The Internet of Things (IoT) describes a grand vision for technology, where multiple devices (equipped with sensors and computing abilities) connect and exchange data with each other and others outside of the immediate network. A well-known example is Fitbit, which allows an individual to track health data in real-time – connecting with their smartphone and cloud-based apps. The IoT has come a long way even in a few short years. Below, this latest industry report describes the market overview and trends in 2023. We also include key players, rising stars, opportunities and risks for investors to consider as they build their portfolios.
Market Overview
The global IoT market is difficult to “measure” precisely due to the sheer range of physical items which can now integrate into a cloud-based network. Yet studies valued the global market capitalisation at USD 544.38 billion in 2022. This year, in 2023, the figure rose to USD 662.21 billion and is expected to reach USD 3,352.97 billion by 2030. If achieved, this would represent a compound annual growth rate (CAGR) of 26.1%.
North America, in particular, is expected to experience remarkable growth. The IoT market was valued at nearly USD 150 billion in 2019 and is projected to reach USD 297 billion by 2028. Yet other regions are also expanding the IoT. Asia-Pacific accounts for 25% of worldwide IoT spending share and EMEA 25%.
Cisco claims that the IoT was “born” in 2008-9 when the “things/people” ratio moved from 0.08 in 2003 to 1.84 in 2010. Today, there are over 15 billion devices connected to the IoT worldwide (with the human population currently sitting at around 8 billion). The potential applications of IoT have also been expanding including security, analytics and device management.
Major Trends
The COVID-19 pandemic was an important moment in the history of the IoT. Governments sought more accurate real-time data about infection rates. Smartphone devices became instrumental in aiding healthcare officials and providers, such as the NHS Covid-19 app (withdrawn in April 2023) which sought to provide alerts about transmission risk. These innovations have sparked a new niche industry called the “Internet of Healthcare Things”, which represents a huge opportunity for investors. For instance, wearables and in-home sensors now allow more healthcare professionals to monitor the condition of patients outside of a hospital or doctor’s surgery – relieving immediate pressure on the health system.
Another interesting new IoT trend involves “digital twins” – where a real-world entity (e.g. a shop floor) is given a digital representation. For instance, a supermarket planner can watch customer footfall in real time and adjust promotions and displays to try and optimise purchases. A third trend is the regulation of data collection and processing, which are integral to the functioning of IoT devices and networks. For instance, the EU is expected to soon introduce legislation which will strictly govern how IoT devices can operate – minimising cyber breaches.
Key Players & Rising Stars
The “big tech” companies are naturally leaders in the global IoT space. Apple is a key end-to-end player with its use of iCloud, iOS (which powers the iPhone and App Store) and HomeKit which allows users to automate their home using an Apple device. Amazon Web Services (AWS), as a leading infrastructure-as-a-service (IaaS) provider, is also a serious contender. There is also Alphabet (containing Google) with its Nest smart hub as well as other technology companies such as Logitech, Alibaba, Lenovo and Dell.
The startup scheme is also offering a range of attractive IoT opportunities in 2023-24. Smarten Spaces, for instance, offers a building management system which combines artificial intelligence (AI) with the IoT to create sustainable, streamlined spaces. The business has achieved USD 12 million in Series A funding and claims to help businesses reduce space costs by up to 25%. Another interesting case study is xFarm which brings IoT to the agriculture sector, helping farmers to “digitise their farm” in less than 10 minutes so they can make more data-driven decisions about their crops, certifications and more. The company recently completed USD 20.7 billion in Series B funding.
Risks & opportunities
Perhaps the biggest risk to the ever-shifting IoT landscape is the threat of cyber attacks. More interconnected devices can bring additional points of “data interception” or breaches. Take the “smart home” as an example. An “opener” for the garage door could also include the ability to deactivate the alarm system (helping the homeowner to enter and leave in a rush). However, if a thief wants to rob the property, they may be able to do this via the garage door opening app – rather than via a direct attack on the alarm system.
To address some of these IoT risks, Web3 technologies could play a vital role. This offers “decentralised” platforms where data can be more securely managed and controlled. Moreover, AI can vastly improve detection capabilities for IoT networks and devices. Yet investors should be mindful that no IoT company or solution is invulnerable. Therefore, careful due diligence needs to be done to ensure maximum security and protection measures are in place – especially when it comes to safeguarding customer data.
Despite the risks, however, the IoT holds out great potential for future growth. Its synergy with other innovations such as edge computing and blockchain cannot be ignored, positioning the IoT as increasingly integral to industry operations as organisations strive for greater efficiencies. A fascinating area to watch, for example, is the rise of “smart cities” across the globe. Here, interconnected devices – e.g. traffic lights, road cameras and street lights – can exchange data to optimise traffic flows, environmental protection and other public services.
Invitation
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