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Machina Research predicts that the IoT market opportunity will be worth US$4.3 trillion in 2024. That would position it amongst the top five largest national economies, surpassing such giants as Germany, Brazil and the UK. It will undoubtedly be a contributing factor to many developing economies and industries. But is the figure too high? With global IT spending at nearly US$3.8 trillion currently, and M2M and IoT revenue opportunities at US$0.9 trillion in 2014,1 IoT market opportunities will be guided by developments in both these markets. Machina Research points to the fact that as M2M markets evolve and transform to IoT, these markets will include greater shares of traditional IT markets, ultimately subsuming them. This is a disruptive time for the IT industry.

When M2M markets become IoT markets

Markets are in the process of changing and transforming from M2M to IoT. It will never be easy to define what ultimately differentiates the two markets when watching change as it takes place. However, Machina Research has identified a number of characteristics that are definitely changing. These include:

• A significantly greater number of connections to devices and sensors but also to corporate IT systems, other IoT applications, social media, published data feeds, and so on,
• A shift from vertically structured, ‘stovepipe’ solutions to open systems nurturing application and data sharing, and
• A focus on application development and the reuse of data to create new and innovative services or efficiencies with tangible benefits for enterprises.

IoT opportunities build on the four major building blocks of M2M revenue: devices, installation, connectivity and M2M services. As illustrated in Figure 1, these amount to US$2.5 trillion by the end of 2024.

Achieving a full set of opportunities from IoT will be dependent on the continued growth and development in these M2M areas. In fact, one-off revenue from devices will continue to form the most significant component in any revenue picture of M2M and IoT markets.

IoT becomes the driving force behind applications and data opportunity growth

Enterprises have started to recognise and exploit opportunities in IoT through applications and data. These opportunities have ranged from new services and business efficiencies to improving customer experiences and launching new business models.

To enable this level of application and data management, traditional IT areas such as system integration (professional services), data centre systems, IT services and enterprise software will become increasingly integrated and aligned with IoT solutions. The market is still at a fairly early stage but a major assumption around IoT markets is that they will become closely aligned with and resemble today’s IT markets, and ultimately subsume them.
Machina Research has identified four main areas where IoT opportunities will emerge from this convergence with IT: applications (provisioning, hosting and developing), platforms (enablement middleware), systems integration and strategy work, and data monetisation and IoT services. These four areas combined will deliver an IoT market opportunity of US$1.8 trillion by the end of 2024 as illustrated in Figure 1.

IoT market opportunity: a US$4.3 trillion market by 2024

Four drivers will move markets to this global level: growth in devices and M2M services, acceleration of application development and requirements, and an increasing level of work in system integration and strategy. Enterprises are defining and refining their IoT strategies, and implementing IoT as integral business change enablers. The lack of innovation remains the greatest challenge to achieving this market opportunity.
For more information on the evolution from M2M to IoT and the growth opportunities associated with the Internet of Things, including more details on the US$4.3 trillion opportunity, please refer to the Research Note “Forecasting the Internet of Things revenue opportunity” (April 2015).

1 Identified M2M revenue for 2014 from Machina Research Global M2M Forecast Database. This figure includes all M2M devices and PCs, tablets and handsets