Be forewarned, the Internet of Things (IoT) will be a disruptive force across many industries. Moreover, total commercial IoT revenue among 21 benchmark companies grew by 14.8 percent year-to-year in 4Q15, reaching $6.7 billion, according to the latest market study by Technology Business Research (TBR).
TBR believes North America is currently the epicenter of IoT activity due to rising interest in the efficiency benefits from commercial IoT applications among energy, manufacturing, transport, retail and healthcare vertical customers in the region.
North America represented 40.3 percent of the benchmark commercial IoT revenue and grew 14.1 percent year-to-year to $2.7 billion in 4Q15. APAC and CALA, while growing faster at 16 percent and 26.3 percent year-to-year, only represented 24.8 percent and 5.5 percent of total revenue, respectively.
Commercial IoT Market Development
"Effectively, every type of IT and operational technology (OT) vendor will have a stake in the growing market, as IoT solutions will drive increased use of diverse IT and OT products and services," said Dan Callahan, analyst at TBR.
In addition to building interest in established IT products, commercial IoT will create growth in specialized business consulting, hardware, network, development, management and security components.
TBR believes savvy vendors are pursuing early adoption to drive higher-than-average gross profit for IoT solutions in the nascent stages of market development as a result of lower competition, more custom solutions, and decreased ability to outsource due to security concerns and the complexities of early IoT.
The segments tracked by TBR include business consulting, IT services, information and communications technology (ICT) infrastructure, software, security software and services, cloud services and connectivity.
Cloud services, despite growing from a smaller base, displayed the highest overall growth rate at 79 percent year-to-year to reach $604 million in 4Q15 -- due to the evolving need for compute platforms and object storage.
Demand for IoT Big Data Analytics
Fast followers, include business consulting and security software firms, are also growing due to the widespread nature and numerous components of IoT management -- such as the confidential data that's generated from a multitude of sensors and connected devices.
IT services and ICT infrastructure, which accounted for 51.4 percent of total benchmark revenue in 4Q15, also achieved strong growth due to increasing capacity requirements associated with deploying, storing and making actionable insights with the massive amounts of data generated by IoT applications.
Demand for diverse skills benefits what TBR defines as hybrid IT vendors: those that deliver a suite of IoT components, containing hardware, software and services. But while buyers may choose hybrid IT firms based on their broad capabilities, they may seek specialized partners to tap industry-specific knowledge.