The worldwide market for internet of things solutions will grow from US$1.9 trillion in 2013 to US$7.1 trillion in 2020, according to figures from IDC.
Over this period, IDC expects product offerings will be differentiated and competition will generally intensify, particularly around holistic solution offerings that incorporate smart analytics and applications.
IDC defines the internet of things as a network of networks of uniquely identifiable endpoints (or ‘things’) that communicate without human interaction using IP connectivity — whether locally or globally.
The research company predicts that the installed base of internet of things units will grow at a 17.5% CAGR over the forecast period to 28.1 billion in 2020.
It estimates that, as of the end of 2013, there were 9.1 billion units installed.
The company also identifies the market challenges as competing priorities in developing regions, global scalability, privacy and security concerns, lack of standards and a nascent ecosystem for application development.
"The worldwide IoT market is exploding, and IDC's research examines the full breadth of its ecosystem, including intelligent and embedded systems shipments, connectivity services, infrastructure, purpose-built IoT platforms, applications, security, analytics, and professional services," added Carrie MacGillivray, Program Vice President, Mobile Services, IoT, and Network Infrastructure at IDC.
In April, Microsoft started to formalise its strategy for helping businesses embrace the internet of things with the limited public preview of the Microsoft Azure Intelligent Systems Service.
The new cloud-based service allows customers to connect, manage, capture and transform machine-generated data from sensors and devices, regardless of the operating system or platform they are using.
The company has also discussed how its ‘Internet of Your Things’ strategy will benefit various industries, such as retail.
“Through the Internet of Your Things strategy, retailers can leverage Windows Embedded and the Microsoft Azure cloud platform – as well as software such as Dynamics CRM or Dynamics ERP – to capture and analyse the data produced by these traditional devices,” Steve Dunbar, intelligent systems lead, EMEA at Microsoft told OnWindows.
He added: “By doing this, they can identify how to improve back-end processes to customer facing systems – including enterprise resource planning, supply chain and inventory management – and streamline their operations.
“In addition, data analysed through intelligent systems enables retailers to visualise emerging behavioural patterns and anticipate key industry trends to ensure they can quickly cater to demand and engage with customers, employees and partner networks in the most beneficial way.
Dunbar also talked about how the internet of things and intelligent systems will benefit retail employees, as well as customers: “Retailers using intelligent systems can analyse various pieces of customer data from across their enterprise to provide a true omni-channel experience, where both in-store and online customers receive tailored promotions and targeted product recommendations based on their purchase history.
“Not only does this make customers feel as though they have been rewarded for their loyalty, it also increases the opportunity for up-sell and cross-sell. In addition, retailers can offer customers more interactive shopping experiences within the store and increase the productivity of their store associates. For example, they can introduce kiosks that connect with customer devices and enable personalised self-service, or facilitate mobile payments from the consumer’s personal smartphone.”
Coca-Cola Amatil, a beverage manufacturer in the Asia-Pacific region, recently implemented an intelligent system from Microsoft and digital marketing agency TKM9 that uses interactive digital signage to create an immersive experience at point-of-sale locations.
Sanjay Ravi is managing director, discrete manufacturing at Microsoft, also spoke to OnWindows about how the internet of things is driving change in manufacturing.
“Automotive manufacturers, for example, can communicate with customers when they are in their vehicle through a two-way in-car platform to provide value-added services, using vehicle related, location-specific, and consumer-context information,” Ravi commented. “Or by equipping a tyre with a sensor, instead of selling the product, manufacturers can sell the miles their customers drive on it.
“Another example is the smart TV where manufacturers can also sell services through the product and provide a rich connected experience.”
To find out more about IDC's findings, download the Worldwide and Regional Internet of Things (IoT) 2014–2020 Forecast: A Virtuous Circle of Proven Value and Demand study.