IBM Corporation IBM has recently announced its investment plans regarding Internet of Things (IoT) for the enterprise market. The company plans to invest $3 billion over the next four years to set up a new IoT unit as well as a cloud-based open platform for clients and ecosystem partners to build IoT solutions.
The investment mainly targets expansion in the enterprise IoT business with IBM’s new industry-specific cloud data services and developer tools. We believe that the latest investment will support IBM’s Smarter Planet and Smarter Cities.
With this investment plan, this Zacks Rank #3 (Hold) company plans to target three key areas for enterprise development. IBM aims to expand its IoT Cloud Open Platform for Industries by offering new analytics services that clients, partners and IBM will use to design and deliver vertical industry IoT solutions.
In addition, the company expects to promote the Bluemix IoT Zone by offering new IoT services as part of its Bluemix platform-as-a-service. This will help users integrate IoT data with cloud and deploy IoT apps.
IBM will also invest in the expansion of the ecosystem of IoT partners — AT&T, ARM, Semtech and The Weather Company — to ensure secure and seamless integration of data services and solutions on its open platform.
Why IoT?
Call it a digital or industrial revolution, IoT is here to stay and offer lucrative business opportunities to IT vendors. The IoT concept foresees billions of connected devices and systems with applications ranging from sensors and mobile devices to home appliances and cars.
According to market research firm IDC, the worldwide market for IoT is poised to surge 133% to $3.04 trillion in 2020. In addition, the number of IoT-connected units will reach approximately 30 billion in 2020. Apart from IDC, research firm Gartner expects a boom in the IoT market and expects mainstream adoption to accelerate as per its annual "Hype Cycle" report.
Further, Business Intelligence estimates that among the three major markets — enterprise, consumer, government — the largest market will be that of enterprise, accounting for 40% of the total IoT device market in 2019, representing 9.1 billion devises. In addition, spending on enterprise IoT products and services is expected to reach $255 billion globally by 2019 representing a 5-year CAGR of 40%.
Therefore, it is not surprising that technology giants are flocking to the scene to grab their share of the IoT for enterprise market.
Companies in the IoT Business
Apart from IBM, another major company which is investing significantly is Cisco Systems, Inc. CSCO. Last year, the network equipment manufacturer announced investment of $150 million over the next two to three years to support IoT startups worldwide. Reportedly, the company believes that IoT for enterprise has the potential to reach $14.4 trillion by 2022, which leaves a huge scope for IT vendors to capitalize on the current boom.
Further, the world’s largest mobile chipset developer, Qualcomm Inc. QCOM is making its presence felt in the IoT market by acquiring companies that already have a strong foothold in this space. In 2014, the company announced the acquisition of U.K.-based CSR plc, which is expected to boost Qualcomm’s growth categories like Internet of Everything (IoE) and automotive infotainment by enhancing product portfolio and increasing channels and customer base. (Read more: Qualcomm to Acquire CSR; Eyes Internet of Things Market)
Another semiconductor maker, MagnaChip Semiconductor Corp. MX, also joined the bandwagon with the launch of its process technology that supports low-power IoT applications and targets end markets such as mobiles, wireless sensors, wearables and energy harvesting. (Read more: MagnaChip Aims for Internet of Things with New Technology)
Conclusion
We believe that stiff competition among companies will foster organic growth in the IoT market and make it the next platform for the proliferation of information technology, especially in the enterprise market. While this technology also comes with significant drawbacks such as security issues, lack of proper standards (and hence privacy issues), and leads to over-dependence on technology, we are hopeful that future advancement, further technological development and increased awareness among end users will drive adoption going forward.
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