IoT Analytics adjusts IoT forecast for 2021
IoT Analytics, a market research firm covering IoT, AI, cloud, edge, and Industry 4.0, reported that the enterprise IoT market grew by 22.4% in 2021 to $158 billion. Rising input prices, a skilled labor shortage, and an ongoing chip shortage created limitations on market growth last year. Meanwhile, technologies such as AI, 5G, and cloud will continue to play a major role in IoT market growth going forward.
“The market grew slightly slower than the 24% forecasted last year due to several factors, including a slower-than-anticipated overall economic recovery, a lack of chipsets, and disrupted supply chains,” said Knud Lasse Lueth, CEO of IoT Analytics in a press release.
“Key macro tailwinds for the IoT market size going forward include maturing technologies such as AI, 5G, and cloud as well as the role that IoT plays in reaching sustainability goals,” Philipp Wegner, Principal Analyst at IoT Analytics added.
According to the firm’s Global IoT Enterprise Spending Dashboard, the updated forecast for the enterprise IoT market is to grow at a CAGR of 22% to $525 billion by 2027. The number has gone down more than the previous year’s prediction due to the headwinds impacting the market more than expected.
Source: IoT Analytics
The report provided a detailed analysis of the IoT market growth trajectory and the macro trends in the area of economics, political developments, environmental factors, and technological advances influencing the forecast.
Add to that other macroeconomic issues relating to war. According to a blog post by the International Monetary Fund MF on the Russian invasion of Ukraine, “The conflict is a major blow to the global economy that will hurt growth and raise prices.” In the January 2022 World Economic Outlook, the IMF forecasted a GDP growth of 4.4% in 2022 after a 5.9% growth in 2021. The business confidence and recovery in private consumption are weaker than previously expected, affecting the enterprise IoT market.
Even though the report found that improving a company’s operational efficiency is among the top reasons to implement IoT, the overall impact of the benefit will not be strong enough to outweigh the negative economic environment. To cope with inflation, central banks around the world have started to increase interest rates which has affected the technology firms’ and startups’ valuation under pressure.
The technological factors expected to affect the market include chip shortages, maturing artificial intelligence and connectivity, expansion of IoT cloud, and increasing cybersecurity incidents. According to IoT Analytics, the cellular IoT market was expected to witness a shortage of 20 million chips. The shortage is anticipated to continue as the chip lead time of 40-50 weeks has become the new industry average. To beat the chip shortage, several investments have been announced to reform the packaging technologies as Intel recently announced an investment of ~$89 billion in R&D, the report’s authors noted.
Maturing artificial intelligence in IoT projects with the availability of simplified AI solutions and the integration of AI capabilities on embedded devices are expected to boost the Artificial Intelligence of Things (AIoT), which is estimated to reach $102.2 billion by the year 2026.
Leading cloud vendors like Microsoft, AWS, and Google have shown significant interest in helping enterprises migrate workloads to cloud processing. These along with several other cloud vendors have become the backbone of enterprise IoT efforts as well and plan to continue their strong commitment to the growing IoT market for the years to come.
Next-generation 5G wireless connectivity providers have been focusing on enterprise businesses with maturing connectivity technologies like LPWAN, Wi-Fi 6, and single pair ethernet. The low-cost wireless connectivity will continue to support the growth of the IoT market towards sustainability and scalability with private 5G networks, the report noted.
Article Topics
5G | edge AI | edge computing | Industry 4.0 | IoT | IoTAnalytics | market forecast
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