Internet of Things to Create US$1.9 T. Economic Value by 2020: Gartner

With the digital world upon us, digitalization will significantly change the technology market through the Internet of Things, or IoT. By 2020, IoT is forecast to create US$1.9 trillion of economic value add, while in the same year over 30 billion connected devices will be in use, according to Gartner Inc..

The IoT encompasses hardware (the 'things' themselves), embedded software (software running on, and enabling the connected capabilities of the things), connectivity/communications services, and information services associated with the things (including services based on analysis of usage patterns and sensor data). The companies that provide this hardware and these services will be referred to as IoT suppliers.

While IT spending in Europe, the Middle East and Africa (EMEA) will show an average annual growth rate of 2.2% through 2017, the IoT will create new markets and a new economy.

“The traditional IT market is not going to grow at a faster rate any time soon, if ever. Increased growth will come from the non-traditional IT market,” said Peter Sondergaard, senior vice president at Gartner and global head of Research. “While in 2015 the combined IT and telecom market will hit nearly US$4 trillion, the incremental revenue generated by the Internet of Things' suppliers is estimated to reach US$309 billion per year by 2020. Half of this activity will be new start-ups and 80% will be in services rather than in products. The Internet of Things is a strategically important market. It will accelerate fast and will drive both revenue and cost efficiencies.”

In 2009, there were 2.5 billion connected devices; Gartner said, most of these were mobile phones, PCs and tablets. By 2020, there will be over 30 billion devices connected, of far greater variety.

Sondergaard added that the IoT will create greater economic value for all organizations, and for the global economy, and Gartner predicts that the total economic value add for the IoT will be US$1.9 trillion in 2020, seen across a number of industries. The verticals that are leading its adoption are manufacturing (15%), healthcare (15%) and insurance (11%).

For example, the manufacturing sector will benefit from producing billions of devices and from more efficient tracking of materials and components leading to cost efficiencies. In healthcare, smart slippers and other wearable devices for elderly people contain sensors that detect falls and various medical conditions. If something is amiss, the device will alert a doctor via e-mail or text message, possibly preventing a fall and a costly trip to the emergency room. Another example includes installing sensors in cars that provide a pay as you drive insurance that links the insurance premium to the individual's risk profile.