What if the Internet of Things isn’t actually the “Next Big Thing?”
For a few years now, it’s been all the Internet of Things (IoT) this and connectivity that, but one research firm would like businesses to hold their collective horses for a hot second and reevaluate the amount of money they’re investing. In fact it’s possible we’re all heading down a dark path based on over exuberant forecasts about quickly the technology will grow.
Some experts claim that by 2020 there will be somewhere between 10 and 50 billion connected devices. This represents trillions of dollars in revenue by 2025. But for Beecham Research, a firm recognized for their IoT expertise, these numbers are both “unrealistic” and “potentially damaging.”
It’s not that IoT and connected devices aren’t a quickly growing industry. It’s more that the numbers being projected might not be realistic, and that means that companies are gambling on an investment that might not pan out until much further down the road.
Beecham Research looked at the number of current connected devices–excluding phones and general purpose electronics like tablets–and found significantly fewer than 1 billion of these devices currently exist. That means that despite long term growth in the industry being between 20 to 30 percent annually, these forecasters are banking on 50 percent (or more) per annum. It’s just not going to happen. There would be no catalyst for the sudden spike in devices, and even if something came up that increased the growth rate by 20 to 30 percent per year, the industry lacks the resources to install and implement them.
If you’re wondering why smart phones and general devices aren’t counted, it’s because the growth parts of the industry are slated to be in HVAC, smart homes, smart offices, alarms, and other integrated systems. But this really hasn’t materialized in a way that is going to affect the growth of the industry to that degree. A house might have 10 or so connected devices, but not enough to produce an increase of billions of connected devices in the next decade.
Beecham Research does note that while smart homes haven’t taken off the way analysts thought they might, LPWANs have offered up a small growth area in the industry.
As for those trillions of dollars of revenue? To put it in perspective the annual GDP of the United States is 18 trillion dollars and that represents the biggest national economy in the world. To make the trillions of dollars of revenue numbers true, IoT would have to grow to represent 10 percent of the total GDP in just a decade.
The big concern is that companies are going to put unrealistic investments into IoT, expecting to see a return more quickly than they actually will.