Understanding the IoT/M2M IT ecosphere

IDC analyst Scott Tiazkun confirms that the Internet of Things (IoT) is beginning to coalesce – both in terms of abstract concept and concrete solutions. As such, Tiazkun recommends vendors take the next step by analyzing IoT’s huge IT opportunity in a “more realistic and valuable” framework.

“As exciting as the overall opportunity for the IoT market currently exists, understanding the vertical ramifications is paramount,” he explained.

“All of the greatest IoT IT opportunities – from the connected home, smart meters, the connected car, and smart grid to personal wellness and connected health – are driven from a vertical market perspective.”

According to Tiazkun, the IoT market must be understood in terms of vertical markets, as the value of IoT is based on individual use cases across all markets.

“Successful sales and marketing efforts by vendors will be based on understanding the most lucrative verticals that offer current growth and future potential and then creating solutions for specific use cases that address industry-specific business processes,” said the analyst. 


“IoT already impacts our everyday life down to the smallest processes. The vertical opportunity that arises from IoT is already in play, but only if the need for vertical expertise is recognized and offered. Realizing the existence of vertical opportunity is the first step to understanding the impact – and therefore market opportunity that exists – for IT vendors.”

More specifically, IDC expects IoT technology and services revenue to expand from $4.8 trillion in 2012 to $7.3 trillion by 2017 at an 8.8% CAGR, with the greatest opportunity initially in the consumer, discrete manufacturing and government vertical industries.

Similarly, the IoT/M2M market is growing quickly, although the development of this market is not expected to be consistent across all vertical markets. 

For example, industries that already “understand” IoT will experience the most immediate growth, such as industrial production/automotive, transportation and energy/utilities. However, all verticals will reflect great opportunity.

“IoT is a derivative market containing many elements, including horizontal IT components as well as vertical and industry-specific IT elements. It is these vertical components where IT vendors will have to distinguish themselves to address industry-specific IoT needs,” Tiazkun continued.

“IoT opens up many IT vendors to the consumer market, providing B2B2C services to connect and run homes and automobiles — all the places that electronic devices will have a networking capability.

The first step to understanding how vendors can position themselves will be to analyze the components of the IoT/M2M IT ecosphere. Because this is a derivative market, there are many opportunities for vendors to offer parts or product suites that cover the needed IoT IT set. 

Vendors, Tiazkun confirmed, will have incentive to do so due to rapid growth which will occur as industries see the convenience, productivity and efficiency that IoT brings to business processes.

“While horizontal-focused IT vendors will look to offer IoT solutions that appeal to many industries, there will also be impetus to offer vertical-focused solutions that make IoT tangible for both industries applications (M2M) and consumer needs (B2B2C),” he added.

“The IoT market will greatly impact and offer the potential for vertical-aligned businesses to improve both performance and profitability. The IoT solutions space will expand exponentially and offer every business endless IoT-focused solutions. The initial strategy of businesses should be to avoid choosing IoT-based solutions that will solve only immediate concerns and lack ‘staying power.'”

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