IDC Directions 2016: IoT (Internet of Things) Outlook vs Current Market Assessment

The 11th annual IDC Directions conference was held in San Jose, CA last week. The saga of the 3rd platform (Cloud, Mobile, Social, Big/Data Analytics) continues unabated. One of many IT predictions was that artifical intelligence (AI) and deep learning/machine learning are a big part of the new application development. IDC predicts 50% of developer teams will build AI/cognitive technologies into apps by 2018 up from only 1% in 2015.

Vernon Turner, senior vice president of enterprise systems at IDC, presented a keynote speech on IoT. IDC forecasts that by 2025, approximately 80 billion devices will be connected to the Internet. To put that in perspective, approximately 11 billion devices connect to the Internet now. The figure is expected to nearly triple to 30 billion by 2020 and then nearly triple again to 80 billion five years later.

To illustrate that phenomnal IoT growth rate, consider that currently, there are approximately 4,800 devices are being connected to the network. Ten years from now, the figure will balloon to 152,000 a minute. Overall, IoT will be a $1.46 trillion market by 2020, according to IDC.

“If you don’t have scalable networks for the IoTs, you won’t be able to connect,” Turner said. “New IoT networks are going to have to be able to handle various requirements of IoT (e.g. very low latency).”

Turner also provided a quick update to IDC’s predictions for the growth of (big) digital data. A few years ago, the market research firm made headlines by predicting that the total amount of digital data created worldwide would mushroom from 4.4 zettabytes in 2013 to 44 zettabytes by 2020. Currently, IDC believes that by 2025 the total worldwide digital data created will reach 180 zettabytes. The astounding growth comes from both the number of devices generating data as well as the number of sensors in each device.

  • The Ford GT car, for instance, contains 50 sensors and 28 microprocessors and is capable of generating up to 100GB of data per hour. Granted, the GT is a finely-tuned race car, but even pedestrian household items will contain arrays of sensors and embedded computing capabilities.
  • Smart thermometers will compile thousands of readings in a few seconds.
  • Cars, homes and office will likely be equipped with IoT gateways to manage security and connectivity for the expanding armada of devices.

How this huge amount of newly generated data gets used and where it’s stored remains an open debate in the industry. A substantial portion of it will consist of status data from equipment or persona devices reporting on remedial tasks: the current temperature inside a cold storage unit, the RPMs of a wheel on a truck etc. Some tech execs believe that a large segment of this status data can be summarized and discarded.

Industrial customers (like GE, Siemens, etc) will likely invest more heavily in IoT (sometimes referred to as “the Industrial Internet) than other market segments/verticals over time, but the moment retail customers are the most active in implementing new systems. In North America, a substantial amount of interest for IoT revolves around “digital transformation,” i.e. developing new digital services on top of existing businesses like car repair or hotel reservation. In Europe and Asia, the focus trends toward improving energy consumption and efficiency.

Turner noted that the commercialization of IoT is still in the experimental phase. When examining the IoT projects underway at big companies, IDC found that most of the budgets are in the $5 million to $10 million range. The $100 million contracts aren’t here yet, he added. Retail and manufacturing are the two leading IoT industry verticals, based on IDC findings.

In a presentation titled, A Market Maturing: The Reality of IoT, Carrie MacGillivray Vice President, IoT & Mobile made the following key points related to the IoT market:

  • Early adopters are plenty, but ROI cases few & far between
  • Vendors refining story, making solutions more “real”
  • Standards, regulation, scalability and cost (!!!) are still inhibitors (as they have been for years)

IDC has created a model to measure IoT market maturity and placed various categories of users in buckets. Their survey findings are as follows:

  • 2% are IoT Experimenters/ Ad Hoc 
  • 31.9% are IoT Explorers/Opportunistic
  • 31.3% are IoT Connectors/Repeatable
  • 24.2% are IoT Transformers/Manageable
  • 10.7% are IoT Disruptors/Optimized solution

Carrie revealed several other important IoT findings:

  • Vision is still a struggle for organizations, but it’s moving in the right direction. Executive teams must set the pace for IoT innovation.
  •  Still more tehcnology maturity is needed Investment extends beyond connecting the “thing” but also ensuring backend technology is enabled.
  •  IoT plans/process are still not captured in the strategic plan.  They need to be integrated into production environments holistically.


Carrie’s Closing Comments for IoT Market Outlook:


  • Security, regulatory, standards…and cost (!!!) are  still inhibitors to IoT market maturity [IDC will be publishing a report next month on the status of IoT standards and Carrie publicaly offered to share it with this author.]
  • Vision is still needed to be set at the executive level.
  • Thoughtful integration of process has to be driven by a vision with measurable objectives.
  • People “buy-in” will determine success or failure of these connected “things.” 



Above graphic courtesy of IDC: