Analyst warns businesses of IoT hype

Beecham Research says that talk of 20 billion connected devices being in circulation by 2020 is ‘pie in the sky’ and potentially detrimental to businesses deploying Internet of Things technologies.

In recent months, a number of industry commentators have forecast that the number of connected devices could grow up to 50 billion by 2020, with this potentially making the IoT market worth trillions of dollars in new revenue by 2025.

However, Robin Duke-Woolley, who is CEO at M2M and IoT research specialist Beecham Research, says that these figures are ‘unrealistic’ and ‘potentially damaging’ to industries and companies that are potentially building their case studies, and business plans, around these false promises.

“There is no doubt that the M2M and IoT markets are moving quickly and there are great new business opportunities, but with unrealistic predictions around the growth of connected devices, there is also the risk that companies will run out of time and money before they see a return on their investment,” said Duke-Woolley.

“We know that today, excluding mobile phones and general purpose devices like tablets, there are significantly less than one billion connected devices worldwide. To suggest that growth rates exceeding 50 percent per annum are credible when the long term growth in this market has been consistently in the range 20-30 percent per annum prompts the question – why and what is likely to accelerate the overall growth rate so spectacularly? There is no answer to that.

“Equally problematic, even if those numbers could be achieved in shipments, there is not nearly enough resource available to install and implement them.”

Some experts have suggested that these numbers will likely be driven by connected devices in homes and workplaces, including heating and air-conditioning systems, security alarms, fridges, freezers, washing machines and office equipment.

Duke-Woolley is less convinced though. “While some households may have a dozen or more connected devices there is no evidence yet of connected devices in the home taking off in a big way.”

Beecham Research does believe that new, low power, low data rate, long range network technologies, such as Low Power Wide Area Networks (LPWANs), will provide a growth spurt to the IoT market.

“We expect this to deliver up to five million connections by the end of 2015 and increasing quickly thereafter,” said senior analyst David Parker. “This is coupled with new cellular technology becoming available within the next two years termed LTE-M or Narrowband IoT and derived from 4G technology. Many now believe it is this that will provide the real growth momentum for low data rate applications.”

Duke-Woolley is particular critical of predictions of trillions of dollars of new revenue. “We need to get real here. The total GDP of the United States – the biggest national economy in the world – is currently 18 trillion dollars annually. To suggest that new revenue from IoT will approach even 10 percent of this over a five to 10-year period is unrealistic and unhelpful.”