniel Callahan.
“Many anticipated far more rapid growth than was reasonable, given that IoT is neither a technology nor a market, but a technique or a class of solutions.
“We [now] believe that the pace of IoT project implementation is increasing, but that the mix has shifted to smaller projects. Over time, however, the number of active projects will grow and the amount of data they produce will also grow, leading to an accelerating growth curve.”
Better understanding of the IoT implications is helping drive this growth, according to TBR. In particular, understanding that IoT implementations are difficult in large, complex organisations with lots of stakeholders.
“Adoption is largely from the bottom up in organisations, but customer IoT champions and vendors are realising that adoption must be supported from the top down to extract maximum value from IoT,” explained Callahan.
As such, vendors are both turning to sales strategies aimed at the C-suite and turning to partners in order to tackle the “variety of interconnected systems and build best-in-class solutions”.
In addition, vendors have started to see IoT as an “evolution” of IT rather than something that is “new, novel and complex”. This has led to to it becoming “one tool in the larger IT solution toolbox” and the focus turning to solving the end problem, rather than defining the technology needed to get there.
Meanwhile, while market consolidation may hit players who are “ok at everything”, strong growth is likely to take place for companies with strong niches, such as self-service Amazon Web Services, application-focused Oracle, embedded-driver Dell Technologies and things-focused Bosch, Callahan said.
“These vendors are increasingly known for being the strongest in their chosen niches, and their narrower focuses not only make them prime targets for systems integrators to pull into solutions but also make partnerships easier, with joint go-to-market efforts proving to be a winning strategy for vendors to employ beyond their legacy customer bases,” he said.
Those who package solutions into shared applications or address common challenges will be in the best position to drive steady market growth moving forward, Callahan added.
“Each solution has its own growth curve, with some being quite rapid—but taken together, these solutions are delivering accelerating but moderate growth.”
