IDC: 5 Ways The IoT Market Is A Treasure Trove For Solution Providers

IoT Spending Is Taking Off

A new IDC report has forecast that Internet of Things spending will grow 17 percent in 2017, signifying that customers around the world are ready to shell out money for IoT applications.

"The discussion about IoT has shifted away from the number of devices connected… The true value of IoT is being realized when the software and services come together to enable the capture, interpretation, and action on data produced by IoT endpoints," said Carrie MacGillivray, vice president of Internet of Things and Mobility at IDC, in a statement.

Here are five ways that the Internet of Things market is turning into a treasure trove for solution providers, based on IDC's new report.

IoT Spending Grows in 2017 … And Beyond

IDC forecast that Internet of Things spending will grow 17 percent in 2017. The market research firm said that IoT spending will reach just over $800 billion this year as more organizations invest in hardware, software, services and connectivity around IoT.

In 2017, the largest IoT investments will include manufacturing operations, freight monitoring, and production asset management. The report also concludes that the IoT market won't slow down anytime soon, forecasting that organizations continuing to invest in hardware, software, services and connectivity will rack up nearly $1.4 trillion in spending by 2021.

Spending On IoT Hardware And Software

From a technology perspective, IDC said that hardware will be the largest spending category for the next few years as customers look to install modules and sensors to connect their devices.

However, hardware is not the fastest-growing technology category in terms of spending – by 2021, hardware investments will be surpassed by the faster-growing services category, according to IDC.

Software spending, on the other hand, will be the fastest growing area. Software will be dominated by application software, but horizontal and analytics software will see growth as well.

The Hottest IoT Industries

According to IDC, the industries making the largest IoT investments in 2017 include the manufacturing, transportation and utilities industries. Manufacturing will see up to $183 billion in spending, while transportation will see $85 billion and the utilities industry will see $66 billion in IoT investments in 2017.

Consumer IoT purchases will be the fourth largest market segment in 2017 with $62 billion in investments, but IDC said this area will grow to become the third largest segment in 2021.

Meanwhile, IDC said the industries that will see the fastest spending growth include the insurance market, with a 20.2 percent compound annual growth rate, and the consumer market with 19.4 percent CAGR.

Biggest IoT Use Cases

The IoT use cases that are expected to attract the largest investments in 2017 include manufacturing operations, which will see $105 billion in investments, freight monitoring with $50 billion in investments, and production asset management with $45 billion in spending. Smart grid technologies for electricity, gas and water and smart building technologies are also forecast to see significant investments this year, according to IDC.

The IDc report said these use cases will continue to see the largest amounts of spending in 2021, but smart home technologies are forecast to also grow at a compound annual growth rate of 19.8 percent. Airport facilities automation, electric vehicle charging and in-store contextual marketing will also see rapid spending growth.

IoT Security Spend

On the security side, security hardware investments will increase at a 15.1 percent compound annual growth rate until 2021, while security software investments will see a 16.6 percent CAGR.

"As enterprises are adapting to new and innovative services provided by different vendors a lot of new threats are introduced, so it's very important to upgrade existing security systems to ensure that an optimal business outcome can be reached and ROI can be justified," said Ashutosh Bisht, research manager for IT spending at IDC, in a statement.