Getting a handle on the size of the industrial IoT market is a challenge, mainly because more and more participants arrive on the scene daily – and defining what’s connected and what’s to be connected is a challenge.
Issac Brown, IoT analyst at Boston-based Lux Research, says while “estimating the potential market size of the IIoT is an effort that many have undertaken,” the issue is in defining that market first.
According to research firm MarketsandMarkets – in a January 2016 report on IIoT – they pegged the market’s value as reaching $151 billion by 2020
Lux’s Brown says while they just released a new report on the market – and it doesn’t guess at the ultimate size – he points out that figure is not thinking big enough. Add some zeros.
The challenge in wrapping your head around this market
“One thing is for certain – it’s huge,” he says, adding that the reason that coming up with a final number can be a “silly thing” to try to do is because it is so loosely defined and difficult to model without a lot of guesswork.
“Let’s start with the sensors,” he says as an example. “In a recent report, we tallied all the predictions of global sensors to be deployed, and the predictions vary wildly – as do definitions of what a sensor.”
It gets cloudier from there, he says, pointing out the impact on data plans alone.
“We’ve got the industrial edge devices and the gateways. Then we’ve got the data plans, which will be huge since they will be streaming manufacturing sensor data, utilities distribution data, vehicle telematics data, farm data, and all sorts of other industrial information,” he says. “The combo of cellular, satellite, LPWAN, and regular old Internet data plans will likely be in the hundreds of billions of dollars per year globally.”
Then there’s the cloud and the maze of IoT platforms.
“Next, we’ve got cloud storage for the industrial data, which will be a huge market in its own right,” Brown says. “Then we have the mess known as the ‘IoT Platforms’ – hundreds of startups, dozens of major tech incumbents, and every company in between has released an IoT platform of one shape or form.”
On top of that are all the analytics, integrators and aftermarket participants.
“Then we’ve got hundreds of pure-play analytics and operational intelligence platforms,” he says, adding in the “value-added resellers and systems integrators each grabbing their slice of the pie.”
Finally, he says, there are those bringing all this together.
“There will be thousands of industrial providers – both OEMs and services organizations – bundling all of the products and services mentioned above into their own offerings, and reselling them as part of a bundled product or service, adding an additional incremental value and fees.”
Add it all up and it dwarfs MarketsandMarkets number above.
“You get something that will certainly be in the trillions of dollars,” he says. “Needless to say, it’s big enough.”
Lux tries to get its arms around this massive market by breaking it down into “distinct environments” – equipment, environments, goods and people.
And when pressed to peg a size on those pockets, Brown says even that’s tough. “Since you asked for percentages, I will give you my gut feel for the next 5 years – we haven’t modelled this specifically” but he says equipment will be 35% of the market; environments, 30%; goods, 20%; and people, 15%.
Part of the issue is these categories are not entirely discrete. He pointed to a typical a Fedex truck – it includes all four. “You can connect and monitor the engine (as equipment), the cargo environment (as environment), the cargo itself (as goods), and the driver (as people).”
“I would say connecting equipment and environments are the top two,” he says. “There is a huge push to connect legacy equipment and new equipment to the Internet for a slew of operational performance improvements – a lot of the action right now is focused on these applications.
He points out that monitoring industrial and commercial environments for improvements in resource consumption isn’t new. “In fact, it’s one of the most developed pieces of the industrial IoT.”
He adds that connecting goods – either in transport or in storage – is becoming a bigger area of focus with a lot of action on fleet management and warehouse management solutions.
As well, in the consumer and healthcare realms, connecting people to the internet is “certainly a big deal” he says. But he adds that while this is indeed a focus in IIoT, “I would say that it’s probably one of the smaller fractions in the near-term.”
“Early pilots are underway for augmented reality wearables, and worker health and safety wearables are increasing,” he adds.
Investors are stepping up
As for investor cash flows, Brown says he sees IIoT investor flows today favoring “pure-play horizontal ‘IoT platforms’ – like Electric Imp – and ‘IoT analytics’ – like mnubo,” he says. “These companies are winning institutional VC money with broadly-applicable – and in my opinion, less valuable – solutions.
He adds that companies that solve more specific problems associated with industrial “pain points” are winning money from corporate VCs. He points out Sigfox as an example, a firm that “has developed a low-power wide-area network technology which is much better suited for sensors and M2M than traditional cellular networks, hence multiple mobile network operator venture groups have invested.”
But he adds it’s still a potential land rush out there. “There is a ton of action both from institutional VCs and corporate VCs across the space and no hard rules,” he says.