Consumer to represent 63% of IoT applications in 2017

Gartner Says 8.4 Billion Connected “Things” Will Be in Use in 2017, Up 31 Percent From 2016

EGHAM, UK — Gartner, Inc. forecasts that 8.4 billion connected things will be in use worldwide in 2017, up 31 percent from 2016, and will reach 20.4 billion by 2020. Total spending on endpoints and services will reach almost $2 trillion in 2017.

Regionally, Greater China, North America and Western Europe are driving the use of connected things and the three regions together will represent 67 percent of the overall Internet of Things (IoT) installed base in 2017.

Consumer Applications to Represent 63 Percent of Total IoT Applications in 2017

The consumer segment is the largest user of connected things with 5.2 billion units in 2017, which represents 63 percent of the overall number of applications in use (see Table 1). Businesses are on pace to employ 3.1 billion connected things in 2017. “Aside from automotive systems, the applications that will be most in use by consumers will be smart TVs and digital set-top boxes, while smart electric meters and commercial security cameras will be most in use by businesses,” said Peter Middleton, research director at Gartner.

Table 1: IoT Units Installed Base by Category (Millions of Units)

Category                         2016      2017      2018      2020
---------------------------  --------  --------  --------  --------
Consumer                      3,963.0   5,244.3   7,036.3  12,863.0
Business: Cross-Industry      1,102.1   1,501.0   2,132.6   4,381.4
Business: Vertical-Specific   1,316.6   1,635.4   2,027.7   3,171.0
                             --------  --------  --------  --------
Grand Total                   6,381.8   8,380.6  11,196.6  20,415.4

Source: Gartner (January 2017)

In addition to smart meters, applications tailored to specific industry verticals (including manufacturing field devices, process sensors for electrical generating plants and real-time location devices for healthcare) will drive the use of connected things among businesses through 2017, with 1.6 billion units deployed. However, from 2018 onwards, cross-industry devices, such as those targeted at smart buildings (including LED lighting, HVAC and physical security systems) will take the lead as connectivity is driven into higher-volume, lower cost devices. In 2020, cross-industry devices will reach 4.4 billion units, while vertical-specific devices will amount to 3.2 billion units.

Business IoT Spending to Represent 57 Percent of Overall IoT Spending in 2017

While consumers purchase more devices, businesses spend more. In 2017, in terms of hardware spending, the use of connected things among businesses will drive $964 billion (see Table 2). Consumer applications will amount to $725 billion in 2017. By 2020, hardware spending from both segments will reach almost $3 trillion.

Table 2: IoT Endpoint Spending by Category (Billions of Dollars)

Category                          2016       2017       2018       2020
---------------------------  ---------  ---------  ---------  ---------
Consumer                       532,515    725,696    985,348  1,494,466
Business: Cross-Industry       212,069    280,059    372,989    567,659
Business: Vertical-Specific    634,921    683,817    736,543    863,662
                             ---------  ---------  ---------  ---------
Grand Total                  1,379,505  1,689,572  2,094,881  2,925,787

Source: Gartner (January 2017)

“IoT services are central to the rise in IoT devices,” said Denise Rueb, research director at Gartner. Total IoT services spending (professional, consumer and connectivity services) is on pace to reach $273 billion in 2017.

“Services are dominated by the professional IoT-operational technology category in which providers assist businesses in designing, implementing and operating IoT systems,” added Ms. Rueb. “However, connectivity services and consumer services will grow at a faster pace. Consumer IoT services are newer and growing off a small base. Similarly, connectivity services are growing robustly as costs drop, and new applications emerge.”

Clients can read further information in the reports “Forecast: Internet of Things — Endpoints and Associated Services, Worldwide, 2016” and “Forecast Alert: Internet of Things — Endpoints and Associated Services, Worldwide, 2016.”