Vodafone’s latest Internet of Things (IoT) Barometer continues to show steady increases of IoT adoption – 29% have adopted an IoT solution in the 2017 edition, compared to 12% in 2013. Enterprises are seeing the benefits from their IoT solutions: the Barometer shows that 95% of organisations with IoT solutions are seeing tangible benefits, while 53% are generating a ‘significant’ return from IoT.
Turned on its head though, this still means that the majority of organisations in the Vodafone IoT Barometer 17/18, 70% of which employed at least 250 people and so were relatively large, do not even have early stage solutions yet. As with most other observers, at Analysys Mason we believe that IoT will impact most if not all areas of the economy. This suggests that IoT is still at an early stage and there is much more growth to come.
So far, awareness of the benefits of IoT is not widespread – after all, companies that are using IoT successfully have little incentive to alert competitors to its impact on revenue or cost. Over time, though, we expect awareness to increase, helping to drive adoption.
We expect IoT to become so common that it will go unnoticed
It is likely that many firms will not adopt something that is explicitly described as IoT. Instead, they will buy products and services – such as a smart retail solution, or a smart manufacturing solution – in which IoT is an inherent element. Many innovative new products are connected by default and are not thought of as IoT.
An analogy can be made with artificial intelligence (AI). Most people probably do not think they are using AI, but almost everyone with a smartphone is using some form of AI, even if it is something as simple as automatically tagging and organising photos. Similarly, IoT may ‘disappear’ over time.
Growth in adoption will be uneven
While we expect significant growth to come, we do not expect it to be evenly distributed. From our own research, we have seen that adoption of IoT in smaller businesses is lagging larger ones.1 Small firms have fewer projects of any type, and fewer resources for new projects; they will want IoT solutions that are easy to adopt, and that have certain returns. As the Barometer shows, evidence for this is accumulating rapidly.
Regional differences are also likely to exist. The Barometer shows that 36% of companies is Asia-Pacific have adopted IoT, compared to 27% in the Americas and 26% in Europe. Within these broad regions significant differences are likely to exist. We believe that certain countries, such as the USA and Sweden, are in advance of others in their region. In Asia, China will be especially interesting to watch; while adoption may current lag the most advanced countries, we expect it to close the gap rapidly, helped by strong government interest. Conversely, Japan, so advanced in many technologies, may be behind in IoT.2
IoT will be used in new ways
As well as increased usage, we will see IoT being used in different ways. Fleet management and logistics are an example of this. IoT technology was adopted early by this sector, as the business case was relatively easy to prove and payback was rapid.3 However, so far, IoT has mostly involved tracking the vehicle, but not the item being transported.
This may change. For example, we see companies experimenting with adding connectivity to pallets, enabling much more accurate tracking of individual items. This can include the location of a pallet within a warehouse, and its exact physical condition, such as temperature, humidity, vibration and so on.
Lower-cost connectivity will open up new use cases
We are still at the very early stages of using the lower-cost connectivity provided by low power wide-area networks (LPWANs), using technologies such as Narrowband IoT (NB-IoT) and LoRa. Analysys Mason is forecasting up to 3.5 billion connections on LPWANs by 2025, but we are still far from that figure today – there are probably fewer than 100 million connections globally. The market is growing, but it has a long way to go.
The LPWAN ecosystem is also maturing rapidly; new types of hardware are being created, developers are gaining experience in the technology and dominant network technologies are emerging. Pricing is another areas of rapid change – providers are experimenting with different options and the new business models that LPWAN can support. All of these areas are changing rapidly, and there are encouraging signs.
We are excited to see the new types of application being created using LPWAN technology. Applications like smart metering have been widely promoted, but we are also seeing developers explore innovation in areas like retail, building monitoring and consumer electronics.
IoT will throw up surprises
As IoT matures, we would expect the value chain of IoT solutions to break down into its component parts, much as a PC can be built using standardised commodity parts. This will make it simpler, faster and cheaper to build IoT products. We also think many of the battles we are seeing between competing standards will be resolved. For example, for LPWAN there will probably be just one or two main standards in use.
Partly in consequence of this, we would expect adoption of IoT solutions to be much more widespread than the current 29% in the Vodafone IoT Barometer 17/18 – the vast majority of large enterprises will have adopted connected solutions, whether they are referred to as IoT or not.
In terms of the applications and use cases, while we can anticipate many of them, we think we are also in for a number of surprises – ideas that we cannot imagine now but will seem obvious when they happen. We have seen this in communications – from SMS to Snapchat. No one could foresee the impact that smart phones would have on food delivery or on taxis, enabling companies like Deliveroo and Uber. As IoT becomes more mass-market, we may see equally unexpected developments.
1 http://www.analysysmason.com/Research/Content/Comments/IoT-enterprise-adoption-RDME0/ ↩ 2 https://www.ft.com/content/7e574d8e-96c9-11e7-8c5c-c8d8fa6961bb ↩ 3 We suspect the 27% adoption figure in Vodafone’s Barometer underestimates adoption levels in this sector (possibly because the technology is so widely used that it is no long thought of as IoT). ↩
Vodafone IoT Barometer 2017/18
Whether you’re an established user or just starting on your journey, the Vodafone IoT Barometer 2017/18 is an essential guide to what’s happening in your sector, and where it’s headed.