IoT Analytics says the success of an entire technology business can depend on understanding which market segments remain attractive and which ones are limiting their budgets.
Markets can change radically in a matter of months, and technology vendors need to be aware of these changes and be ready to pivot, IoT Analytics says.
The IoT Analytics report also included its views of the growth prospects and general sentiment in 20 industry verticals, the four main global regions, and 10 elements of the IoT stack.
Here are the highlights:
Overall state of IoT: Clearly accelerating, hampered by the chip shortage
Digital technology markets in general have seen steady and pervasive momentum in 2021.
As Accenture CEO Julie Sweet puts it in her conference call last 24 June: “The dynamics in the market we are seeing are not only of recovery from the lower spending pattern at the onset of the pandemic but a more sustained growth in demand as companies race to modernize and accelerate their digital initiatives.”
Nordic Semiconductor CEO Svenn-Tore Larsen says that this digital acceleration has clearly reached IoT markets.
IoT Analytics CEO Knud Lasse Lueth agrees, but adds there are two main concerns: the shortage of IoT semiconductor chips and the ongoing regional impacts of COVID-19 in APAC, Latin America, and Africa.
Regional view: North America and Europe leading out of the pandemic
Tech budgets in 2021 and going into 2022 differ greatly by region. These budgets are still strongly correlated to regional COVID-19 impacts, with North America and Europe increasing IoT tech spending, while most places in APAC and the rest of the world are cautious when it comes to innovation and tech investments.
Overall business sentiment across all companies in North America has surpassed pre-COVID-19 levels. In North America in the second quarter (Q2) of 2021, business sentiment indexed at 107, compared to an index of 100 in Q2 2019. Europe is also strong at 104, according to the report.
Technology view: Opportunities across the entire stack
Addressing some of the current demand trends in the market will help them strengthen their solutions and win customers. Here are eight important technology topics that customers are increasingly willing to pay for (the State of IoT report covers many additional and more technology-specific trends):
1. Cloud migration and modernisation services
The migration of software workloads and entire software applications to private and public cloud environments accelerated in 2021. Growth rates for both Google Cloud and Microsoft Azure climbed back above 50% (year on year) in Q2 2021.
For IoT vendors in general, there is a large opportunity in helping clients move their IoT assets and existing IoT-based applications to the cloud.
However, IoT software providers also face a growing need to modernise their existing software technology in the cloud. Containers have become the de facto standard in modern software design. Firms are modernising their applications with serverless architectures (at least partially) while some lagging software companies still have their applications optimised for on-premises installations (often with the option to host the software in the cloud but without any of today’s cloud-native functionalities). Consistent data structures and state-of-the-art data warehouses are also a large area of investment.
2. Low-code/No-code development interfaces
Given the current shortage of global tech talent, companies should allow non-techy users to easily use applications and develop solutions. Offerings such as C3.ai’s Ex Machina platform (announced for general availability in January 2021) are popping up in response to that need.
No-code (or at least low-code) interfaces are becoming a customer expectation in IoT software, much like they are in other software categories (e.g., low-code website builders that let a user design an entire website with no or little coding knowledge).
3. State-of-the-art cybersecurity setups or features
Cyberattacks have increased in the last two years, driven by the remote work trend and IT integrations with multiple (supplier) systems alongside poor cybersecurity practices in many firms.
The study reported that several IoT companies were subject to large cyberattacks in recent months, including Sierra Wireless, and Ubiquiti. As a result, enterprise spending for cyber tools has increased.
In 2021, many IoT companies introduced IoT security tools or features. u-blox launched a new IoT security as a service, Ericsson launched a new threat monitoring and mitigation service, and Microsoft announced its new firmware vulnerability detection tool.
4. End-to-end solutions that are easy to configure
IoT practitioners remain thankful for solutions that allow a portion of the overall architecture to be seamlessly connected. Zero touch is a gamechanger in IoT connectivity (i.e., onboarding new devices and connecting them to a network instantly).
Easy onboarding of devices to the cloud has become a general expectation of users. Ready-to-use software solutions are also increasingly common. Several system integrators, for example, have developed typical IoT applications that are available on IoT platforms marketplaces (e.g., Infosys’ asset efficiency solution in the PTC marketplace or HCL’s real-time manufacturing insight solution in the Microsoft Azure marketplace).
5. Solutions supporting open application programming interfaces (APIs) and data ecosystems
There is an increasing focus on clean data and/or semantic data structures for contextualising, synthesising, and solving IoT data issues.
The OPC Foundation, in collaboration with CESMII, for example, announced the launch of the OPC Unified Architecture (UA) cloud library joint working group (JWG) in October 2020.
The goal of the JWG is to specify how OPC UA information models of machines, supervisory control and data acquisition (Scada) and manufacturing execution systems will be stored in and accessed from a cloud-based database.
New data marketplaces are displacing old data-sharing models, and unify governance, big data, and security tools in a common, seamless data supply chain.
In May 2021, for example, Nokia launched a blockchain-powered data marketplace for secure data trading and artificial intelligence (AI) models. Vehicle industry companies joined forces in March 2021 to form Catena-X, a data marketplace that aims to enable a secure and cross-company-wide data exchange for all participants in the automotive value chain.
6. Intelligent and connected edge solutions
At their annual Ignite 2021 conference, Microsoft announced Azure Percept, which streamlines AI model deployment for low-power edge devices.
IoT Analytics classifies six different types of edges. In June 2021, Cisco revealed a series of new routers and IoT gateways designed for cellular and Wi-Fi connectivity in industrial environments, aiming to simplify enterprise requirements for IoT connectivity.
Few startups are receiving funding for intelligent edge initiatives. Zededa in March 2021 closed a $12.5 million strategic investment round to develop secure distributed edge computing.
IoT analytics has discussed the migration of control away from traditional programmable logic controllers (PLCs) in manufacturing environments. Several industrial automation vendors recently introduced products that decouple industrial control software from the underlying hardware, enabling more flexible and interoperable control systems.
In March 2021, for example, Wago announced two devices, Edge Controller and Edge Computer, that provide advantages over traditional PLCs and industrial personal computers (IPCs).
They can take over data mining from controllers that need low latency and high determinism, perform control tasks that IPCs cannot, and deliver close to real-time analytics and displays that would otherwise have to come from remote servers or the cloud.
7. Offerings that support sustainability initiatives
IoT plays an important role for a sustainable planet, as also highlighted in IoT Analytics’ previous research.
There are few examples of how IoT sustainability plays at work.
TCS’ IoT solutions, which help organisations become energy efficient, reduce greenhouse gas emissions, and meet financial and sustainability goals; Orbcomm’s satellite IoT technology, which supports African wildlife conservation; and Kerlink’s partnership with wireless, real-time water-management systems provider WEGoT to address serious water shortages in India.
8. AI-infused software applications
Artificial intelligence is becoming ingrained in many legacy software applications, giving rise to new themes, such as machine learning model monitoring (MLOps or autoML), which automates the task of data integration and model creation.
Vertical view: Pharma has woken up, automotive more muted
Moderna has shown the pharma industry what it means to put digital first. Therefore, it is not surprising that pharmaceuticals are embracing digital much more than it was before COVID-19 hit.
Other industries embracing IoT as we move into 2022 are the energy/utilities industry, the chemicals industry, and food and beverage. The automotive industry is suffering from chip shortage and battling with other structural issues related to the switch to electric vehicles.
The oil and gas industry is battling with the same issue, veering away from fossil fuels. The building industry is plagued with uncertainty associated with future occupancy levels as more workers opt to work from home.