The global market implementation of IoT technology in the past few years has been astounding, but can we expect the Internet of Things market to continue growing at this pace?
What are the major drivers and restraints on such growth and where is IoT headed?
Current Value of the IoT Market
In 2022 the global Internet of Things market size was valued at USD 544.38 billion. Geographically, the study of this market was shared between Europe, Asia Pacific, North America, South America, the Middle East, and Africa.
Factors contributing to recent and continued growth include the growing demand for downstream data servers as well as the major influence of IoT in the manufacturing and healthcare sectors throughout the global market. The rising number of initiatives pushing for smart city applications are also expected to influence this expanding market share. As population and urbanization increase, smart city solutions are being more steadily adopted to deal with questions of resource management.
As mentioned, the manufacturing sector is a major contributor to the market value of the Internet of Things and is expected to register the greatest market share between 2023 and 2030 due to spending on advanced technologies to increase efficiency and quality in production.
Although the slowed economic growth of 2022 and 2023 is leading some to cautiously consider their spending on IoT and digital transformations, IoT-central companies typically evaded tech layoffs. This avoidance of layoffs paired with forecasted growth seems a good omen for the future of IoT.
In 2023 the IoT market is expected to grow from USD 662.21 billion to a size of USD 3,352.97 billion in 2030. This projected period would boast an estimated CAGR of 26.1%. In North America, the growing customer base looking for cloud-based platforms is a major determinant of the expansion of the North American market value. Investments in research and development and the proliferation of IoT-enabled devices are accelerating the demand for cloud platforms which necessitate the use of IoT solutions.
This significant forecasted growth is determined by a number of factors:
- Industry 4.0: the ongoing fourth industrial revolution involves the integration of IoT, AI, and robotics into manufacturing.
- Advancing technology: With technology becoming increasingly more complex, IoT fills a crucial demand for wireless communication, processors, and sensors on a cost-effective scale.
- Data analytics: Data analytics are useful in all sectors where they can provide real-time insights for managers who are looking to increase their efficiency and lower their margins. Using IoT solutions to record, analyse, and store data is an economical and sustainable move.
Limitations on Forecasts
Some factors which are lowering the forecast of IoT market growth include inflation, high interest rates, and lowered GDP growth.
Inflation is resulting in employees requiring higher salaries to combat the cost of living, which may challenge tech firms. At the same time, heightened interest rates instituted to combat inflation are putting pressure on company margins and reducing the ability to invest in novel technologies. Lowered GDP growth is also affecting such investments.
Sustainability of IoT Companies
Despite the possibility of pausing interests in digital transformations and similar tech investments, IoT companies are still expected to do well (as shown in the forecasted growth of the market value).
As mentioned, these companies feel less of a compulsion to lay off employees on a significant scale and are looking toward the future with a positive outlook. The world is still in the early stages of digitally transforming manufacturing thanks to industrial IoT and as the adoption of IoT technologies increases, so will the sector’s market share.
Even with the restraints on IoT growth, it’s important to remember that inflation and interest rates may cause some pause, but investment in IoT-related projects will likely only be delayed rather than cancelled.
Looking at the different regional shares of the global market reveal how each region is adopting and utilizing IoT. In North America, increased product demand for personal IoT-connected devices have resulted in the region possessing more than 23.35% of the revenue in 2022.
The Asia-Pacific region is forecasted to see huge growth due to developing network infrastructure and ongoing digital transformation. Right now, the adoption of smart home solutions is a major contributing factor to the ongoing demand of IoT infrastructure.
The smart home market is also driving IoT value upward in China where, in 2021, this market grew by roughly USD 50 billion.
Meanwhile in the Middle East and Africa, smart city projects initiated by governments are proliferating to focus on long-term sustainability in these regions.
It seems clear that due to the increasing implementation of IoT solutions around the world, the global market will continue to grow despite current challenges. Even if investments in digital transformations are slow, utilizing IoT technology is ultimately an economical and sustainable solution for every region that is sure to deliver long-term results.
To learn more about the Internet of Things and how it is applied in all regions and sectors, contact us at Evolution Data.