The Internet of Things is constantly in the news, and it’s no wonder: 2016 has been dubbed the “Year that IoT goes mainstream.” Much as smartphone use outstripped desktop computers back in 2011, the need for constant connectivity is driving sales in everything from smart cities to smart health, smart homes and smart accessories. With endless possibilities for connected products and widespread recognition of the value inherent in IoT-driven data, the foremost question asked is whether these smart products can guarantee a high return on investment. The complexity inherent in smart product production legitimizes these concerns. However, positive sales statistics should allay these fears: The penetration rate for smart products surged in 2015, and smart devices have already generated increased revenue in multiple verticals. The most recent data demonstrates that IoT market penetration is growing rapidly, as have consumers’ expectations for more connectivity wherever they are, with whatever they use.
Manufacturers are gearing up for a smart product economy
Technology companies across the spectrum are publishing reports surveying the impact of the ‘smart product economy’. In one study, over half of the surveyed businesses involved in industrial equipment and packaging had already developed smart products. Seebo recently conducted a survey in which 300 product manufacturers were asked, “Have you already begun developing an IoT Product?” The answer: 91% of respondents were exploring, preparing to start within 6-12 months, or had already begun development on a smart product.
In its “Agenda Overview for the Internet of Things”, Gartner shows that data from connected products doubles every two years, and the economic value from smart products is expected to reach $1.7 trillion by 2020. A survey by Researchgate.net corroborated these findings and placed smart product sales from last year at nearly a trillion U.S. dollars. Wireless networks feel the impact immediately, and judging by Verizon’s $585 million in annual revenue from its connected devices technology, 2015 proved the tremendous impact that connected capabilities have on business ROI.
2015: Strong ROI from smart homes to smart wearables
Looking directly at the consumer goods market, statistics reveal just how deeply smart products have already penetrated. Smart wearables, perhaps the most widely-known form of smart product thanks to Apple’s smart watch, earned companies $4.5 billion in revenue in 2014, and is expected to surge to over $50 billion in retail revenue by 2019. The smart fabrics and textiles market brought in over $1.47 billion in 2015 alone and is expected to hit over $2 billion by 2018.
Another industry which has attracted less buzz than wearables, but which has quietly built up revenue from smart products in the last five years, is the smart homes market. A survey by iControl demonstrates how homeowners are actively searching for smarter ways to save energy costs and increase home security: 72% of surveyed consumers were excited about smart energy efficiency and smart security measures. This push by consumers for smart energy solutions explains the data on global smart thermostat sales, which grew by 123% in 2015. In particular, new home buyers and anyone renovating their homes are keen on implementing smart security solutions such as smart safes , connected home monitoring cameras, and remotely locking smart doors.
Another factor which predicts even higher ROI from smart products is the polarity of spending between young versus old consumers. In the survey above, young adults (25-34) were significantly more likely to purchase smart products than their older counterparts. As millennials accrue more disposable income in the next five years, the spending on smart connected products will increase exponentially.
IoT penetration: From infrastructure to individuals
Smart product penetration has already spread beyond individual consumers; in fact, cities and infrastructure currently display the most dramatic ROI for smart technology. Cities such as Ipswich are saving thousands of dollars through smart irrigation systems and controllers in public spaces such as sports arenas and parks. The same technology also cuts water costs when applied to individual lawns and other private properties. This power to serve individuals and infrastructures equally, often utilizing the same technology, exemplifies the strength and ubiquity of IoT – users are unknowingly surrounded by smart products and slowly become dependent on the technology in multiple arenas in their lives.
IoT has already proven its value to business and consumers; manufacturers must show their capacity to keep up with the technological revolution and cater to always-connected consumers.