Insight: The Business of IoT

Posted by Mae Kowalke on Tuesday, June 16, 2015 with No comments

The Internet of Things (IoT) is an exciting new area of communications technology, promising to positively transform the lives of consumers as well as business processes and industry efficiency. On the vendor and service provider side, IoT also represents a significant business opportunity. Here's an overview of some recent predictions about that opportunity, and developments in the market. 

First, an obligatory market growth prediction. 

Analyst firm Berg Insight recently projected that the global market for third party IoT platforms will experience solid growth in the next few years, growing at a compound annual growth rate of 32.2% from 2014 to 2020, FierceWirelessEurope reported.

Such platforms are relatively new to the market, FierceWireless noted, with a great deal of functionality and application diversity. But, they generally fit into three categories: device management platforms, connectivity management platforms, and application enablement platforms.  

The IoT market isn't just growing, it's also morphing. Mergers and acquisitions (M&A) are a predictable aspect of that change. 

So far in 2015, IoT-related M&A activity has shattered records, FierceWirelessEurope said
citing a recent 451 Research report. The year isn't even half over yet, and already buyers have spent $14.8 billion to purchase 39 IoT-related companies--more than all IoT related M&A for the entire year of 2014. The bulk of that activity involved semiconductor-related acquisitions.

Meanwhile, IoT's business opportunity is attracting the attention of venture capitalists (VCs). During 2013, 153 venture deals were struck, totaling $1 billion in investments, for companies involved in IoT products and services, RCRWireless said, citing a recent Inc. report. Accurate figures aren't in yet for 2014, but it's likely that year saw $1.6 billion in IoT VC investments. 

Finally, it's worth noting the impact IoT is having on network operator strategies, in particular their development of Software Defined Networking (SDN)- and Network Functions Virtualization (NFV)-related business cases. 

Light Reading thinks operators may find in IoT a compelling business case for deploying SDN and NFV. Why? IoT involves many, many small sensors and devices that collectively generate a tsunami of data, which can only be effectively managed with network elasticity and flexibility. SDN and NFV makes that possible.  

The argument is that deploying SDN and NFV gives operators the ability to better control their networks and adapt billing systems to handle many the many connections and value chain parties related to IoT. 

What do you see as the biggest business opportunities and hurdles related to IoT?
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