The market is set to move into a development phase featuring market integration, driven by technology and business model innovations.
Fuelled by Internet of Things-related technology, China's business IoT market is forecast to reach $361 billion by 2020—a CAGR of 13.3% over the next five years, according to market research firm IDC.
IoT software is poised to be the most promising technology segment in the country’s business IoT industry, according to the recently released IDC China Semiannual Internet of Things Spending Guide Forecast.
China’s IoT market, which has remained fragmented for the past five years in its exploratory development stage, is set to move into a development phase featuring market integration and platform agglomeration, driven by technology and business model innovations.
“IoT is now entering an era of rapid development,” said Antonio Liu, Senior Market Analyst at IDC China. “An important step in the future IoT ecosystem development in China will be an accelerating shift from market fragmentation to market integration, and from vertical industry convergence to horizontal platform agglomeration. This will also become the main theme in the next phase of the market.”
IoT has been identified as one of the key industries in China’s national innovation strategy. It serves as an important driver for the country to transform and upgrade its traditional industries, and to develop strategic emerging industries, offering enormous business opportunities. During the country’s 13th Five-Year Plan period, Big Data, Cloud Computing and IoT technologies will develop rapidly and find wide applications. More importantly, these technologies will influence one another and push forward the third wave of the information technology transformation, according to IDC. As IoT gains in popularity, IoT technology will be further integrated with information technologies (IT) and operation technologies (OT), unlocking the huge potential in China's business IoT market–one that is still in its early stages.
__Figure 1:__ *China manufacturing IoT market revenue forecast for 2016-2020 (Source: IDC)*
IDC expects technology and business model innovations to drive the following two important development trends in China’s business IoT industry over the next three years:
IoT applications are gradually entering people’s everyday lives, generating new demand for connectivity that IDC believes will emerge as the most direct growth opportunity in the market. IoT devices have become the most competitive field in the IoT industry as connectivity platforms mushroom. The growing reach of IoT platforms is ushering in a high-speed transformation towards a new generation of information communication. In the future, enterprises from different vertical industries and different technological fields will aid the development of the market, giving rise to diverse platform variety and services.
China's IoT industry chain has been gradually improving and taking shape thanks to the national policy support. IoT industry will gradually show its data-driven features as it enters fast-growth period. More and more enterprises have begun to explore the core value of IoT, launching different IoT solutions and data applications. Industry-specific data analysis and applications spearheaded by industry IoT companies have been well received in the market. Telco operators have introduced general IoT platforms and Big Data analysis to serve their partners in the ecosystem. And IDC believes that start-ups that go deep into different segments and provide specialised services are expected to emerge and prosper.