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IoT use cases come to fruition

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In a new update to the Worldwide Semiannual Internet of Things Spending Guide, International Data Corporation (IDC) forecasts that organisations across Western Europe will invest more than $145-billion in Internet of Things (IoT) hardware, software, services, and connectivity this year.

And IDC expects Western European IoT revenues will experience a compound annual growth rate (CAGR) of 18,9% over the 2016–2020 forecast period, reaching nearly $290-billion in 2020.

The Western European industries leading the way in IoT investments are manufacturing, at $28,7-billion in 2016, followed by utilities and transportation at nearly $18-billion and $17,5-billion, respectively.

Consumer IoT revenues are expected to reach $17,6-billion this year.

The IoT use cases receiving the greatest levels of investment from WE organisations across these four market segments are:

* Manufacturing operations, which support digitally-executed manufacturing, or how manufacturers use intelligent and interconnected I/O (input output) tools, such as sensors, actuators, drives, and vision/video equipment, to enable the different components in the manufacturing field, such as machine tools, robots, and conveyor belts, to autonomously exchange information, trigger actions, and control each other.

* Smart grid (electricity), where non-smart meter field devices owned by the electricity utility are used to control and optimise power flow to ensure efficient, safe and reliable service. The devices used throughout the electricity distribution grid for tasks including line sensing, substation automation, feeder and line equipment control and optimization. Utility owned in-home devices (such as smart meters) are included in this category when used for grid operations.

* Freight monitoring, which uses radio frequency identification (RFID), global positioning systems (GPS), GPRS, and GIS technologies to create an intelligent, Internet-connected transportation system. This system carries out the intelligent recognition, location, tracking and monitoring of freight and cargo through exchanging information and realtime communications via wireless, satellite or other channels, paving the way to the multimodal transportation system that is characterizing the evolution of the sector in Europe.

* Smart home utilises IoT technology to enable environmental (temperature, humidity), consumption (energy, water), and home system (lighting, heater, conditioner, window shutters, door locks) monitoring and enablement via mobile apps or Web sites. Utilities’ smart meter investments are not included in this use case, nor are home entertainment or gaming systems.

Looking across all Western European use cases, manufacturing operations, smart grid (electricity), freight monitoring, and smart home will receive the greatest levels of investment throughout IDC’s forecast, being among the top five use cases for 2016 spending.

However, two additional use cases – omni-channel operations in retail and production asset management in manufacturing – will be among the largest use cases in terms of revenue by 2020.

The IoT use cases that will experience the greatest revenue growth in Western Europe are smart buildings, smart home, in-store contextualized marketing, and connected vehicles, all of which will see revenue increases of more than 28% CAGR over the 2016-2020 forecast period.

“Companies will invest significant amounts on IoT solutions – making the market potential significant for vendors. Those who have the clearest message for buyers but also a clear understanding of the role they want to play themselves in IoT, and that filled in by their partner ecosystem will emerge as early leaders,” says Lionel Lamy, IDC European IoT practice co-lead.

While manufacturing will lead the way in terms of Western European IoT investments, the insurance and retail industries will see IoT spending levels increase by 138% and 130%, respectively, over the forecast period, representing the two fastest growing WE business sectors.

Nevertheless, consumer will represent the true fastest vertical sector, with spending for consumer IoT solutions forecast to increase nearly 160% between 2016 and 2020.

“IoT adoption and use cases vary strongly across industry sectors, with flourishing opportunities on both the business and consumer sides,” says Andrea Siviero, IDC European practice co-lead.

“All industries are now familiar with the IoT concept and there has been an explosion of industry-specific pilots in recent months, the next step for adopters is to understand how to make IoT have a deeper impact on their business activities and extrapolating bang for the buck from their IoT investments.”