Vertical markets including smart meters, connected cars and connected health are set to drive spending on Internet of Things (IoT) services between now and 2017, according to new research from IDC.
The market-research company says IoT players need to look at the opportunity in a more realistic way, and develop and understanding of the specific vertical sectors that have the greatest use for M2M services and applications.
“The Internet of Things market must be understood in terms of vertical markets because the value of IoT is based on individual use cases across all markets,” said Scott Tiazkun, senior research analyst with IDC. “Successful sales and marketing efforts by vendors will be based on understanding the most lucrative verticals that offer current growth and future potential and then creating solutions for specific use cases that address industry-specific business processes.”
IDC says that while the vertical opportunity arising from IoT is already in play companies need to develop vertical market expertise to make the most of it.
IDC expects technology and services revenue from IoT to increase from $4.8 trillion in 2012 to $7.3 trillion by 2017 at a compound annual growth rate of 8.8%, with the biggest initial opportunity in the consumer, discrete manufacturing and government vertical industries.
The company also says that while the IoT market is growing quickly its development will vary according to the vertical market in question, with industries that already “understand” IoT growing fastest.
Although many IoT components are “horizontal” in nature, vendors will have to distinguish themselves on the vertical components to address industry-specific IoT needs.
“The IoT market will greatly impact and offer the potential for vertical-aligned businesses to improve both performance and profitability,” said Tiazkun. “The IoT solutions space will expand exponentially and will offer every business endless IoT-focused solutions.”
“The initial strategy of businesses should be to avoid choosing IoT-based solutions that will solve only immediate concerns and lack ‘staying power’,” he added.