Business Strategy – the Massive Market for the Internet of Things

 The Internet of Things (IoT) is a hot trend for 2018. The IoT represents the next step forward for many IT and software applications, and opens up many new commercial opportunities.

The sheer size of the IoT market is extraordinary, with around 25 million devices predicted to be connected in the next 5-10 years. The number of connected devices already exceeds the world’s population of around 7-8 billion people, with devices such as street lights, smart meters, alarms, and access systems at the top of the connected list.

The concept of the IoT implies an exchange of data between all of these devices, all communicating in a co-ordinated and intelligent way. This suggests a city of the future where you could arrive in town in the late evening, the street lights would illuminate when they sense your car approaching, an on-board navigation device system would guide you to a free parking space, and traffic lights would remain green until a pedestrian arrives to cross the road, triggering a red light. Your insurance company would know your driving style and average speeds from an on-board device inside the vehicle, and your personal fitness device could monitor your body parameters and alert you when it is time to take a rest.

In reality, this may not materialise for some time. The illustration I gave would require different service providers to co-operate much more than they do now, and share valuable data. There are plenty of commercial factors in the way of building such intelligent environments. Security is the top concern, as hackers could play havoc with the automated systems, and slow investment and scarcity of skills are also likely to be limiting factors.

Because of these obstacles, the IoT is likely to comprise many individual systems built around certain applications, where there will be a limited amount of data sharing and co-operation between parties. More realistic instances of the IoT will be in a series of ‘walled gardens’.

The IoT will grow in the form of discrete, maybe interconnected systems where there is a business or lifestyle benefit to be derived from connecting large numbers of devices. This IoT scenario will mean every IP address is connected to one network, where people can access any data they choose on the network.

At the moment, the impetus for the IoT is coming partly from network providers and the bodies building new low powered WANs – lower cost networks which will help to make future business applications more viable. Telecoms carriers are keen to promote the IoT, which will increase their usage base. Other parties, such as energy companies, see the IoT as a genuine opportunity to improve efficiency and achieve better sustainability.

So far, the IoT is gaining ground in markets where it has the potential to transform them. The key markets are monitoring applications that collect data such as wearable technology, the transport and automotive sector, municipal authorities working with infrastructure and building automation, and the smart homes sector. These areas are attractive business applications where one organisation can build a system that brings benefits straight away, without co-operating with other parties.

We are still near the start of the IoT trend, but it’s expected to grow at low cost and new wide area networks will provide more choices of connectivity. New smart software solutions will further connect the IoT together to bring greater convenience, efficiency, and safety.

While the IoT will eventually become a mainstream part of IT, 2018 is likely to see IT and technology vendors positioning themselves to capture shares of this market, and some of the early IoT pioneers will be bought by bigger players.

Anna Wood has an MBA from Warwick Business School and works as an independent PR and Marketing consultant in technology markets. Please see for details