What's ahead for IoT in the next decade?

The Internet of Things (IoT) is revolutionizing the way we interact with the world around us. It refers to the vast network of interconnected devices and objects that collect, exchange, and analyze data. Through seamless connectivity and intelligent communication, the IoT enables everyday objects to become "smart" and enhances our ability to monitor, control, and automate various aspects of our lives.

By incorporating sensors, actuators, and internet connectivity, IoT devices can gather valuable information from their surroundings and transmit it to other devices or systems. This data can be harnessed to gain insights, improve efficiency, and create new services and experiences. From smart homes and cities to industrial automation and healthcare applications, the potential of the IoT is vast and continually expanding.

With billions of connected devices and projected exponential growth in the coming years, the IoT drives transformative changes across industries and sectors. It offers unprecedented opportunities for innovation, efficiency, and convenience.

Transforma Insights projects that the global IoT landscape will substantially increase, with an estimated 34.4 billion interconnected IoT devices worldwide in 2032. However, considering the information from 2022, we can ascertain that there were already 13.2 billion active IoT devices globally. This data implies a remarkable upcoming surge in the market, resulting in a threefold increase facilitated by a compound annual growth rate of 10%. Furthermore, the annual shipment of IoT devices is expected to grow from 3.6 billion in 2022 to 7.9 billion in 2032, according to the same report.

One striking observation from the report is the consistent and gradual growth within the broader IoT market. Unlike some markets that experience exponential spikes, the IoT market demonstrates a more balanced and steadier trajectory. When viewed as a collective whole, the growth remains steady rather than sensational, encompassing various sectors contributing to the IoT ecosystem. Moreover, even when the market is examined at a more granular level, the growth rates continue to follow a predominantly linear pattern.

Slow replacement rates are part of the deal

The growth of IoT faces some challenges due to the prevailing market dynamics characterized by inertia and slow replacement rates. Rapid adoption is not the norm in this landscape, as enterprises and consumers encounter challenges that impede the pace of IoT implementation.

One major obstacle is the time it takes to convince businesses and individuals of the value proposition associated with adopting IoT. While the benefits of full automation in areas such as warehouses or industrial processes are substantial, the implementation journey involves extensive proof-of-concept testing, system integration, and adaptation of existing processes. It is akin to maneuvering a massive super-tanker, requiring considerable time and effort. This is why İnnova approaches IoT projects with a business goal-oriented, focusing on the value IoT technology can bring to organizations.

Moreover, even after stakeholders are convinced of the value, there is often a subsequent delay caused by replacement cycles. This is particularly evident in the case of connected cars, where the adoption of IoT relies on the typical replacement rate of vehicles. Depending on the location, this replacement cycle typically spans 10 to 20 years. However, according to the statistics and predictions, this inertia and slow replacement rates can't stop the seemingly inevitable rise of IoT.

Rapidly growing rare verticals

Although a few select applications within the IoT landscape experience rapid growth within a short time, they remain the exception rather than the norm. Upon delving into the most detailed level of Transforma Insights' forecasts, and examining the 200-300 individual applications, a handful exhibit growth rates resembling a "hockey-stick" pattern. However, these applications constitute a minority and do not significantly impact the overall market growth.

Typically, these exceptional cases arise from consumer devices that possess an inherent appeal and capture the interest of a wide audience or from highly regulated sectors. An example of the latter is observed in the accelerated deployment of smart meters, which often occurs within a compressed timeframe due to specific regulations. However, even within this specific application category, the rules and regulations governing smart metering vary greatly across different countries. Consequently, when combined, these variations result in overlapping growth patterns that contribute to a more balanced and gradual overall expansion.

It is noteworthy that encountering "hockey-stick" growth rates in the IoT domain is a rarity since the market is characterized by steady growth. This is a good indicator: IoT is converging with other technologies and impacting many areas, from smart cities to enterprises and homes. The steady increase in adoption suggests that the Internet of Things will impact our lives in more areas and with greater impact in the future.

What will the IoT landscape look like in 2032?

Over the next decade, consumer applications will dominate the IoT landscape, encompassing 71% of all connections. Five of the top twelve IoT applications belong to consumer electronics, including headphones, connected TVs, smart speakers, smartwatches, and home video equipment. Additionally, several applications straddle consumer and enterprise domains, such as building lighting, smart electricity metering, and factory-fit vehicle head units.

Interestingly, the largest IoT application will be electronic shelf labeling, with an impressive 2.7 billion connected devices. While it may not be the most glamorous application, its demand for high volumes and tangible return on investment makes it a prominent contender.

Short-range solutions take the lead by a significant margin regarding technology preferences within the IoT realm. The cost-effectiveness of short-range hardware and the absence of associated service fees make it the preferred choice for most organizations, whenever applicable. Most IoT devices find deployment in environments with access to short-range networks, such as homes, offices, or factories.

From short to long-range connectivity

According to the report, almost three-quarters of IoT devices will be connected through short-range technologies like Wi-Fi, Bluetooth, or Zigbee. The remaining devices primarily rely on cellular networks for connectivity. However, the dominance of short-range technologies is expected to diminish over the decade leading up to 2032. Their share is projected to decrease from 78% in 2022 to 73.5% in 2032, largely due to the rise of Low Power Wide Area (LPWA) technologies. This includes 5G mMTC technologies like NB-IoT and LTE-M, as well as unlicensed technologies such as LoRaWAN and Sigfox. These cost-effective options offer expanded capabilities and are poised to unlock various applications, including smart labels and affordable environmental or asset monitoring devices.

LPWA technologies are expected to grow from 698 million connections in 2022, with a strong focus on NB-IoT adoption in China, to 5.2 billion connections globally. Among LPWA technologies, mMTC technologies utilizing licensed spectrum will dominate, accounting for around two-thirds of LPWA connections by 2032, increasing from 62% in 2022 to 68% in 2032.

The utilization of satellites for IoT purposes is also set to experience rapid growth due to the emergence of new Low Earth Orbit constellations. However, despite this expansion, the share occupied by satellite connections remains relatively small. In 2022, satellites accounted for a mere 0.05% of all IoT connections, projected to increase to 0.17% by 2032. While satellite adoption will outperform the overall market, its contribution is not expected to represent a significantly substantial portion.