As the Internet of things (IoT) market starts to coalesce in both concept and solution offering, vendors should take the next step and look at the IT opportunity in a more realistic and valuable framework, according to a report from IT research firm IDC.
The firm defines the Internet of things concept as a wired or wireless network connecting devices, or "things," that is characterized by autonomous provisioning, management and monitoring.
The report expects the technology and services revenue to expand from $4.8 trillion in 2012 to $7.3 trillion by 2017 at an 8.8 percent compound annual growth rate (CAGR), with the greatest opportunity initially in the consumer, discrete manufacturing and government vertical industries.
The report segments the IoT market and provides a forecast that illustrates which vertical industries show the greatest market opportunity over the next several years.
The market and forecast is based on internal IDC models, analysis and survey information, which was used to create segmentation models around the 18 vertical markets that IDC tracks.
"The Internet of things market must be understood in terms of vertical markets because the value of IoT is based on individual use cases across all markets," Scott Tiazkun, senior research analyst for IDC's Global Technology and industry research organization, said in a statement. "Successful sales and marketing efforts by vendors will be based on understanding the most lucrative verticals that offer current growth and future potential and then creating solutions for specific use cases that address industry-specific business processes."
While the IoT and machine to machine (M2M) market is growing quickly, the report noted the development of this market will not be consistent across all vertical markets. Industries that already "understand" IoT will see the most immediate growth, such as industrial production and automotive, transportation, and energy and utilities sectors.
"The IoT market will greatly impact and offer the potential for vertical-aligned businesses to improve both performance and profitability," Tiazkun continued. "The IoT solutions space will expand exponentially and will offer every business endless IoT-focused solutions. The initial strategy of businesses should be to avoid choosing IoT-based solutions that will solve only immediate concerns and lack 'staying power.'"
While horizontal-focused IT vendors will look to offer IoT solutions that appeal to many industries, there will also be impetus to offer vertical-focused solutions that make IoT tangible for both industries applications (M2M) and consumer needs, the report said.
The vertical opportunity that arises from IoT is already in play, but only if the need for vertical expertise is recognized and offered. Realizing the existence of vertical opportunity is the first step to understanding the impact—and therefore market opportunity that exists—for IT vendors.