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See What’s Pushing up IoT Revenues

See What’s Pushing up IoT Revenues
by Pawan Fangaria on 07-21-2015 at 12:00 pm

The whole world’s eyes are at Internet of Things (IoT) market in various segments. The overall semiconductor ecosystem, starting from best suited technology nodes for IoT up to the final end products including sensors, microcontrollers, wireless chipsets, analog ICs, and so on are geared to avail the best opportunities from IoT market in coming years. If we put IoT in the perspective of connected cities or industrial applications, it doesn’t appear to be new, a significant amount of it is already happening in those segments. However, in modern age, IoT is being perceived as permeating in most of the aspects of our lives, thus unfolding the potential of internet in many more segments including home, automotive, wearable, medical, environment, and so on. The idea is for a human being to be able to monitor and control anything from anywhere at any time. So, definitely there will be many new segments evolving from the ground level adding into the expected ~25 billion IoT devices by 2020. We are already seeing good interest in home, automotive, and wearable segments; the wearable sales growth is showing promising future.

As we see in a graph from an IC Insights report, the connected cities has a large base with sales increasing at a modest rate, 19% in 2014 and forecasted 14.7% in 2015. The next is industrial internet at a base of about 1/4[SUP]th[/SUP] the base of connected cities and growing between 20 to 30% per year. The rest of the segments are relatively new and are miniscule in their base sizes. Look at the connected vehicle segment, it’s growing by 40+% per year but is expected to reach just $2 billion in 2015 which is ~3% of total forecast ($62.4 billion) of IoT market in 2015. Any guesses about how driverless cars can pan out in the near future?

The total IoT market does seem to grow at a healthy rate of ~29%, reaching $62.4 billion in 2015 from $48.4 billion in 2014. However, in my opinion, for this rate to sustain or grow further for the overall IoT market, the emerging segments that are with very small base need to grow their bases by multiple times. It’s encouraging to see the wearable segment; see its sales figure in 2014 and forecast in 2015. It’s more than 450% jump from $1.1 billion in 2014 to $6.1 billion in 2015. This will push wearable segment in 3[SUP]rd[/SUP] position in terms of base sales in the IoT market. Will this momentum in wearable segment continue? I guess it should because that comprises of many things including smartwatches, fitness bands, smart ornaments, smart glasses (Google is now working on smart lens), some healthcare devices, and so on. According to IC Insights earlier report, they anyway forecast IoT market to grow at a CAGR of ~21% until 2018 reaching ~$104 billion.

Whether we agree or not, we did see a budge in smartwatch segment after AppleWatch launch in April. According to Slice Intelligence, estimated Apple Watch sales could be about 3 million units by now. However there are conflicting rumours about Apple Watch sales in the market. Although the actual figure from Apple is yet to be seen, to me it appears to be much higher than Fitbit sales, the next major in wearable segment. Apple Watch is a compact good design but needs some key improvements. If Apple is able to address those in their next version of Apple Watch and that invades the large watch industry, then the wearable segment can grow by much larger extent.

The IC Insights report is HERE. See more details there on new connections to IoT which have grown from 282 million in 2013 to 410 million in 2014 and are expected to grow further to 574 million in 2015 and ~1.4 billion in 2018.

Also read: Apple Watch – A Great New Design, Needs More

Pawan Kumar Fangaria
Founder & President at www.fangarias.com


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