IIoT market size – finding out ‘who pays whom for what’

by Alan Griffiths
@cambashi_alan
LinkedIn

Although there is a lot of hype around the Internet of Things (IoT), a significant market will grow in this area, of importance to most ‘industrial’ consumers and software providers.

Current IoT market size estimates

Estimates of the total market size are enormous and vary wildly.  For example,

These figures are both from reputable research companies, so the likelihood is that they are ‘measuring different things’.  The IoT is so varied and complex that tight definitions are needed in order to measure and compare revenues. In short, we need to know ‘who pays whom for what?

To estimate this in detail, we need to know:

  • how the market works;
  • the segmentation that the market participants recognise.

Definitions and segmentation

The ‘industrial’ application of the IoT is variously known as the ‘Industrial Internet of Things’ (IIoT) or the ‘Enterprise of Things’ (EoT). The definitions and distinctions are not clear, so Cambashi’s research in this area will clarify and agree the most appropriate terminology.

For now, we will use the term Industrial IoT or IIoT.

The IIoT marketplace includes ‘platforms’ at the highest level, and niche products at lower levels.  There is some segmentation, and the major ‘platform’ providers are beginning to emerge, but market consensus on price points and expected functionality is not yet clear.  Although much of the underlying technology has been around for many years, the IIoT software market is still in its early stages. We believe there will be further consolidation at the higher ‘platform’ levels, and proliferation of products at the lower ‘niche’ levels.

The old rule ‘get big, get niche or get out’ will apply.

Some reports have been published that attempt to designate categories and assign providers to them.  For example:

‘The ‘New Technology Stack’; Harvard Business Review

‘How Smart, Connected Products Are Transforming Competition’

The ‘New Technology Stack’ includes: modified hardware with embedded systems; network communications for connectivity; a ‘product cloud’ (software running on the manufacturer’s or a third-party server) containing the product-data database; a platform for building software applications; a rules engine and analytics platform; and smart product applications not embedded in the product.

Identity and security applies to all layers and there should be a gateway for accessing external data, and tools that connect the data from ‘things’ to enterprise business systems (for example, ERP and CRM).

See the full report at: https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition

‘The Industrial Internet Reference Architecture’

This shows the three-tier architecture – edge, platform and enterprise tiers, connected by three networks. See the full report at: http://www.iiconsortium.org/IIRA.htm

Cambashi’s own reference architecture

This focuses on the 6 layers of function in a smart connected product:

6-layer-iot-architecture
Figure 1: Cambashi’s 6-layer reference architecture for smart connected products

Business and Market Planning – Cambashi’s IIoT Report and Observatory

Models and diagrams such as these provide useful references, and there is some good-quality research. But robust business and market planning information (such as available market, categorisation and growth) remains sparse.  Now is the time to develop a clear consensus on the overall IIoT Framework structure and the Terminology, and to produce reliable market size/growth estimates.

Cambashi is preparing a report on the IIoT Market’s Structure and Direction, and will subsequently develop an on-line IIoT Training module and an ‘IIoT Market Observatory’ to show market size and projections.

To this end, we have interviewed many subject expert(s) from a selection of key ‘platform’ and ‘niche’ providers, to discuss:

 

  • Their understanding of the IIoT Framework and where their current product(s) fit.
  • Their most common Use Cases.
  • Their pricing models.
  • How they see their product/technology and the IIoT Framework evolving.

We have also interviewed users and important academic institutions.

Benefits

The results of this research will benefit:

  • Major software providers, who seek to ensure they are at the ‘top table’ and want to round-off their ‘platform’ by developing capability in key areas or acquiring companies that fill ‘gaps’.
  • Smaller providers, who need to know how to direct their efforts in order to dominate a niche.
  • All providers who wish to communicate clearly with the market using a consistent, accepted Framework and Terminology.
  • Later (when the Observatory is completed), any company that needs reliable, global market size and distribution data for planning purposes.
  • Investors, who wish to select companies with a sound strategy and growth potential.

More information

Sign up to the Cambashi e-zine for a summary of the report (when it’s published) and for further articles on the Industrial IoT.

 

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