IoT network infrastructure investment trends
Will the internet of things (IoT) take over all aspects of our lives? Will every kitchen appliance, industrial temperature sensor, implanted medical device and police license plate reading camera be online at the same time? Putting aside the question of whether doing all this is a good idea, what would it take in the way of IoT network infrastructure?
Let’s take a look at what’s involved.
Overall IoT market
A widely quoted forecast from Bain & Company predicts that “by 2020, annual revenues could exceed $450 billion for the IoT vendors selling the hardware, software and comprehensive solutions that will make up the internet of things.” Note that when Bain talks about IoT and infrastructure they are talking about the infrastructure of the nation, — automatic toll collection, for example — rather than the infrastructure of the IoT itself.
In February 2017 Gartner was predicting that 8.4 billion connected “things” would be in use in 2017, up 31% from 2016. That will take a lot of infrastructure to support it.
Infrastructure growth and investment
First, how do we define the term “infrastructure?” A white paper from F5 Networks points out the different ways IoT devices connect: “long-range WiFi/Ethernet using IP protocols (TCP/UDP, including cellular); short-range Bluetooth low energy; short-range Near Field Communication; and other types of medium-range radio networks. Point-to-point radio links and serial lines are also used. Some devices/sensors connect directly to the Internet via an IP protocol and others with specific IoT protocols, such as Message Queue Telemetry Transport (MQTT), Constrained Application Protocol, and others. These may need may need specialized IoT networking hardware to ‘talk’ to the data center.”
A 2015 article in Network Computing quotes Anurag Agrawal of Techaisle that there are multiple categories of IoT infrastructure, including security and privacy, data analytics and management, data integration, governance, data transportation, computing near the data and power.
Gartner defines infrastructure as a service as “a standardized, highly automated offering, where compute resources, complemented by storage and networking capabilities are owned and hosted by a service provider and offered to customers on-demand. Customers can self-provision this infrastructure, using a Web-based graphical user interface that serves as an IT operations management console for the overall environment. API access to the infrastructure may also be offered as an option.”
Show me the money
Christy Pettey, senior public relations director at Gartner, cites the company’s predictions that “by 2020, more compute power will have been sold by infrastructure as a service (IaaS)… and platform as a service (PaaS)… cloud providers than sold and deployed into enterprise data centers…”
A November 2017 article from McKinsey & Company echoes these predictions, noting that “as-a-service” pricing models are showing strong growth, both in software and hardware.
Microsoft is certainly moving in this direction, introducing Azure IoT Edge, “a fully managed service that delivers cloud intelligence locally by deploying and running artificial intelligence (AI), Azure services, and custom logic directly on cross-platform IoT devices.” Features include the ability to respond on near real time, “[optimizing] for performance between edge and cloud while ensuring management, security, and scale.” It makes it possible to move artificial intelligence and analytics to edge devices, “without writing it in-house.” And by doing much of the processing locally, it increases reliability in situations where connection to the cloud is intermittent or even absent.
In 2016 BI Intelligence predicted that worldwide municipal investments in IoT systems (mostly all of it in infrastructure) would increase “from $36 billion in 2014 to $133 billion in 2019.” It further predicted that this investment would yield “$241 billion in economic value for these cities by 2019.”
A report from Global Market Insights valued the IoT infrastructure market at more than $15 billion in 2016 and predicted that it would increase at a more than 25% CAGR from 2017 to 2024. The most significant growth, the reports predicts, will be in so-called smart cities, which are expected to grow from about $3 billion in 2016 to close to $21 billion in 2024. The market for smart building infrastructure is expected to grow from about $1 billion in 2016 to a bit more than $7 billion in 2024, while that for smart homes would increase from close to $1 billion to about $4 billion over the same period.
As the IoT expands, it will put an ongoing strain on infrastructure at all levels, which presents both a challenge and an opportunity: a challenge, particularly for municipalities, in that it will require substantial investment in physical infrastructure; for industry, because it will require significant effort to systematize the somewhat chaotic growth patterns. An opportunity, because, as stated above, the market for devices themselves is enormous, and the potential transformation of commerce potentially more so.