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Price pressure forces IoT market to an up-down trend

Posted: 06 Jun 2014  Print Version  Bookmark and Share

Keywords:IoT  price pressure  Yole 

The IoT market presents a short-term opportunity, with a growth trend that is seen to climb sharply over the next few years, and plummet afterwards as manufacturing volumes and stiff competition force average selling prices down, according to Yole Developpement. One long-term result is likely to be the merging of companies and activities in vertically integrated enterprises to capture value from IoT-related services.

Yole has produced a report on technologies and sensors for IoT that looks ten years forward and sees the IoT equipment market going from an annual value of $9.5 billion in 2014 to $70 billion in 2018, before falling back to $46 billion in 2024. The market consulting company predicted that while this trend is to stem partly from the movement of IoT deployments towards integration at module and device levels, it will mainly be a result of the migration of IoT's value to software and services.

By the end of the forecast year, the annual value of the overall IoT market will be $400 billion with $46 billion coming from hardware, $59 billion from cloud infrastructure and $296 billion from data processing services. IoT will represent 15 per cent of the overall data processing, Yole claimed.

IoT roadmap

The Internet of Things roadmap, according to Yole.

The value of IoT being tied up in data services is considerable since the main purpose of IoT is to make sensing ubiquitous at very low cost, resulting in extremely strong price pressure on electronic component manufacturers. Nevertheless, the next five years will be extremely fruitful for device makers and is the time when manufacturers must stake a claim to IoT business.

IoT is a multi-billion dollar market emerging from the convergence of several established markets, such as industrial sensors, wearable electronics and home automation and from three categories of supplier; the electronics components, communications and data storage companies, and service companies. Companies are already positioning themselves including Bosch Connected Devices and STMicroelectronics, Oracle, Amazon, Google and Facebook.

Just as there is expected to be price pressure in the components sector, the same is expected in the cloud computing industry. Yole reckoned that a price war has already begun between the major cloud computing companies cutting prices while growing capacity.

"Service companies will be the big winners in this field. In order to secure some of this value, hardware and cloud companies will have no choice but to try and integrate themselves vertically in order to valorise themselves and the data they'll be responsible for," said Guillaume Girardin, Yole analyst and one of the co-authors of the report.

- Peter Clarke
  EE Times Europe





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