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Worldwide IoT Services Market will Double by 2020

Given the upside potential opportunity for the Internet of Things (IoT) -- most of which is yet to be realized -- enterprise leaders are making significant investments in partnership with key technology service providers to explore new growth areas.

As a result, Everest Group forecasts that the IoT services market will more than double in the next three years, reaching $18 billion by 2020.

IoT Services Market Development

Enterprises are already exploring ways that IoT can be used to achieve higher efficiency, enable data-driven decision-making and develop new revenue opportunities through customer-centric products and services.

With enterprises and service providers considering IoT as their next big opportunity, Everest Group has identified several trends that are emerging from the current adoption pattern:
  • Eighty-seven percent of enterprises are optimistic about the returns on their investments in IoT.
  • The percentage of IoT projects moving from pilot to production has jumped four-fold from 2014 to 2016.
  • All industries are gearing up for IoT adoption; manufacturing is leading the way with 36 percent of IoT adoption.
  • Developing a strong partner ecosystem is extremely complex and requires disruptive vision.
"Enterprises are increasingly adopting IoT to improve operational efficiency and create disruptive business models," said Chirajeet Sengupta, vice president at Everest Group.

A number of players across the IoT stack are making huge investments to grab a larger share of the pie, but most fall short on expectations of a transformation partner. Savvy service providers can draw on their engineering and services expertise, by embracing engagement models to help their clients with long-term innovation.

The current use cases of IoT are dominated by the need of enterprises to drive operational efficiency. However, enterprises will likely leverage IoT to fundamentally transform their business going forward.

In fact, Everest Group has identified four distinct classifications of organization, based upon the business objectives they hope to accomplish through their IoT initiatives:
  • Engagers represent 17 percent of IoT adopters; these enterprises drive IoT adoption largely for customer engagement and creation of experiences.
  • Optimizers (63 percent) adopt IoT mainly to solve operational issues and improve internal efficiencies.
  • For Integrators (14 percent), the objective of IoT adoption is growth for the entire enterprise ecosystem.
  • IoT adoption by Innovators (6 percent) results in transformative disruption and otherwise unthinkable business models.
"Enterprise organizations should adopt IoT across all categories, which will lead to new revenue streams and adoption of new business models," added Sengupta.

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