Services-focused partners are set to capitalise in an Internet of Things (IoT) market expected to reach $1.1 trillion by 2023, as customer momentum gathers pace.
According to IDC findings, IoT services represents the largest technology category through the next four years, after recently overtaking hardware spending. Combined, both categories account for roughly two thirds of all IoT spending at a global level.
“Services spending goes toward traditional IT and installation services as well as ongoing services such as content as a service,” an IDC report stated. “Hardware spending is dominated by module/sensor purchases.”
Meanwhile, software stands tall as the fastest growing technology category with a five-year compound annual growth rate of 15.3 per cent, with a focus on application and analytics software purchases.
“Two additional trends within the IoT software category include the dominance of vertical industry IoT platforms and the rise of cloud deployments for IoT software,” IDC added.
As reported by IDC, more than three quarters of all spending on IoT platform software - middleware that provides the device management, connectivity management, data management, visualisation, and applications enablement for connecting IoT endpoints - will go toward software packages that integrate and support devices, applications, data schemas, and standards of a single industry.
“And firms are increasingly deploying their IoT software, including applications, analytics software, and IoT platforms, to the cloud,” IDC stated.
By the end of the forecast, nearly one third of IoT software spending will go toward public cloud deployments, compared to less than 20 per cent spent on cloud deployments in 2018.
“Spending on IoT deployments continues with good momentum and is expected to be $726 billion worldwide this year,” said Carrie MacGillivray, group vice president of IoT, 5G, and Mobility at IDC.
"While organisations are investing in hardware, software, and services to support their IoT initiatives, their next challenge is finding solutions that help them to manage, process, and analyse the data being generated from all these connected things.”
Delving deeper, the three commercial industries that will spend the most on IoT solutions throughout the forecast are discrete manufacturing, process manufacturing, and transportation. Together, these three industries will account for nearly a third of worldwide spend total in 2023.
"The primary IoT use case for the two manufacturing industries will be manufacturing operations while transportation industry spending will largely go toward freight monitoring," IDC added.
Furthermore, the consumer market will be the second largest source of IoT spending in 2019, led by smart home and connected vehicle use cases.
With the fastest five-year growth rate across all industries (16.8 per cent CAGR), the consumer market is forecast to overtake discrete manufacturing to become the largest source of IoT spending by 2023.