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INDUSTRIAL INTERNET OF THINGS
(IIoT) MARKET INSIGHTS
IIoT MARKET INSIGHTS
2
Table of Contents
1 MARKET OVERVIEW..............................................................................................................4
1.1 Industrial Evolution.................................................................................................................4
1.2 Market Definition....................................................................................................................5
2 MARKET DYNAMICS..............................................................................................................8
2.1 Drivers.....................................................................................................................................8
2.2 Restraints ................................................................................................................................9
2.3 Opportunities..........................................................................................................................9
3 INDUSTRY ANALYSIS........................................................................................................... 10
3.1 IIoT Data Flow .......................................................................................................................10
3.2 IIoT Economic Impact............................................................................................................10
4 IIOT SPENDING ................................................................................................................... 11
4.1 Value of IoT in the Industrial Sector .....................................................................................11
4.2 IIOT Investment Trends.........................................................................................................12
4.3 Projected IIoT Worth in Key Countries by 2030....................................................................14
4.4 Are Countries Laying the Right Foundations?.......................................................................15
5 MARKET ESTIMATES ........................................................................................................... 16
6 MARKET LANDSCAPE .......................................................................................................... 18
6.1 IIoT Market Landscape..........................................................................................................18
6.2 Market Positioning of Key Players ........................................................................................19
6.3 Investors in IIoT.....................................................................................................................19
6.4 Major IIoT M&A Transactions...............................................................................................20
7 CONCLUSION...................................................................................................................... 22
IIoT MARKET INSIGHTS
3
List of Tables
Table 1. IOT v/s IIoT ..........................................................................................................................5
Table 2. IIoT Market Drivers – Impact Analysis ................................................................................8
Table 3. IIoT Market Restraints – Impact Analysis............................................................................9
Table 4. Global IIoT Market Size (US$ billion) and Y-o-Y Growth (%).............................................16
List of Figures
Figure 1. The Evolution to Industry 4.0..............................................................................................4
Figure 2. The Automation Systems Stack that Enables IIoT...............................................................6
Figure 3. How IIoT Helps Overcome Challenges within Key Industries .............................................7
Figure 4. IIoT Data Flow ...................................................................................................................10
Figure 5. Who said what ..................................................................................................................10
Figure 6. Global Endpoint Spending on IoT and IIoT........................................................................11
Figure 7. IIoT Annual Global Financing History................................................................................12
Figure 8. IIoT Quarterly Global Financing History (Q1 2011 – Q1 2016) .........................................13
Figure 9. IIoT Investment v/s IoT Investment (Q1 2011 – Q1 2016)................................................13
Figure 10. Rankings of countries’ Industrial Internet of Things enabling factors..........................15
Figure 11. IIoT Market Landscape..................................................................................................18
Figure 12. IIoT Dimensions.............................................................................................................19
Figure 13. Most Active Investors in the IIoT Arena........................................................................19
Figure 14. Digitization Across Various Industries with IIoT............................................................22
IIoT MARKET INSIGHTS
4
1 MARKET OVERVIEW
1.1 Industrial Evolution
Figure 1. The Evolution to Industry 4.0
 1760 to 1840 - Ushered in Mechanical production; railways and steam engine
 1870 to 1940 - Mass production; electricity and assembly line
 1960 to 2010 - Computers; semi conductors, main frame computing, personal
devices, internet
INDUSTRY 4.0: A collective term for technologies and concepts of value chain
organization. Based on the technological concepts of cyber-physical systems, the
Internet of Things and the Internet of Services, it facilitates the vision of the Smart
Factory. Within the modular structured Smart Factories of Industry 4.0, cyber-
physical systems monitor physical processes, create a virtual copy of the physical
world and make decentralized decisions. Over the Internet of Things, Cyber-physical
systems communicate & cooperate with each other & humans in real time. Via the
Internet of Services, both internal & cross-organizational services are offered &
utilized by participants of the value chain.
4. Industrial
revolution
Based on cyber-physical-
systems
3. Industrial revolution
Through the use of electronics
and IT further progression in
autonomous production
2. Industrial revolution
Introducing mass production
lines powered by electric
energy
1. Industrial revolution
Introducing mechanical
production machines powered
by water and steam
End of the
18th century.
Beginning of the
20th century
Beginning of the
70th
Industry 1.0 Industry 3.0Industry 2.0 Industry 4.0
Levelofcomplexity
Today
IIoT MARKET INSIGHTS
5
CYBER-PHYSICAL SYSTEM (CPS): A cyber-physical system (CPS) is a system of
collaborating computational elements controlling physical entities. CPS’s are
physical and engineered systems whose operations are monitored, coordinated,
controlled and integrated by a computing and communication core. They allow us to
add capabilities to physical systems by merging computing and communication with
physical processes.
1.2 Market Definition
THE INTERNET OF THINGS (IoT): IoT is the network of physical objects accessed
through the Internet. These objects contain embedded technology to interact with
internal states or the external environment.
THE INDUSTRIAL INTERNET OF THINGS (IIoT): IIoT is a network of physical
objects, systems, platforms and applications that contain embedded technology to
communicate and share intelligence with each other, the external environment and
with people. The adoption of the IIoT is being enabled by the improved availability
and affordability of sensors, processors and other technologies that have helped
facilitate capture of and access to real-time information.
Table 1. IOT v/s IIoT
Parameter IOT IIOT
Focus On
Convenience for individual
consumers.
Return on investment by improving
efficiency, safety, and productivity.
System
Breakdown
Do not immediately create emergency
situation. Important but not critical.
Often creates life threatening or other
emergency situations. Mission critical.
Driving
Philosophy
Human productivity Machine productivity
Applications
Consumer level-devices:
 Wearable fitness tools
 Smart home thermometers
Systems used in high stake industries:
 Manufacturing
 Aerospace
 Defences
 Energy
IIoT MARKET INSIGHTS
6
Figure 2. The Automation Systems Stack that Enables IIoT
The real value-add in IIoT will come from four primary areas:
1. Sophisticated supply chain management — linking information from the entire
supply chain into a comprehensive view of the entire system, enabling tighter
inventory and quality control;
2. Increased operational efficiency for existing processes — reduction of waste,
downtime and so forth, essentially better process automation, including predictive
maintenance and just in-time techniques;
3. The enablement of entirely new business models, for example those enabling the
conversion of a product sale to a service sale, or a one-time transaction to an
ongoing service relationship, as well as increased ability for mass customization
and reduction in the number of different physical manifestations of a product by
controlling features through remotely programmable software;
4. Sophisticated software analytics that allow managers to sift out the actionable
information from the enormous flow of raw data.
IIoT MARKET INSIGHTS
7
Figure 3. How IIoT Helps Overcome Challenges within Key Industries
IIoT MARKET INSIGHTS
8
2 MARKET DYNAMICS
2.1 Drivers
Table 2. IIoT Market Drivers – Impact Analysis
Drivers Short Term Mid-Term Long Term
Optimize asset utilization
◕ ● ●
Reduce operational cost
◑ ◕ ●
Improve worker productivity
◑ ◕ ●
Enhance worker safety
◑ ◕ ●
Create new revenue streams through new products
and services ◑ ◕ ●
Improve sustainability
◑ ◕ ◕
Enhance customer experience
◑ ◕ ◕
Note: ● Very High Impact, ◕ High Impact, ◑ Medium Impact, ◔ Low Impact
IIoT MARKET INSIGHTS
9
2.2 Restraints
Table 3. IIoT Market Restraints – Impact Analysis
Restraints Short Term Mid-Term Long Term
Lack of interoperability or standards
◕ ◕ ◔
Security concerns
● ◕ ◑
Privacy concerns
◕ ◕ ◔
Uncertain ROI (e.g., insufficient business cases)
● ◕ ◑
Legacy equipment (e.g., no connectivity or
embedded sensors) ◕ ◕ ◔
Technology immaturity (e.g. large-scale analytics)
● ◕ ◑
Lack of skilled workers (e.g., data scientists)
◕ ◕ ◔
Societal concerns (e.g., economic dislocation)
● ◕ ◑
Note: ● Very High Impact, ◕ High Impact, ◑ Medium Impact, ◔ Low Impact
2.3 Opportunities
 Predictive maintenance
 Increasing set-up of data centers
 Increasing investment and adoption of technology by industries to improve
operational efficiency and asset performance across APAC region
 Rising trend of adoption of software by large industries with the objective to
improve their existing infrastructure so as to employ IIoT in their processes
IIoT MARKET INSIGHTS
10
3 INDUSTRY ANALYSIS
3.1 IIoT Data Flow
Figure 4. IIoT Data Flow
3.2 IIoT Economic Impact
Figure 5. Who said what
IIoT MARKET INSIGHTS
11
4 IIOT SPENDING
In order to be successful and generate further growth, companies will use the IIoT to
improve efficiency by optimizing the supply chain, boost revenues by enhancing
customer experience and upgrade the risk management by improving product safety.
However, a transformation from interpretation to prediction in the usage of data is
crucial.
4.1 Value of IoT in the Industrial Sector
In today's business world, all companies are facing a challenge that can be turned
into a great opportunity: the transformation from a reactionary towards a visionary
approach. Retrospective analysis and delayed responses are no longer suitable for
today's rapidly changing business environment. As with the increased use of sensors
and improved quality of data, IoT allows companies to act with foresight, preventing
significant losses and creating value.
Figure 6. Global Endpoint Spending on IoT and IIoT
IIoT MARKET INSIGHTS
12
According to Gartner, the number of IoT equipment installed worldwide reached 6.4
billion in 2016, representing a 30% year-on-year growth, and it is expected to reach
20.8 billion in 2020. The global endpoint spending on IoT was about USD 1.414
trillion in 2016, composed of USD 546 billion from consumer applications, USD 201
billion from cross-industry business applications, and USD 667 billion from vertical
industry applications. By 2020, the total expenditure on IoT is expected to reach
USD 3.011 trillion, and the afore-mentioned market segments are expected to grow
to USD 1.534 trillion, USD 566 billion and USD 911 billion, respectively. This
represents CAGR of 29%, 30% and 8%, respectively.
IoT projects are currently mostly used in the industrial sector. IoT Analytics believe
that the manufacturing industry accounts for around 25% of IoT applications while
Harbor Research and CISCO estimated its percentage at 27% and Gartner
calculated a 15% share1. Although estimates by research firms vary, the
manufacturing industry takes the lead in IoT. The figure below shows Gartner's
forecast of the overall IoT market and Industrial IoT applications.
4.2 IIOT Investment Trends
Figure 7. IIoT Annual Global Financing History
IIoT has experienced its fourth straight year of growth in 2016, with investment
exceeding $2.2bn across 321 deals.
IIoT MARKET INSIGHTS
13
Figure 8. IIoT Quarterly Global Financing History (Q1 2011 – Q1 2016)
Figure 9. IIoT Investment v/s IoT Investment (Q1 2011 – Q1 2016)
IIoT MARKET INSIGHTS
14
4.3 Projected IIoT Worth in Key Countries by 2030
IIoT will lift real gross domestic product (that is, adjusted for inflation) by 1.0 percent
in 2030 over trend projections for 20 major economies studied. And if those
economies were to increase their IIoT investments by 50 percent and improve the
underlying enabling conditions in their respective countries, this could rise from 1.0
percent to 1.5 percent in that year. Looked at collectively in 2030, Brazil, Russia,
India and China (BRICs) will see corresponding increments to annual GDP of 0.2
percent on average and, with enhanced investments and measures, 0.5 percent.
In particular, China looks set to see greater economic gains from the IIoT than
Russia, India or Brazil. With IIoT-enhancing measures in place, China could see its
cumulative GDP rise by US$1.8 trillion by 2030, raising its GDP in 2030 by 1.3
percent over trend projections.
The U.S. economy will gain US$6.1 trillion in cumulative GDP by 2030. By taking
additional measures, for instance, to improve the country’s broadband infrastructure,
this figure could rise to US$7.1 trillion. This could mean that the United States’
annual GDP is 2.3 percent higher than trend projections in 2030. Including additional
efforts and investments, Germany could lift its cumulative GDP by US$700 billion
and the U.K by US$531 billion within the next 15 years.3 This would raise German
gross domestic product and United Kingdom gross domestic product by 1.7 and 1.8
percent, respectively, in 2030 over trend projections.
IIoT MARKET INSIGHTS
15
4.4 Are Countries Laying the Right Foundations?
NAC INDEX: A country with a National Absorptive Capacity (NAC) score of 100
would be the top performer on each of the 55 indicators compared to the other study
countries. Overall, the results show that no one country has achieved this level of
NAC. In other words, every country has work to do.
Figure 10. Rankings of countries’ Industrial Internet of Things enabling factors
The ranking model incorporates four measures of a country’s enabling factors. The
business commons includes reliable banking and finance, education, good
governance and a healthy network of suppliers. A category of take-off factors
includes the levels of R&D, the presence of high-tech companies and the degree of
technology skills. The wide diffusion of technology requires effective transfer factors,
such as the level of social and end-user acceptance, the willingness to embrace
organizational change and an ability to respond to the impacts on human capital.
Finally, a group of characteristics determine a country’s ability to reach a level we
term as the self-sustaining innovation dynamo, when the ubiquity of IIoT technology
acts as a multiplier effect on existing levels of entrepreneurialism and the ability to
commercialize new ideas.
IIoT MARKET INSIGHTS
16
5 MARKET ESTIMATES
As per my analysis, I believe that the Global IIoT Market will account for US$ 135
billion in 2016 and will reach to US$ 590 billion by 2022, expanding at a CAGR of
28.26% during the forecast period 2017-2022.
Table 4. Global IIoT Market Size (US$ billion) and Y-o-Y Growth (%)
Year 2015 2016 2017 2018 2019 2020 2021 2022
CAGR
(2017 – 2022)
Market Size
($ Billions)
108 135 170 217 278 358 460 590 28.26%
Y-o-Y Growth (%) 25.00% 25.93% 27.65% 28.28% 28.61% 28.49% 28.26% 25.00%
The IIoT market can be segmented on the basis of services, software solutions,
platforms, and application areas, as follows:
By Service
 Professional service
 Deployment and integration
 Support and maintenance
 Consulting service
 Managed service
By Software Solution
 Real- time Streaming Analytics
 Security solution
 Data management
 Remote monitoring system
 Network bandwidth management
IIoT MARKET INSIGHTS
17
By Platform
 Device management
 Application management
 Network management
By Application Area
 Building and home automation
 Smart energy and utilities
 Smart manufacturing
 Connected logistics
 Smart retail
 Smart mobility and transportation
 Others
Some of the major vendors in the IIoT market include Hewlett Packard Enterprise,
Google Inc., Amazon Web Services, General Electric, Bosch Software Innovation
GmbH, Intel Corporation, Cisco Systems, Inc., SAP SE, Microsoft Corporation, IBM
Corporation, Oracle Corporation, and PTC Inc. among others.
IIoT MARKET INSIGHTS
18
6 MARKET LANDSCAPE
6.1 IIoT Market Landscape
Figure 11. IIoT Market Landscape
IIoT MARKET INSIGHTS
19
6.2 Market Positioning of Key Players
Figure 12. IIoT Dimensions
6.3 Investors in IIoT
Figure 13. Most Active Investors in the IIoT Arena
IIoT MARKET INSIGHTS
20
6.4 Major IIoT M&A Transactions
IIoT MARKET INSIGHTS
21
IIoT MARKET INSIGHTS
22
7 CONCLUSION
Figure 14. Digitization Across Various Industries with IIoT
IIoT is often presented as a revolution that is changing the face of industry in a
profound manner. In reality, it is an evolution that has its origins in technologies and
functionalities developed by visionary automation suppliers more than 15 years ago.
As the necessary global standards mature, it may well take another 15 years to
realise the full potential of IIoT. Over this period of time the changes to the industry
will be far reaching. The good news is that end users and machine builders can now
leverage their existing investments in technology and people while taking advantage
of available new IIoT technologies.
Introducing IIoT solutions using a “wrap & re-use” approach, rather than a “rip &
replace” approach will enable greater business control. In addition, this measured
approach will drive the evolution towards a smart manufacturing enterprise that is
more efficient, safer, and sustainable. The emergence of the IIoT megatrend has
created both hope and confusion among stakeholders responsible for operating
industrial plants. Much of the early hype was focused on the impact of technological
advancements on existing automation platforms.

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Industrial Internet of Things (IIoT)

  • 1. INDUSTRIAL INTERNET OF THINGS (IIoT) MARKET INSIGHTS
  • 2. IIoT MARKET INSIGHTS 2 Table of Contents 1 MARKET OVERVIEW..............................................................................................................4 1.1 Industrial Evolution.................................................................................................................4 1.2 Market Definition....................................................................................................................5 2 MARKET DYNAMICS..............................................................................................................8 2.1 Drivers.....................................................................................................................................8 2.2 Restraints ................................................................................................................................9 2.3 Opportunities..........................................................................................................................9 3 INDUSTRY ANALYSIS........................................................................................................... 10 3.1 IIoT Data Flow .......................................................................................................................10 3.2 IIoT Economic Impact............................................................................................................10 4 IIOT SPENDING ................................................................................................................... 11 4.1 Value of IoT in the Industrial Sector .....................................................................................11 4.2 IIOT Investment Trends.........................................................................................................12 4.3 Projected IIoT Worth in Key Countries by 2030....................................................................14 4.4 Are Countries Laying the Right Foundations?.......................................................................15 5 MARKET ESTIMATES ........................................................................................................... 16 6 MARKET LANDSCAPE .......................................................................................................... 18 6.1 IIoT Market Landscape..........................................................................................................18 6.2 Market Positioning of Key Players ........................................................................................19 6.3 Investors in IIoT.....................................................................................................................19 6.4 Major IIoT M&A Transactions...............................................................................................20 7 CONCLUSION...................................................................................................................... 22
  • 3. IIoT MARKET INSIGHTS 3 List of Tables Table 1. IOT v/s IIoT ..........................................................................................................................5 Table 2. IIoT Market Drivers – Impact Analysis ................................................................................8 Table 3. IIoT Market Restraints – Impact Analysis............................................................................9 Table 4. Global IIoT Market Size (US$ billion) and Y-o-Y Growth (%).............................................16 List of Figures Figure 1. The Evolution to Industry 4.0..............................................................................................4 Figure 2. The Automation Systems Stack that Enables IIoT...............................................................6 Figure 3. How IIoT Helps Overcome Challenges within Key Industries .............................................7 Figure 4. IIoT Data Flow ...................................................................................................................10 Figure 5. Who said what ..................................................................................................................10 Figure 6. Global Endpoint Spending on IoT and IIoT........................................................................11 Figure 7. IIoT Annual Global Financing History................................................................................12 Figure 8. IIoT Quarterly Global Financing History (Q1 2011 – Q1 2016) .........................................13 Figure 9. IIoT Investment v/s IoT Investment (Q1 2011 – Q1 2016)................................................13 Figure 10. Rankings of countries’ Industrial Internet of Things enabling factors..........................15 Figure 11. IIoT Market Landscape..................................................................................................18 Figure 12. IIoT Dimensions.............................................................................................................19 Figure 13. Most Active Investors in the IIoT Arena........................................................................19 Figure 14. Digitization Across Various Industries with IIoT............................................................22
  • 4. IIoT MARKET INSIGHTS 4 1 MARKET OVERVIEW 1.1 Industrial Evolution Figure 1. The Evolution to Industry 4.0  1760 to 1840 - Ushered in Mechanical production; railways and steam engine  1870 to 1940 - Mass production; electricity and assembly line  1960 to 2010 - Computers; semi conductors, main frame computing, personal devices, internet INDUSTRY 4.0: A collective term for technologies and concepts of value chain organization. Based on the technological concepts of cyber-physical systems, the Internet of Things and the Internet of Services, it facilitates the vision of the Smart Factory. Within the modular structured Smart Factories of Industry 4.0, cyber- physical systems monitor physical processes, create a virtual copy of the physical world and make decentralized decisions. Over the Internet of Things, Cyber-physical systems communicate & cooperate with each other & humans in real time. Via the Internet of Services, both internal & cross-organizational services are offered & utilized by participants of the value chain. 4. Industrial revolution Based on cyber-physical- systems 3. Industrial revolution Through the use of electronics and IT further progression in autonomous production 2. Industrial revolution Introducing mass production lines powered by electric energy 1. Industrial revolution Introducing mechanical production machines powered by water and steam End of the 18th century. Beginning of the 20th century Beginning of the 70th Industry 1.0 Industry 3.0Industry 2.0 Industry 4.0 Levelofcomplexity Today
  • 5. IIoT MARKET INSIGHTS 5 CYBER-PHYSICAL SYSTEM (CPS): A cyber-physical system (CPS) is a system of collaborating computational elements controlling physical entities. CPS’s are physical and engineered systems whose operations are monitored, coordinated, controlled and integrated by a computing and communication core. They allow us to add capabilities to physical systems by merging computing and communication with physical processes. 1.2 Market Definition THE INTERNET OF THINGS (IoT): IoT is the network of physical objects accessed through the Internet. These objects contain embedded technology to interact with internal states or the external environment. THE INDUSTRIAL INTERNET OF THINGS (IIoT): IIoT is a network of physical objects, systems, platforms and applications that contain embedded technology to communicate and share intelligence with each other, the external environment and with people. The adoption of the IIoT is being enabled by the improved availability and affordability of sensors, processors and other technologies that have helped facilitate capture of and access to real-time information. Table 1. IOT v/s IIoT Parameter IOT IIOT Focus On Convenience for individual consumers. Return on investment by improving efficiency, safety, and productivity. System Breakdown Do not immediately create emergency situation. Important but not critical. Often creates life threatening or other emergency situations. Mission critical. Driving Philosophy Human productivity Machine productivity Applications Consumer level-devices:  Wearable fitness tools  Smart home thermometers Systems used in high stake industries:  Manufacturing  Aerospace  Defences  Energy
  • 6. IIoT MARKET INSIGHTS 6 Figure 2. The Automation Systems Stack that Enables IIoT The real value-add in IIoT will come from four primary areas: 1. Sophisticated supply chain management — linking information from the entire supply chain into a comprehensive view of the entire system, enabling tighter inventory and quality control; 2. Increased operational efficiency for existing processes — reduction of waste, downtime and so forth, essentially better process automation, including predictive maintenance and just in-time techniques; 3. The enablement of entirely new business models, for example those enabling the conversion of a product sale to a service sale, or a one-time transaction to an ongoing service relationship, as well as increased ability for mass customization and reduction in the number of different physical manifestations of a product by controlling features through remotely programmable software; 4. Sophisticated software analytics that allow managers to sift out the actionable information from the enormous flow of raw data.
  • 7. IIoT MARKET INSIGHTS 7 Figure 3. How IIoT Helps Overcome Challenges within Key Industries
  • 8. IIoT MARKET INSIGHTS 8 2 MARKET DYNAMICS 2.1 Drivers Table 2. IIoT Market Drivers – Impact Analysis Drivers Short Term Mid-Term Long Term Optimize asset utilization ◕ ● ● Reduce operational cost ◑ ◕ ● Improve worker productivity ◑ ◕ ● Enhance worker safety ◑ ◕ ● Create new revenue streams through new products and services ◑ ◕ ● Improve sustainability ◑ ◕ ◕ Enhance customer experience ◑ ◕ ◕ Note: ● Very High Impact, ◕ High Impact, ◑ Medium Impact, ◔ Low Impact
  • 9. IIoT MARKET INSIGHTS 9 2.2 Restraints Table 3. IIoT Market Restraints – Impact Analysis Restraints Short Term Mid-Term Long Term Lack of interoperability or standards ◕ ◕ ◔ Security concerns ● ◕ ◑ Privacy concerns ◕ ◕ ◔ Uncertain ROI (e.g., insufficient business cases) ● ◕ ◑ Legacy equipment (e.g., no connectivity or embedded sensors) ◕ ◕ ◔ Technology immaturity (e.g. large-scale analytics) ● ◕ ◑ Lack of skilled workers (e.g., data scientists) ◕ ◕ ◔ Societal concerns (e.g., economic dislocation) ● ◕ ◑ Note: ● Very High Impact, ◕ High Impact, ◑ Medium Impact, ◔ Low Impact 2.3 Opportunities  Predictive maintenance  Increasing set-up of data centers  Increasing investment and adoption of technology by industries to improve operational efficiency and asset performance across APAC region  Rising trend of adoption of software by large industries with the objective to improve their existing infrastructure so as to employ IIoT in their processes
  • 10. IIoT MARKET INSIGHTS 10 3 INDUSTRY ANALYSIS 3.1 IIoT Data Flow Figure 4. IIoT Data Flow 3.2 IIoT Economic Impact Figure 5. Who said what
  • 11. IIoT MARKET INSIGHTS 11 4 IIOT SPENDING In order to be successful and generate further growth, companies will use the IIoT to improve efficiency by optimizing the supply chain, boost revenues by enhancing customer experience and upgrade the risk management by improving product safety. However, a transformation from interpretation to prediction in the usage of data is crucial. 4.1 Value of IoT in the Industrial Sector In today's business world, all companies are facing a challenge that can be turned into a great opportunity: the transformation from a reactionary towards a visionary approach. Retrospective analysis and delayed responses are no longer suitable for today's rapidly changing business environment. As with the increased use of sensors and improved quality of data, IoT allows companies to act with foresight, preventing significant losses and creating value. Figure 6. Global Endpoint Spending on IoT and IIoT
  • 12. IIoT MARKET INSIGHTS 12 According to Gartner, the number of IoT equipment installed worldwide reached 6.4 billion in 2016, representing a 30% year-on-year growth, and it is expected to reach 20.8 billion in 2020. The global endpoint spending on IoT was about USD 1.414 trillion in 2016, composed of USD 546 billion from consumer applications, USD 201 billion from cross-industry business applications, and USD 667 billion from vertical industry applications. By 2020, the total expenditure on IoT is expected to reach USD 3.011 trillion, and the afore-mentioned market segments are expected to grow to USD 1.534 trillion, USD 566 billion and USD 911 billion, respectively. This represents CAGR of 29%, 30% and 8%, respectively. IoT projects are currently mostly used in the industrial sector. IoT Analytics believe that the manufacturing industry accounts for around 25% of IoT applications while Harbor Research and CISCO estimated its percentage at 27% and Gartner calculated a 15% share1. Although estimates by research firms vary, the manufacturing industry takes the lead in IoT. The figure below shows Gartner's forecast of the overall IoT market and Industrial IoT applications. 4.2 IIOT Investment Trends Figure 7. IIoT Annual Global Financing History IIoT has experienced its fourth straight year of growth in 2016, with investment exceeding $2.2bn across 321 deals.
  • 13. IIoT MARKET INSIGHTS 13 Figure 8. IIoT Quarterly Global Financing History (Q1 2011 – Q1 2016) Figure 9. IIoT Investment v/s IoT Investment (Q1 2011 – Q1 2016)
  • 14. IIoT MARKET INSIGHTS 14 4.3 Projected IIoT Worth in Key Countries by 2030 IIoT will lift real gross domestic product (that is, adjusted for inflation) by 1.0 percent in 2030 over trend projections for 20 major economies studied. And if those economies were to increase their IIoT investments by 50 percent and improve the underlying enabling conditions in their respective countries, this could rise from 1.0 percent to 1.5 percent in that year. Looked at collectively in 2030, Brazil, Russia, India and China (BRICs) will see corresponding increments to annual GDP of 0.2 percent on average and, with enhanced investments and measures, 0.5 percent. In particular, China looks set to see greater economic gains from the IIoT than Russia, India or Brazil. With IIoT-enhancing measures in place, China could see its cumulative GDP rise by US$1.8 trillion by 2030, raising its GDP in 2030 by 1.3 percent over trend projections. The U.S. economy will gain US$6.1 trillion in cumulative GDP by 2030. By taking additional measures, for instance, to improve the country’s broadband infrastructure, this figure could rise to US$7.1 trillion. This could mean that the United States’ annual GDP is 2.3 percent higher than trend projections in 2030. Including additional efforts and investments, Germany could lift its cumulative GDP by US$700 billion and the U.K by US$531 billion within the next 15 years.3 This would raise German gross domestic product and United Kingdom gross domestic product by 1.7 and 1.8 percent, respectively, in 2030 over trend projections.
  • 15. IIoT MARKET INSIGHTS 15 4.4 Are Countries Laying the Right Foundations? NAC INDEX: A country with a National Absorptive Capacity (NAC) score of 100 would be the top performer on each of the 55 indicators compared to the other study countries. Overall, the results show that no one country has achieved this level of NAC. In other words, every country has work to do. Figure 10. Rankings of countries’ Industrial Internet of Things enabling factors The ranking model incorporates four measures of a country’s enabling factors. The business commons includes reliable banking and finance, education, good governance and a healthy network of suppliers. A category of take-off factors includes the levels of R&D, the presence of high-tech companies and the degree of technology skills. The wide diffusion of technology requires effective transfer factors, such as the level of social and end-user acceptance, the willingness to embrace organizational change and an ability to respond to the impacts on human capital. Finally, a group of characteristics determine a country’s ability to reach a level we term as the self-sustaining innovation dynamo, when the ubiquity of IIoT technology acts as a multiplier effect on existing levels of entrepreneurialism and the ability to commercialize new ideas.
  • 16. IIoT MARKET INSIGHTS 16 5 MARKET ESTIMATES As per my analysis, I believe that the Global IIoT Market will account for US$ 135 billion in 2016 and will reach to US$ 590 billion by 2022, expanding at a CAGR of 28.26% during the forecast period 2017-2022. Table 4. Global IIoT Market Size (US$ billion) and Y-o-Y Growth (%) Year 2015 2016 2017 2018 2019 2020 2021 2022 CAGR (2017 – 2022) Market Size ($ Billions) 108 135 170 217 278 358 460 590 28.26% Y-o-Y Growth (%) 25.00% 25.93% 27.65% 28.28% 28.61% 28.49% 28.26% 25.00% The IIoT market can be segmented on the basis of services, software solutions, platforms, and application areas, as follows: By Service  Professional service  Deployment and integration  Support and maintenance  Consulting service  Managed service By Software Solution  Real- time Streaming Analytics  Security solution  Data management  Remote monitoring system  Network bandwidth management
  • 17. IIoT MARKET INSIGHTS 17 By Platform  Device management  Application management  Network management By Application Area  Building and home automation  Smart energy and utilities  Smart manufacturing  Connected logistics  Smart retail  Smart mobility and transportation  Others Some of the major vendors in the IIoT market include Hewlett Packard Enterprise, Google Inc., Amazon Web Services, General Electric, Bosch Software Innovation GmbH, Intel Corporation, Cisco Systems, Inc., SAP SE, Microsoft Corporation, IBM Corporation, Oracle Corporation, and PTC Inc. among others.
  • 18. IIoT MARKET INSIGHTS 18 6 MARKET LANDSCAPE 6.1 IIoT Market Landscape Figure 11. IIoT Market Landscape
  • 19. IIoT MARKET INSIGHTS 19 6.2 Market Positioning of Key Players Figure 12. IIoT Dimensions 6.3 Investors in IIoT Figure 13. Most Active Investors in the IIoT Arena
  • 20. IIoT MARKET INSIGHTS 20 6.4 Major IIoT M&A Transactions
  • 22. IIoT MARKET INSIGHTS 22 7 CONCLUSION Figure 14. Digitization Across Various Industries with IIoT IIoT is often presented as a revolution that is changing the face of industry in a profound manner. In reality, it is an evolution that has its origins in technologies and functionalities developed by visionary automation suppliers more than 15 years ago. As the necessary global standards mature, it may well take another 15 years to realise the full potential of IIoT. Over this period of time the changes to the industry will be far reaching. The good news is that end users and machine builders can now leverage their existing investments in technology and people while taking advantage of available new IIoT technologies. Introducing IIoT solutions using a “wrap & re-use” approach, rather than a “rip & replace” approach will enable greater business control. In addition, this measured approach will drive the evolution towards a smart manufacturing enterprise that is more efficient, safer, and sustainable. The emergence of the IIoT megatrend has created both hope and confusion among stakeholders responsible for operating industrial plants. Much of the early hype was focused on the impact of technological advancements on existing automation platforms.