The ‘Internet of Things’ (IoT) refers to the networking of physical objects that are equipped with sensors, processors and controls.
Through real time monitoring and dynamic management (in response to analysis of captured data or changing conditions) of such devices, a host of potential operational improvements can be unlocked including increased employee productivity, greater energy efficiency, reduced maintenance and optimised network utilisation.
The IoT sector is at a relatively nascent stage of development and estimates of its likely rate of deployment and ultimate value vary significantly. According to McKinsey, the number of connected devices (not including computers, phones and tablets) operating globally, which currently stands at around 5 billion, is likely to grow to c.20 to 25 billion by 2019, fuelled by the falling price of sensors, connectivity, data storage and processing.
Deployment at this scale would result in a market worth between $4 trillion and $11 trillion by 2025, up from $700bn in 2014.
Over the longer term, it is anticipated that the IoT will create new revenue streams by helping companies to identify and exploit novel product and service opportunities. For instance, while industrial applications have taken an early lead, there is significant unrealised potential within consumer applications. According to IDC, purpose-built platforms and application software are likely to capture the majority of ultimate market value, with devices (modules/sensors) accounting for c30%.