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

Demand for Quantum Computing as a Service

The enterprise demand for quantum computing is still in its early stages, growing slowly. As the technology becomes more usable, we may see demand evolve beyond scientific applications. The global quantum computing market is forecast to grow from $1.1 billion in 2022 to $7.6 billion in 2027, according to the latest worldwide market study by International Data Corporation (IDC). That's a five-year compound annual growth rate (CAGR) of 48.1 percent. The forecast includes base Quantum Computing as a Service, as well as enabling and adjacent Quantum Computing as a Service. However, this updated forecast is considerably lower than IDC's previous quantum computing forecast, which was published in 2021, due to lower demand globally. Quantum Computing Market Development In the interim, customer spend for quantum computing has been negatively impacted by several factors, including: slower than expected advances in quantum hardware development, which have delayed potential return on inve

AI Semiconductor Revenue will Reach $119.4B

The Chief Information Officer (CIO) and/or the Chief Technology Officer (CTO) will guide Generative AI initiatives within the large enterprise C-Suite. They may already have the technical expertise and experience to understand the capabilities and limitations of Gen AI. They also have the authority and budget to make the necessary investments in infrastructure and talent to support Gen AI initiatives. Enterprise AI infrastructure is proven to be expensive to build, operate and maintain. That's why public cloud service provider solutions are often used for new AI use cases. AI Semiconductor Market Development Semiconductors designed to execute Artificial Intelligence (AI) workloads will represent a $53.4 billion revenue opportunity for the global semiconductor industry in 2023, an increase of 20.9 percent from 2022, according to the latest worldwide market study by Gartner. "The developments in generative AI and the increasing use of a wide range AI-based applications in data c

Industrial Cloud Computing Apps Gain Momentum

In the manufacturing industry, cloud computing can help leaders improve their production efficiency by providing them with real-time data about their operations. This has gained the attention of the C-suite. Total forecast Industrial Cloud platform revenue in manufacturing will surpass $300 billion by 2033 with a CAGR of 22.57 percent, driven by solution providers enhancing platform interoperability while expanding partner ecosystems for application development. ABI Research found the cloud computing manufacturing market will grow over the next decade due to the adoption of new architectural frameworks that enhance data extraction and interoperability for manufacturers looking to maximize utility from their data. Industrial Cloud Computing Market Development "Historically, manufacturers have built out their infrastructure to include expensive data housing in the form of on-premises servers. The large initial upfront cost of purchasing, setting up, and maintaining these servers is