by Alan Griffiths
@cambashi_alan
LinkedIn

Where is the market heading and how can we measure it?

Abstract

It’s been difficult to avoid articles and reports on the industrial ‘Internet of Things’ and Digital Transformation for the past few years, but there isn’t a consensus on the size of the market, or how it will grow in the next few years. In fact, there isn’t even agreement on how to define or segment this market. To provide much needed clarity Cambashi, in consultation with industry partners, has derived a draft market segmentation model – see image below. This comprises nine important, connected ‘Market Areas’ into which most industrial IoT applications can be placed. Along with the underlying IoT technology and Digital Transformation services, this provides a picture of the ‘industrial IoT market’.

Industrial IoT market model of connected applications
Draft Market Segmentation Model

The ‘Trough of Disillusionment’

Cambashi recently spoke with the CTO of a leading IoT company who wondered if we were moving into the ‘Trough of Disillusionment’. Clearly for this company, and for many others we have spoken with, the upward trend isn’t proceeding with the same initial vigor, and the press isn’t as glowing as it was. According to the ‘hype cycle’, negative press indicates the start of the downslope into the trough and will be followed by supplier consolidation or failure. We may appear to be at this point, but we believe ‘Amara’s law’ will apply, that is:

‘We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run’.

Big things move slowly, and nearly everyone agrees that IoT and Digital Transformation will be very big. The questions are ‘when?’ and ‘how big?’ Cambashi’s view is that there are many solutions from many types of provider at different levels of maturity. This means that some IoT applications are already entering the next phase and ‘climbing the slope to success’. But often when an application becomes successful, it is under a new name that may not include the acronym ‘IoT’. For example, in our research we have found that all the major management consultants and systems integrators – and many of the larger IT companies – have ‘Digital Transformation’ or ‘Digitalization’ practices. IoT is often placed within a Digital Transformation initiative, so it is hard to tease out just how much of the success is due to IoT. And many of the major IoT providers now offer ‘Applications’ where the term ‘IoT’ may not even be mentioned; in fact, some don’t want their application to be associated with ‘IoT’ if they are targeting the more conservative majority who tend to avoid what they consider to be ‘technology hype’.

Obstacles

There are also obstacles to the growth of this market and to effective planning, as shown by some of the comments we are hearing from providers:

“Our customers don’t want to hear about ‘IoT platforms’ or ‘Digital Transformation’; they think it’s just hype”

“Even though they want to use IoT, our customers get confused by all the different IoT offers“

“We don’t know which are the ‘hot’ market areas to go for”

“Our corporate IoT/DT strategy isn’t getting through to the field sales teams”

“I don’t trust the industrial IoT numbers that I’m seeing”

“Many of our customers are looking at technical solutions – such as IoT platforms or digital transformation projects – before ensuring they have a well thought-out business proposition”

The feedback we are receiving from industry stakeholders is that, to optimize resource allocation, they urgently need qualified insight into applications in their Market Areas, and a measure of the available market size, global distribution and growth rate. Providers need reliable figures to plan their strategy and allocate resources, and their customers are looking for solutions to implement easily, at a known cost, with identifiable benefits. Many estimates being indicated in the industry are inconsistent and prone to be ambitious; Cambashi is intent on producing defendable numbers with clear growth rates across the different market areas and geographies.

The Charter Initiative

From September 1st to November 30th, 2018 Cambashi is launching an industry-led Charter Program to validate and steer this research by inviting selected stakeholders to participate. This program will provide market data and planning tools to support the strategic planning and go-to market needs of leading providers and enable them to target appropriate solutions for the market.

If you would like more information on this Charter Program, please contact:

Keith Henry, Client Advocate, or

Alan Griffiths, Principal Analyst, Industrial IoT and Digital Transformation

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