International Data Corp. (IDC) published on Monday its latest Worldwide Semiannual Internet of Things Spending Guide (version 2H17). The Spending Guide forecasts Internet of Things (IoT) spending will experience a compound annual growth rate (CAGR) of 13.6 percent over the 2017-2022 forecast period and reach $1.2 trillion in 2022. The forecast is based on the latest research in the burgeoning IoT technology market, which offers business investment opportunities across a spectrum of industries and illuminated through use case implementations.
The Worldwide Semiannual Internet of Things Spending Guide forecasts IoT spending for 14 technologies across 20 vertical industries in nine regions and 53 countries through 100 use cases. Unlike any other research in the industry, this comprehensive spending guide was designed to help vendors clearly understand the industry-specific opportunity for IoT technologies.
As the diverse IoT market reaches broad-based critical mass, innovative offerings in analytics software, cloud technologies, and business and IT services have expanded rapidly.
“The IoT market is at a turning point – projects are moving from proof of concept into commercial deployments,” said Carrie MacGillivray, group vice president, Internet of Things and mobility. “Organizations are looking to extend their investment as they scale their projects, driving spending for the hardware, software, services, and connectivity required to enable IoT solutions.”
The intersection of multiple technology domains is one key to successfully understanding and developing a supply-side product and market development strategy. The IDC IoT Spending Guide is an industry defining market intelligence tool that details end-user adoption and spending across multiple segmentations.
“The latest IoT Spending Guide release fully aligns to IDC’s Industry Taxonomy. We now forecast all 20 standard IDC Industries,” said Marcus Torchia, research director, Customer Insights & Analysis. “As a result, we are proactively mapping IoT use cases that have segmentations in shared domains, such as in Smart Cities and Digital Transformation investment areas. As a part of these improvements, IoT supports spending forecasts for 100 use cases.”
Forecast highlights show that the consumer sector will lead IoT spending growth with a worldwide CAGR of 19 percent, followed closely by the insurance and healthcare provider industries. From a total spending perspective, discrete manufacturing and transportation will each exceed $150 billion in spending in 2022, making these the two largest industries for IoT spending.
From an enterprise use case perspective, vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) solutions will experience the fastest spending growth (29 percent CAGR) over the forecast period, followed by traffic management and connected vehicle security.
IDC also released Monday that the global wearables market is forecast to ship 124.9 million units by the end of 2018, up 8.2 percent from the prior year. Although this growth is slightly lower than the 10.3 percent growth experienced in 2017, the market is expected to return to double-digit growth from 2019 until 2022 as smartwatches and other form factors grow in popularity.
Smartwatches will evolve to encompass far more features and functionalities than they have.
“The smartwatches of 2022, even 2020, will make today’s smartwatches seem quaint,” added Llamas. “Health and fitness is a strong start, but when you include cellular connectivity, integration with other Internet of Things (IoT) devices and systems, and how smartwatches can enable greater efficiencies, the smartwatch market is heading for steady growth in the years to come.”
Beyond the typical wrist-worn devices, IDC also anticipates earwear to gain momentum as various brands start to capitalize on the growing interest in smart assistants. Qualcomm’s upcoming silicon designed for this category is likely to also help bolster supply by offering brands a platform solution to build their products. Clothing with built-in sensors is also expected to grow and double its share by 2022.
Smartwatches will gain an increasing amount of market share over the course of the forecast, accounting for 44.6 percent of all wearables shipped by the end of 2022. Apple’s decision to include cellular connectivity on the latest Watch has helped bring some much-needed attention to the smartwatch category from telcos and, more importantly, it has helped with consumer acceptance. It’s only a matter of time before other vendors (beyond those who have already dabbled with it) begin to include this capability and consumers, along with developers, take advantage of the tech to enable additional use cases.
Basic watches, which to date have been primarily comprised of sport watches, kids’ watches, and hybrid watches, are forecast to see a compound annual growth rate (CAGR) of 7.4 percent from 2018 – 2022. Though these devices offer many advantages such as long battery life, simplified interfaces, and highly fashion-forward designs, this category will continue to remain in the shadow of smartwatches as its share declines from 23.7 percent in 2018 to 19.7 percent in 2022.
The entire category also faces internal challenges as many sport watch and kids’ watch vendors are focused on transitioning their user base to smartwatches in hopes of increasing revenue.
The market for wristbands is expected to decline 6.6 percent in 2018 as demand for these simple devices has cooled off and incumbents like Fitbit and Garmin continue to pursue smartwatch growth instead. Beyond 2018, the category is expected remain largely flat with growth below 1 percent in the following years. Meanwhile, average selling prices (ASPs) are expected to drop below $50 by 2022.