A Few Observations on IoT and Test & Measurement

Published: 23 Sep 2015

Internet of Things (IoT) is a key buzzword in the world today with companies across industries trying to figure out the revenue opportunities they can get from it and position themselves as thought leaders in this space. 5G, Big Data, Industrial Internet of Things (IIoT), Internet of Medical Things (IoMT), and smart are all terms playing into this. When it comes to the Test and Measurement (T&M) industry, what does IoT mean?

Testing IoT Devices

IoT is a huge concept spanning the connected home, wearable electronics, smart cities, the manufacturing industry, and the connected car among other markets. From an overall standpoint, adding connectivity to a myriad of devices would translate into a huge revenue opportunity for T&M companies, increasing demand from traditionally small end-user segments. New variations of WLAN, Bluetooth, ZigBee and other wireless technologies have been developed and are driving growth in the test equipment market, as the devices need to be able to communicate and interoperate seamlessly. With IoT applying to a number of consumer electronics devices, the cost of test is a key concern. Far from meaning that there will not be an opportunity for T&M market participants from such devices, the opportunity is expected to be upstream (semiconductors). Therefore, it will be essential for T&M companies to have great relationships with semiconductor companies to capitalize on this part of IoT.

IoT also involves more expensive devices. These devices and critical applications in the automotive, medical, and aerospace and defense sectors present significant opportunities for T&M companies due to stricter requirements for aspects such as reliability, latency, and availability. Mission-critical applications also translate into opportunities in wireless communications requiring the development and rollout of 5G networks.

Winners and Losers

RF and Microwave Test Equipment

Among the T&M segments expected to benefit the most from IoT, the radio frequency (RF) test equipment market, which includes RF signal generators, spectrum and signal analyzers, and other related test equipment such as power meters, certainly stand out, as IoT means providing connectivity to a myriad of devices. At least this will be the case in the short term until the industry moves to higher frequencies. Over the next decade, demand for higher frequency equipment will increase making of microwave test equipment the ultimate winner from IoT. The time domain will also be positively impacted by the IoT concept, not only because the wireless technologies used for the talking of devices to each other increase in frequency and involve more complex modulation schemes, but also due to the move to optical infrastructure to support the extra Internet traffic. Technologies such as 5G which require bandwidth to increase are currently driving demand for oscilloscopes in research and development (R&D) applications.

Security Test Equipment

With the increasing focus on cybersecurity, another T&M market segment to benefit strongly from IoT would be the security test equipment market. Organizations are transitioning from a traditional set-up to a digital one that involves informal interactions between employees, customers and investors, has holistic information requirements, relies on scalable IT systems, and employs end-to-end processes based on real-time key performance indicators (KPI). The increasing use of clouds and practice of bring you own device (BYOD) and bring your own wearable (BYOW), coupled with increased connectivity with third parties and outsourcing are some of the trends drastically expanding the threat surface area for companies, in turn driving interest in cybersecurity and thus driving the need for security testing. Currently, there is great emphasis on network security and a growing focus on endpoint security in the industrial space. However, the opportunity may be lowered by the lack of quantification of the benefits and return on investment (ROI) of cybersecurity, which tends to reduce investments.

Installation and Maintenance (I&M) Test Equipment

Unfortunately, not all T&M segments will benefit from IoT. For example, Frost & Sullivan foresees the installation and maintenance (I&M) test equipment market to radically change with the advent of IoT. The greater connectivity of devices/equipment could greatly reduce the need for technicians to go on site to perform repairs and maintenance tasks. This could translate into significant cost savings, as predictive maintenance would allow for the better scheduling of maintenance visits. Telecommunication service providers, for example, are particularly sensitive to maintenance costs. As a result, this market has transitioned to outsourcing such tasks to third parties, which in turn impacted demand for new T&M equipment, as the customer moved from being a large company with significant financial means to a budget-constrained contractor. Increasing personnel safety is another motivating factor for this trend. Utilities, for example, are dealing with dangerous environments with potential electrical explosions. While there will still be a requirement for technicians to go on site to perform maintenance and repair tasks, this requirement could be greatly diminished especially in the long term with the ability to emit data back to the devices and control them remotely.

Please contact Jessy Cavazos at jcavazos@frost.com for questions or feedback on this article.

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