In his recent article titled “Riding the Rise of the Machines,” published in the December 2015 issue of Forbes Magazine, Jon D. Markman wrote about the Internet of Things (IoT) and said, “it is still incredibly important and could represent one of the most lucrative investment opportunities of our lifetime.” Frost & Sullivan feels that IoT, or rather Industrial Internet of Things (IIoT), is not only a communication connectivity revolution, but also an evolution of a number of new sensors, systems, and applications. Remote monitoring and control activity is growing in industrial, commercial, consumer, and institutional applications. Sensors remain the key enablers for real-time monitoring and control using the IIoT platform and ensure high levels of operational efficiency. At Frost & Sullivan, our research in this area is focused on IIOT. Large-scale proliferation of Internet connectivity bands has propelled the rapid installation of IIoT-compliant sensors for diverse applications across most end-user markets.
What makes IIoT exciting is that, currently, very small installed bases of sensor-based devices are connected to the IIOT platform. This opens up a large, untapped opportunity for growth by moving towards a connected platform. Various estimates have been made, but there is currently a broad agreement that only 1% to 2% of sensor devices are connected to IIoT platform.
Scope and Proliferation
The current IIoT revolution is the fourth industry attempt, and is referred to by some as Industry/Manufacturing 4.0. This is an integrated approach to establishing remote connectivity for real-time monitoring and control. It lays an action-oriented approach for one connected industrial world.
The existing research by Frost & Sullivan has been focused on 12 diverse end-user markets, including industrial process control, eHealth, environmental monitoring, retail (point of sale [POS]), and smart cities. All these end users have begun to transform by seamlessly integrating sensors into the IIoT platform.
IIoT facilitates valuable data streaming from machines and enables companies to integrate this data into their business processes to assist in making intelligent decisions, reducing costs, and creating new revenue streams. Sensors used in IIoT are very rugged and help to maintain and improve desired plant efficiency. Most end-user industries are investing in infrastructure to facilitate IIoT connectivity, exhibiting advantages ensured by sensors (such as real-time monitoring and course corrections) while maintaining safety and data integrity. Demand for remote monitoring is likely to put pressure on capital expenditure and motivate adoption the of IIoT solutions. Companies that deliver differentiation for sensors, services, and analytical solutions will create new revenue streams and enhance operational efficiencies.
Key Role Players and End Users
Currently, the go-to-market (GTM) channel, which is a partnership between telecom, individual software vendors (ISVs), and IIoT technology companies, dominates the wireless sensor IIoT network distribution channel. System integrators play a key role because they include system manufacturers and, in some cases, installers such as smart homes, building automation, and security. Such sales are prevalent in safety and security, logistics, automotive, automation products, HVAC, and other end-user sectors.
Demand for smart solutions across diverse vertical markets (as shown in image above) is not only restricted to eHealth or smart health and smart transportation, but extends to industrial controls, smart animal farming, smart agriculture, and smart cities. Both wired and wireless networks will become the most important channels to deliver these smart solutions.
Factory automation is in need of real-time data. Real-time process monitoring reduces waste and improves process efficiency. The ability to optimize resources, both in terms of energy and workforce, is significantly increased because data can be accessed remotely. Asset tracking and workforce mobility will fuel adoption for the IIoT market.
Monitoring in hazardous and inaccessible locations is also likely to boost growth. The safety of personnel is at risk when they monitor the parameters of oil storage silos and alcohol tanks, especially if these storage tanks need to be opened. The immense flexibility facilitates use to track miners trapped within a section of a mine and can direct rescue teams to the right location.
In case of any performance variation in the industrial space, the operator would be warned in advance to schedule maintenance operations. Hence, unplanned downtimes can be avoided. Due to improved efficiencies of machines and economies of scale, maintenance costs can be drastically reduced.
Regional Potential Growth Contributors
Rapid industrialization led by China and other emerging economies in Asia-Pacific have created a huge market for infrastructure-monitoring sensor devices. In the 12th five-year plan duration (2012-2017), India envisaged spending about $1 trillion. The advancement of technology and increased adoption rates of smart cities in emerging economies will boost the related sensor market. The government of India has adopted a mega project to develop 100 smart cities.
In developed countries, road networks, dams, and bridges are facing critical issues due to ageing. Consequently, to maintain productivity and safety levels, continuous monitoring is crucial.
Sensor vendors and system integrators are involved in research and development (R&D) efforts focused on creating reusable design templates, product development time, and addressing unmet needs in the market. The current focus in the sensors market is on cost reduction, low power consumption, and increased security in communication. Increasing sensor reliability along these parameters will determine the success and acceptance of sensors in the IIoT domain.
Sensor Types in IIoT
The recently concluded analysis of various sensors used in the IIoT platform reveals that there are over 47 most-frequently used sensors in diverse applications across different vertical markets.
The key tasks performed include automation and control and location and tracking. More sensors are increasingly being deployed, establishing a presence in control functions. Currently, the bulk of the revenue is generated by the top 9 sensors, which includes temperature, pressure, flow, image, gas, vibration, and position and proximity (presence/absence sensors, motion open/close, and condition sensors).
Potential Revenue for Sensors – A Conservative Approach
- The total sensors in the IIoT market is estimated to increase from $4,412.0 million in 2015 to $11,235 million in 2021, growing at a CAGR of 16.8% from 2015 to 2021. Monitoring continues to be the largest application market for IIoT, but tracking and tagging is also likely to witness growth in end-user markets such as building automation, consumer electronics, supply chain, and food and beverages over the forecast period.
- o Control is also a crucial application for the IIoT market, which has been restricted to on-and-off functions so far. However, revenue generation from ubiquitous computing will witness slower growth in the forecast period.
- The retail (POS) market is estimated to increase from $54.7 million in 2012 to $246.9 million in 2021, growing at a CAGR of 18.6% during 2014 to 2021. Owing to better purchasing power of consumers, more and more retail stores are using sensors at POS to gain insights regarding consumer behavior and preferences, thereby providing better customer satisfaction.
- The safety and security market is estimated to increase from $185.3 million in 2012 to $824.1 million in 2021, growing at a CAGR of 18.2% during 2014 to 2021. The rise of cyber crime is sure to boost this market.
- The smart meter market is estimated to increase from $162.1 million in 2012 to $743.3 million in 2021, growing at a CAGR of 18.6% during 2014 to 2021. With the growth of smart cities and a renewed focus on energy conservation, this market will witness a sustainable demand over the forecast period.
- The environmental monitoring market is estimated to increase from $156.5 million in 2012 to $672.4 million in 2021, growing at a CAGR of 17.8% during 2014 to 2021. Global warming and other environmental issues will continue to result in huge potential for this market.
Efforts are focused on prioritizing areas that supplier companies in the value chain can focus on to take advantage of high market opportunities. Industrial control, eHealth, smart cities, retail (POS), and smart metering are growing at a high CAGR and adoption of the IIoT platform is doing the same. Bricks and clicks will become the retailing norm of the future, with every retailer expected to have an online identity as well as a brick and mortar presence by 2021. With online retail sales expected to reach trillions of dollars by 2021, virtual stores, virtual hypermarkets, interactive stores, and click and collect will see increased adoption by retailers facilitated by IIoT. The other end-user market that attracts the attention of sensor vendors is eHealth. This is because cloud connectivity compatible wearable devices, patient monitoring systems, and other medical devices are increasingly using the IIoT platform to ensure real-time monitoring and, consequently, generating high revenue dollars.
Real-time remote monitoring is the key to growth for the IIoT connectivity platform and is likely to impact existing business models. Using multi-layered networks with different frequency ranges, it can also be used for sensing/detection applications that are required in a number of vertical markets. This will perpetuate virtual control rooms and virtual offices. Physical banks, medical offices, ticket booking offices, and others may just disappear because a large portion of retailing is likely to switch to virtual shops. IoT offers a compelling value proposition and smart and intelligent sensors enable IIoT. Additionally, different protocols have been developed that are able to carry Big Data. The integration of analytical software is incorporated in with customization modules in demand for specific plant operations. The sensor companies servicing users in the IIoT platform will increasingly be challenged by complexity due to changes in operating business environments.
The key focus will be on senor longevity, ruggedness, ease of use, and global maintenance support. To conclude, we have yet to experience the big change during which there will be large-scale deployment of connected sensors, ushering us into an era of explosive growth.