Skip to main content

IoT Packaged Solutions and Services Market Momentum

Nearly all segments of the Internet of Things (IoT) market recorded double-digit growth in the fourth quarter of 2016 (4Q16), driving an overall 19.3 percent year-to-year revenue gain to $8.2 billion, according to the latest study by Technology Business Research (TBR).

This market is still evolving. "We expect growth to continue apace as more customers undertake implementations due to the emergence of packaged use cases, standards are adopted and pricing models become more rationalized," said Daniel Callahan, analyst at TBR.

Cloud services was the fastest-growing segment, at 63.5 percent year-to-year as customers increasingly adopted centralized analytics, storage and other intensive computing applications -- such as artificial intelligence (AI) and machine learning.

IoT Solution and Services Market Development

However, despite its growing popularity and market mind-share, cloud services accounted for only a small portion of the total. Software remains a giant part of the IoT market and a sizable portion of the IT vendor's revenue.

According to the TBR assessment, this is due to a large number of legacy implementations and the reality that many customers have not signed on to the costly data transport and compute power necessary when starting on the cloud, focusing on edge instead. In most cases, customers are beginning with experimental implementations on the edge, leveraging software and only moving to the cloud when the ROI is proven.

The experimentation on the edge and the necessity of Hybrid IoT -- the combination of edge and centralized cloud capabilities -- are also delivering ICT infrastructure a more permanent position in the IoT stack, rather than it being a victim of cloud-based IaaS. The ICT infrastructure segment grew 6.6 percent year-to-year in 4Q16 to 10.3 percent of total revenue.

IT services grew 13.5 percent year-to-year in 4Q16 and remains a crucial component of the IoT market due to the necessity of build, run and training services in IoT. However, TBR noted that IT services revenue growth decelerated from 15.2 percent year-to-year in 2Q16.


TBR believes IT services will increasingly be the victim as more prepackaged, low configuration IoT solutions emerge and as AI takes over much of the run aspect.

That said, business consulting grew 28.6 percent year-to-year. TBR reports that business consulting will be less impacted by standardization, prepackaged solutions and AI due to the complex knowledge and creativity necessary to guide transformation.

The security and connectivity segments, necessary aspects of an IoT solution, grew 28.2 percent and 16 percent year-to-year, respectively. Both of these segment's revenues scale extremely close to IoT adoption -- as more devices and sensors are deployed by customers the more security and connectivity are required.

Based upon revenue, the top three vendors were IBM, Microsoft and Cisco. These vendors, which registered nearly $2.4 billion combined, led the market for numerous reasons, including:

  • They are market leaders in defining and acting on an IoT go-to-market strategy and did not hesitate on investing in M&A activity to build advanced capabilities, including in AI, machine learning, platform infrastructure and vertical expertise.
  • Each chooses to brand themselves as, or act as through partnerships, a full-service or multi-line vendor. This simplifies customer interaction, an extremely important tenet in IoT, and increases the ability for the vendors to cross-pollinate.
  • All three have a deep-rooted presence in the enterprise, large legacy customer bases and brand awareness for market-leading technology. All have wide partner networks.

Popular posts from this blog

Digital Transformation Spending Reaches $1.8 Trillion

Ongoing investment in business technology will remain on track, despite concerns about the global economic outlook which continues to evolve in 2022. Enterprise CIOs and CTOs are focused on operational profitability and digital business growth goals that are enabled by strategic IT initiatives. Global spending on the Digital Transformation (DX) of business practices, products, and organizations is forecast to reach $1.8 trillion in 2022 -- that's an increase of 17.6 percent over 2021, according to the latest market study by International Data Corporation (IDC). Many anticipated DX investments will sustain this pace of growth throughout the 2021-2025 forecast period, with a five-year compound annual growth rate (CAGR) of 16.6 percent. Digital Transformation Global Market Development "IDC expects to see aggressive DX technology investment growth in 2022 following a minor slowdown during the pandemic period," said Craig Simpson, senior research manager at IDC . "As orga

Why Cloud-Native is The Future of IT Spending

The leading organizations that create a digital transformation plan will gain the most from their use of public cloud computing. However, some CIO and CTO leaders still struggle with how to build a modern cloud migration strategy. The worldwide cloud computing Infrastructure as a Service (IaaS) market grew 41.4 percent in 2021, to a total of $90.9 billion -- that's up from $64.3 billion in 2020, according to the latest market study by Gartner. "The IaaS market continues to grow unabated as cloud-native becomes the primary architecture for modern workloads," said Sid Nag, vice president and analyst at Gartner . Cloud IaaS Market Development Cloud supports the scalability and composability that advanced technologies and applications require, while also enabling enterprise leaders to address emerging needs such as sovereignty, data integration, and enhanced customer experience. In 2021, the top five IaaS providers accounted for over 80 percent of the market. Amazon AWS conti

Energy Sector IoT Cybersecurity Gains Momentum

The electric distribution industry continues to invest in digital transformation projects. Advanced Metering Infrastructure (AMI) technology is becoming a driver for connected electricity meters, which will reach an installed base of 1.3 billion by 2027. AMI growth is prompting utilities and energy suppliers to revisit their IT infrastructure security and device management operations, according to the latest worldwide market study by ABI Research. Energy Infrastructure Security Market Development Digitization of traditional electricity grids and the modernization of the aging energy infrastructure is among the top concerns for utility operators and governments worldwide. Security for last-mile energy consumption applications was frequently overlooked. "However, the introduction of AMI, smart metering, and grid digitization is steadily increasing spending for secure management services, assisting implementers to transition to IT (information technologies) and OT (operational techno