2015 was the hype year for the Internet of Things (IoT), or what research giant Gartner refers to as the ‘peak of inflated expectations’. Despite strong predictions by Gartner and others IoT studies, people wondered if the Internet of Things would lead to genuine smart product adoption in the mass market.
A year later, the results for 2016 are in: While adoption is progressing slowly in some industries, smart products have led to increased revenue for numerous verticals and raised expectations for ROI from the internet of things. Market reports go a step further and now declare that IoT is “going mainstream”.
If 2015 was the year of Internet of Things hype, here are five signs that smart product adoption by consumers, manufacturers and ecosystem players is on the rise.
1. Smart product adoption is generating ROI
The Internet of Things brought in $750 billion worldwide in 2015, according to aMachina research report. A growing number of companies already reported increased revenues thanks to smart products integrated with information systems and devices. Intel, one of the largest stakeholders in the Internet of Things, saw its IoT revenue grow by 2% to $572 million this past year. Glancing at a few verticals, sales of smart home audio devices and ‘hearables’ brought the revenue for the smart audio market to $1 billion this year. Similarly, in the industrial world,smart electricity meters generated over $4 billion in revenue in 2015. The growing adoption of smart products has prominently impacted revenue for everyone in the IoT ecosystem, and companies are vying for greater roles in the smart product market in 2017.
2. Big companies are fighting to strengthen their footholds in IoT
Companies like Cisco and General Electric are changing strategies and fighting for dominance in the Internet of Things.Cisco intends to lay off nearly 7% of its workforce – 5,500 jobs – in a restructuring that includes new investments in IoT, next-generation data center, cloud, and other areas. The company saw an increase in revenue in 2015, strengthening their claim that the move is a proactive one. It is even better understood in the context thatCisco and General Electric are racing each other to “dominate the widely coveted Internet of Things landscape.” The two giants are now in a dead heat to re-brand themselves as premier industrial IoT providers.
The dramatic changes occurring in Cisco are a clear sign that communications and computing giants consider IoT to be the best investment they can make for their company. And that’s a good sign for smart product adoption for other companies as well.
3. Smart product adoption by IoT players: designers and developers are getting on board the Internet of Things
90% of designers surveyed by Morgan Stanley are “adding connectivity to IoT.” The company’s AlphaWise survey in May pointed out that software developers and product designers who want their skills to stay relevant, look at the way the industry progresses and sniff out opportunities. This data correlates a survey from Upwork, which saw a dramatic increase in the number of job postings for learning IoT-related development skills. VisionMobile projects there will be 4.5 million developers involved in IoT by 2020, “a 57% compound annual growth rate and a massive market opportunity“. Smart product design and the accompanying software and firmware development skillsets are high in demand, and professionals are broadening their skillsets to adopt to the new technology and advance with it.
4. As competition increases, variety flourishes, disruption status disappears, and users buy more
The smart product market is widening. One smart offering will disrupt an industry, but ten will create new standards, raise competition, lower prices and introduce a diversity of new features. Smart sprinkler controllers now set the standard for the industry, thanks to big names like Rachio and Skydrop. There are also wholelists of smart irrigation controllers for commercial and industrial use. The same applies for smart thermostats and air conditioners, which, according toNavigant research are some of the most popular smart products being purchased by consumers.Nest,Sensibo andHoneywell show that everyone from established brands to spunky startups are increasing their revenue from smart home products.
A perfect example is the smart vacuum cleaner industry. Just as smart products in 2016 see more competition, forcing manufacturers to get creative with smart features, competition drove the robotic vacuum company iRobot to reinvent Roomba, theoriginal robotic vacuum. through IoT. Today, Roomba operates remotely via an app on smartphones. The same product that was once a disruption is now removing the disruptive status of smart products.
5. Short range connectivity solutions are a growing, viable option
According to theMachina Research report, “71% of IoT devices use short-range [connectivity solutions] such as Wi-Fi and Bluetooth.” Consumer electronics, building and automation are the top verticals taking advantage of these solutions. However, component prices have shot down in the last few years and the supply and competition between different solutions have increased, all making connectivity a more viable option for consumer goods and industrial manufacturers.
Numerous reports are already coming out with positive IoT revenue forecasting for the next five to ten years – everyone from Gartner and IDC, to Berg Insight. But a look at data from 2016 alone is promising: More smart products enter the mainstream market and drive business value for everyone from startups to large corporations; more designers and developers learn the skills necessary for participating in the IoT ecosystem; and connectivity solutions are democratized to enable more product companies access to wireless connectivity.
Liran is Seebo’s Co-founder and serves as the COO. He is a driven and accomplished entrepreneur with hands-on experience leading software development, business development and company-wide integrated marketing initiatives. Prior to Seebo, he launched Playfect (acquired) with his brother Lior.