One of the analysts for the German-based analyst firm, IoT Analytics, found me a bit over a year ago. The firm, founded by Knud Lasse Lueth, specializes in research and consulting on IoT broadly speaking. I am affiliated with the firm as an advisor. I’ve participated in some research and recommend it if you’re in the market.
Lueth authored a report on digital and IoT markets. I’ve included some of the interesting findings. You can download a summary or purchase the report by following the link.
Key Insights
- Digital and IoT markets continue to accelerate, with North American and European enterprise customers leading the way.
- Cloud and cybersecurity—but also topics such as no-code—are becoming more important to end-users.
- Pharma and energy verticals are leading the recovery, while automotive, buildings, and oil and gas lag behind.
Why it matters?
- Due to the current uncertain business environment, IoT technology vendors can win market share by targeting the most attractive regions, technologies, and verticals while deprioritizing the less attractive ones.
The opportunities and threats of highly dynamic technology markets
We recently interviewed an IoT technology provider that almost lost the entire business due to COVID-19 effects but then pivoted quickly. The company had found initial market success providing solutions for the digitalization of commercial office buildings. In early 2020, COVID-19 hit, and overnight, all investments in commercial office buildings were halted as people stayed home. Six months later, while still in the middle of lockdowns, the company was thriving again.
Why? They had shifted their efforts toward the digitalization of specialty buildings, such as airports and hospitals, which were in urgent need of tracking and other IoT applications.
This example shows that, in changing times, the success of an entire technology business can depend on understanding which market segments are or remain attractive and which ones are limiting their budgets. Markets can change radically in a matter of months, and technology vendors need to be aware of these changes and be ready to pivot.
The current state of the Internet of Things: Twice a year, we provide our view on the current IoT market environment, offering our clients a general market overview of enterprise technology with a focus on Internet of Things-related businesses and use cases. The latest 148-page State of IoT report highlights 100+ recent IoT-related news stories, the 100 largest IoT-related funding rounds of the last nine months, major acquisitions in the space, our team’s input on 36 current trends, and a view of the IoT vendor landscape.
The report also includes our view of the IoT technology market attractiveness and general sentiment in 20 industry verticals, the four main global regions, and along 10 elements of the IoT tech stack. Here are some of the highlights from our summer 2021 analysis.
Regional view: North America and Europe leading out of the pandemic
Tech budgets in 2021 and going into 2022 differ greatly by region. These budgets are still strongly correlated to regional COVID-19 impacts, with North America and Europe increasing IoT tech spending, while most places in APAC and the rest of the world are cautious when it comes to innovation and tech investments.
Overall business sentiment across all companies in North America has surpassed pre-COVID-19 levels. In North America in the second quarter (Q2) of 2021, business sentiment indexed at 107, compared to an index of 100 in Q2 2019. Europe is also strong at 104.
Technology view: Opportunities across the entire stack
Lueth includes eight technology topics the research found trending. I’ve included brief comments on them.
1. Cloud migration and modernization services
The migration of software workloads and entire software applications to private and public cloud environments accelerated in 2021. Growth rates for both Google Cloud and Microsoft Azure climbed back above 50% (year on year) in Q2 2021. For IoT vendors in general, there is a large opportunity in helping clients move their IoT assets and existing IoT-based applications to the cloud. Containers have become the de facto standard in modern software design. Leading software firms are modernizing their applications with serverless architectures (at least partially). Consistent data structures and state-of-the-art data warehouses are also a large area of investment.
2. Low-code/No-code development interfaces
The low-code/no-code trend is in full swing. Given the current shortage of global tech talent, it is more important than ever that companies allow non-techy users to easily use applications and develop solutions.
3. State-of-the-art cybersecurity setups or features
Cyberattacks have increased in the last two years, driven by the remote work trend and IT integrations with multiple (supplier) systems alongside poor cybersecurity practices in many firms.
4. End-to-end solutions that are easy to configure
Complexity is still the enemy of all IoT initiatives. IoT practitioners remain extremely thankful for solutions that allow a portion of the overall architecture to be seamlessly connected. Zero touch is the name of the game in IoT connectivity (i.e., onboarding new devices and connecting them to a network instantly).
5. Solutions supporting open application programming interfaces (APIs) and data ecosystems
There is an increasing focus on clean data and/or semantic data structures for contextualizing, synthesizing, and solving IoT data issues. The OPC Foundation, in collaboration with CESMII, for example, announced the launch of the OPC Unified Architecture (UA) cloud library joint working group (JWG) in October 2020 . The goal of the JWG is to specify how OPC UA information models of machines, supervisory control and data acquisition (SCADA), and manufacturing execution systems will be stored in and accessed from a cloud-based database.
6. Intelligent and connected edge solutions
The edge continues to become more intelligent, and vendors are racing to support more connected and smart edge devices.
An edge trend we have discussed in depth is the migration of control away from traditional programmable logic controllers (PLCs) in manufacturing environments. As further proof of this trend, several industrial automation vendors recently introduced new products that decouple industrial control software from the underlying hardware, enabling more flexible and interoperable control systems.
7. Offerings that support sustainability initiatives
Sustainability has become a CEO priority, as highlighted in some of our recent “What CEOs talked about” articles. IoT plays an important role for a sustainable planet, as also highlighted in previous research.
8. AI-infused software applications
Artificial intelligence is becoming ingrained in many legacy software applications, giving rise to new themes, such as machine learning model monitoring (MLOps or autoML), which automates the task of data integration and model creation.
