As a market researcher, industry analyst, and consultancy firm, our independent research and analysis shows that while the hype has faded, the Industrial IoT (IIoT) industry is still growing. higher than the main industrial OT (Operational Technology) and IT companies. . But disruptors, for example in the semiconductor, automotive and telecommunications industries, are emerging to threaten established IoT companies.
Organizations and investors operating in this field need to understand the existing market and the potential for disruption when making decisions, assessing trends and developing effective marketing strategies.
State of established IIoT industry and connected market areas
The industrial IoT market is large and growing, and the term “connected” is more important than “IoT” in defining its scope. Vendors from the “OT”, “IT” and “pure IoT” backgrounds are well established, and “ET” (engineering technology) companies play an important role. The IIoT market is fragmented, with large and small vendors from different backgrounds. Many offer IoT platforms, some are totally focused on building connected applications using IoT, while others “test the water” with entry-level, sometimes integrated solutions. in products.
By defining nine connected market areas as shown in Figure 1 and analyzing frequent use cases, we can measure the market with granularity and identify trends.
Steady growth of companies offering industrial IoT software
Based on our analysis, the IIoT Software / Connected Applications market is showing consistently high growth. Figure 2 below shows three groups of IoT providers: “pure” IoT companies; Computer / enterprise software companies that have IoT solutions; and “OT” companies with IoT divisions.
Pure IoT companies are represented by companies such as C3.ai, PTC, and RTI.
“IT” companies / enterprises with IoT divisions include Amazon AWS, IBM, Microsoft, Oracle, SAP and Software AG.
“OT” companies with IoT divisions include ABB, Bosch, Emerson, GE Digital, Hitachi, Honeywell, Rockwell Automation, Schneider Electric and Siemens Digital Industries.
This growth is greater than that of major operational technologies (TOs) or IT / enterprise software vendors. For example, the OT parent companies listed above declined on average by 15% in 2020 and are only expected to grow 5% in 2021 and 2022.
IoT disruptors: semiconductors, automotive and telecommunications
The potential IoT market is so diverse that disruptors could come from many directions; three emerging sectors are semiconductor producers, the automotive market and telecommunications.
Involved in IoT since its inception, semiconductor producers and designers have increasingly improved software capabilities. Semiconductor pioneers (ARM, Intel, NVIDIA, Qualcomm, Samsung, and Texas Instruments) all provide software to support IoT applications such as industrial automation and autonomous vehicles.
Automakers are already some of the largest software developers in the world, and they are increasingly focusing on the smart, connected vehicle – a prime example of an IoT ‘thing’. If all of Toyota’s software developers were in one company, it would easily be in the top ten in the world. Audi recently announced the formation of CARIAD to centralize software development within the VW / Audi group with a focus on connected / autonomous electric vehicles. CARIAD will have more than 10,000 employees, making it the second largest software organization in Europe after SAP. Li Auto, Nio and Xpeng electric car companies are well established in China and are expanding worldwide. Renault has just launched Software République with Atos, Dassault, ST Microelectronics and Thales; this will foster collaboration and start-ups to create innovative mobility solutions and systems.
Most major telecom operators support connectivity as a natural extension of communications. 5G is a catalyst for IoT as it extends the spectrum and range of applications to the device. Edge computing is used to process data closer to the device and avoid latency issues. Telecom operators like AT&T, Deutsche Telekom, NTT and Verizon offer their own connected applications and hold a significant market share.
Friend or enemy?
All of the above disruptors are potential competitors in the IoT / connected apps market, but are they friends or foes?
Cambashi’s point of view is that – rather than displacing current suppliers – these “new” entrants will forge alliances in a complex ecosystem. This is illustrated by:
- Semiconductor producers: Intel recently announced that it is engaging with the technology ecosystem – including IBM – in its latest “IDM 2.0” vision for next-generation chips. NVIDIA works closely with ARM to deliver technology to the automotive industry through VW / Audi, Toyota and others, and to the AEC industry with Autodesk and Bentley Systems.
- Vehicle / device manufacturers: There are many collaborations between automotive and tech companies, such as the Autonomous Vehicle Computing Consortium (AVCC) involving ARM, Bosch, GM, NVIDIA, NXP and Toyota, and SAE International, which defines levels of automated driving and criteria. of security.
- Telecommunications operators partner with IT companies / businesses. For example, IBM, through its “IBM Cloud for Telecommunications” program, is working with the world’s leading telecommunications operators to improve their business offerings to include new cloud technologies. Microsoft and AT&T announced a strategic alliance to enable new 5G, cloud and edge computing solutions to boost the enterprise capabilities of businesses around the world.
Due to its rapid growth, the industrial IoT market is of great interest to software developers and investors. Market access for IIoT is through connected applications that connect real world ‘things’ to information systems and leverage AI (artificial intelligence), ML (machine learning) and others. analytical capabilities to deliver business benefits. Connected apps help drive digital transformation, which typically requires connected technology. A sign of a mature market shows that investing in IoT technologies is seldom self-sustaining; Most industrial automation projects involve the IoT that connected applications provide as part of a larger solution that often includes business systems such as ERP, PLM / CAx, MOM, and BIM. Expect to see disruptors emerging that are not currently recognized as IoT companies.
To predict the winners and losers of industrial IoT, it is necessary to observe and understand this ecosystem, the drivers and the place of your business.
Written by Alan Griffiths.
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