The progressive American companies have adopted the notion that there's real value in connecting their Things to the public Internet. International Data Corporation (IDC) forecasts that U.S. firms will invest more than $232 billion in the Internet of Things (IoT) hardware, software and services market in 2016.
Furthermore, IDC expects IoT revenues in the U.S. market will experience a compound annual growth rate (CAGR) of 16.1 percent over the 2015-2019 forecast period -- eventually reaching more than $357 billion in 2019.
According to the IDC assessment, the industries leading the way in U.S. IoT investments are Manufacturing and Transportation at $35.5 billion and $24.9 billion, respectively, in 2016.
U.S. IOT Market Development Momentum
However, cross-industry investment -- which represents use cases that are common to all industries -- will approach $31 billion this year. The IoT use cases receiving the greatest levels of investment from U.S. organizations across these three industry segments are:
Manufacturing Operations, which supports digitally-executed manufacturing, or how manufacturers use intelligent and interconnected I/O (input output) tools to enable the different components in the manufacturing field -- such as machine tools, robots, conveyor belts -- to autonomously exchange information, trigger actions and control each other independently.
Freight Monitoring, which uses radio frequency identification (RFID), global positioning system (GPS), GPRS, and GIS technologies to create an intelligent, Internet-connected transportation system. This system carries out the intelligent recognition, location, tracking and monitoring of freight and cargo through exchanging information and real-time communications via terrestrial wireless or satellite communication channels.
Smart Buildings, which utilize advanced automation and integration to measure, monitor, control, and optimize building operations and maintenance. The key concept is optimization – meaning the deployment of a set of integrated control systems capable of adapting in real time to both internal policies and external signals. These systems manage how building equipment operates to use energy in the most efficient and cost-effective way.
Looking across all U.S. industries, these three IoT use cases will receive the greatest levels of investment throughout the forecast period. And, the next three largest IoT use cases in terms of U.S. revenue will be Remote Health Management, Smart Grid (Electricity), and Smart Home.
Upside Opportunities for Exponential Growth
The IoT use cases that will experience the greatest revenue growth in the U.S. over the 2015-2019 forecast period are In-Store Contextualized Marketing, Connected Vehicles, and Insurance Telematics.
"A use case represents a detailed composition of a technology investment that is made to produce a set of end user benefits," said Marcus Torchia, research manager at IDC.
The long term opportunity for IoT vendors is helping to identify and create immediate and residual benefits for end users through their technologies. IDC analysts believe that there are already significant opportunities across many industries.
For example, in highly instrumented industries like manufacturing and transportation, large data sets are used to optimize operational processes and extend the life of high cost assets. In other sectors, such as healthcare and consumer, IoT technology is being used to produce benefits that improve quality of everyday life.
While Manufacturing and Transportation will lead the U.S. in terms of overall IoT investments, the Insurance, Retail, and Healthcare industries will see IoT spending levels increasing by 135 percent, 101 percent, and 96 percent, respectively, over the forecast period. In addition to driving some of the largest IoT investments, the Cross Industry segment will also see revenue growth of more than 100 percent through 2019.