How are early adopters of IoT generating real revenue?

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The potential of the Internet of Things (IoT) is already translating into real revenue for those brave enough to be early adopters, according to new research from analyst house Technology Business Research (TBR). In its most recent ‘Commercial IoT Benchmark’ report for the fourth quarter of 2015, TBR states that total commercial IoT revenue, among 21 benchmarked companies, grew 14.8 per cent on the year-ago quarter to reach $6.7 billion.

The report notes that the IoT will be a transformational, disruptive force for a wide array of industries, and that those organisations quick to support commercial IoT will benefit from a sizeable new revenue source.

For those pursuing early adoption in the technology’s nascent stages, it says, there is the potential for higher-than-average gross profit as a result of lower competition, more custom solutions due to a lack of standardisation, and fewer options for outsourcing due to security concerns and the complexities of early IoT.

“Effectively, every type of IT and operational technology (OT) vendor will have a stake in the growing commercial IoT market, as IoT solutions will drive increased use of diverse IT and OT products and services,” said TBR Devices and IoT Analyst Dan Callahan, adding: “IT and OT vendors that are quick to capture IoT opportunities within their current customer base, and attract new ones through developer programs and investing in growing mindshare, will enjoy additional, immediate, revenue opportunities.”

IT services and ICT infrastructure accounted for the largest share of revenues at 51.4 per cent of all revenues benchmarked during the quarter. Year-on-year growth was in the ‘teens’, it says, driven by growing capacity requirements associated with deploying, storing and making actionable insights from the huge volume of data generated by connected devices.

It notes that the fastest growing segment was cloud services, which increased 79 per cent year-on-year to $604 million – albeit from a smaller base. Cloud services commercial IoT revenues are being driven by the evolving needs of cloud platforms and requirements for greater processing power and more storage capacity.

Other segments, which grew in the ‘mid-twenties’ notes the report, include business consulting (which is necessary to define large-scale IoT deployments in the technology’s nascent stages) and security (due to the widespread nature and numerous components of IoT, and the threat of hacks of confidential data held on thousands of sensors and devices.

North America is currently the epicentre of IoT activity representing 40.3 per cent of total benchmarked commercial IoT revenue in 4Q15 and growing 14.1 per cent year-on-year to $2.7 billion.

The report goes on to say that the diverse requirements of the IoT are driving the evolution of ‘hybrid companies’, which it describes as companies that deliver a near-full suite of IoT components, containing hardware, software and services. It names the leading hybrid companies, in terms of revenue, as IBM, Hewlett Packard Enterprise (HPE), GE and Cisco. Other vendors benchmarked in the study were: Accenture, Amazon Web Services, AT&T, Dell, Ericsson, Google, Huawei, Intel, Microsoft, OBS, Oracle, Salesforce, SAP, Siemens, Symantec, Telefonica and Verizon.

However, it adds, no company has a complete IoT solution, meaning that hybrid companies also seek specialised partners to leverage industry knowledge or software capabilities. It’s clear that there’s a huge potential to be unlocked – both in terms of applications and services, and in forming partnerships and collaboration opportunities. Bringing the multiple stakeholders together seems to hold the key to success.

At Smart Mobility Summit, we believe that the best way forward, for everyone, is to work together, and share knowledge and best practices. That’s why we set dedicated time aside for networking and open panel discussion debates, which not only allows delegates to gain new insight, but also to meet their peers and build new business relationships.