Global IoT Opportunity


Machina Research predicts that the IoT market opportunity will be worth USD4.3 trillion in 2024. As M2M markets evolve and transform to IoT, these markets will include greater shares of traditional IT markets, ultimately subsuming them.

There is an evolution happening from machine-to-machine (M2M) connectivity to the Internet of Things (IoT). Machina Research has been tracking this development for a long time. Up until now our highly detailed market sizing and forecasts (see the M2M Forecast Database for more details) have focused on the M2M market. Now we have revealed our views on the market opportunity associated with the wider Internet of Things. We put the value of that wider IoT at USD900 billion in 2014, rising to USD4.3 trillion in 2024.

Although there is no commonly accepted distinction between the two, we have 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.

In order to value the IoT we have taken account of these wider elements in the ecosystem, over and above the simple M2M opportunity. That M2M element is a crucial part of the revenue associated with IoT: the four major building blocks of M2M revenue (devices, installation, connectivity and M2M services) will be worth approximately USD2.5 trillion by the end of 2024. Even in the exciting new world of IoT, the single biggest revenue opportunity is associated with the one-off revenue from connected device hardware.

However, the IoT opportunity is wider than this. To enable the level of application and data management implicit in the IoT, 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 USD1.8 trillion by the end of 2024.

Commenting on the findings, Machina Research's Emil Berthelsen said: "With a value of USD4.3 trillion, the IoT will have a collective value in excess of many of the world's leading economies, including Germany, Brazil and the UK." He is bullish about the opportunity, identifying four drivers that 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. This is, he notes, a trend that is gaining momentum: "Enterprises are defining and refining their IoT strategies, and implementing IoT as integral business change enablers." However, he has a warning: "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 USD4.3 trillion opportunity, please refer to the Research Note “Forecasting the Internet of Things revenue opportunity” (April 2015).

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