Europe’s IoT evolution

Andrea Siviero, research manager at IDC and Lionel Lamy, associate vice president of IDC’s European Software and Services Group discuss IoT consumer habits.

The IoT market is evolving rapidly in Europe, with a lot of moving pieces and companies able to give a new value to objects and data, opening different business scenarios and creating amazing market opportunities. 

According to the IDC Global IoT Decision Maker Survey 2016, IoT is having a strategic role within organisations for more than 50 per cent of European IoT adopters, allowing them to compete more effectively by adding value to the products and services they currently offer, while reducing cost and improving productivity. At the same time, more than 20 per cent of respondents indicated how IoT is transforming their organisation towards new products and service areas. Improving business productivity and process automation are the top IoT drivers among European companies, although security and privacy concerns, together with high upfront costs, still hinder wider IoT adoption. Security remains a key aspect, with 40 per cent of European IoT adopters expecting IoT to increase company security concerns and threats and more than two-thirds of respondents designing IoT security policies.

Two additional topics reshaping the IoT market are the role of the line of business (LoB) and edge computing. For a quarter of European respondents, IoT decision making sit within business units, with LoB that is assuming a key role in company IoT strategies and investments. Edge computing is already a reality for European IoT adopters, with almost one-third of them collecting and processing data at the point of creation.

“IoT is having a strategic role within organisations for more than 50 per cent of European IoT adopters.” 
Andrea Siviero and Lionel Lamy, IDC

On the ecosystem side, IT hardware vendors lead the way in terms of suppliers who are currently discussing IoT with end-users, although most European respondents expect analytics specialists and more generic software vendors to become the market leaders in the coming years.

Looking at the IoT market, European spending is forecast to reach $168 billion in 2017 as organisations expand or start their investments in the hardware, software, services, and connectivity that enable the IoT. According to the latest IDC Worldwide Semiannual Internet of Things Spending Guide, European spending will show a compound annual growth rate of 19.8 per cent over the 2015-2020. 

Manufacturing is the leading industry in terms of market share, immediately followed by utilities and transportation. The industries that will see the fastest spending growth are expected to be consumer, insurance, and retail, all showing a 2015-2020 CAGR above 25 per cent.

From a technology perspective, hardware will remain the largest spending category, followed by services, software, and connectivity. Software will grow faster than other categories, driven by application software and analytics. Connectivity follows for market growth, showing a very dynamic scenario in terms of the different standards involved (wired, cellular, LPWA and other wide area wireless, Wi-Fi and other short-range wireless, and satellite). 

Andrea Siviero and Lionel Lamy are the research manager at IDC and associate vice president of IDC’s European Software and Services Group respectively.

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