A new report by Frost & Sullivan has said the Internet of Things (IoT) will be “heavily influenced” by ‘Cloudification’, and this will lead to its own set of challenges.
The report said the challenges will include the large amounts of data involved, realignment of existing processes and security solutions. The IoT was expected to continue its transformative potential across industries in the foreseeable future. This momentum was expected to continue in 2016, with services expected to lead spending in the IoT space. Frost & Sullivan estimated the IoT market to be valued at US$24.2 billion in 2015 and would reach US$79.3 billion in 2020 with a CAGR of 26.8 per cent from 2015 to 2020, with services accounting for nearly three quarters of the market in 2020.
“The major IoT opportunities will be in the deployment and management of IoT projects. This will lead to a requirement for new skill sets which are currently scarce in the APAC region,” noted Andrew Milroy, Senior Vice President, ICT Practice, Asia Pacific, in a statement.
The report added there would also be a shift towards computing decentralization as the IT industry gradually shifts towards using more IoT technology. Examples included P2P networks becoming more widely used, allowing connected devices to communicate directly with each other rather instead of being routed through a centralized data centre.
Digital disruption was set to be the norm across industries as they looked to transform to keep their business relevant amidst the ever changing technological landscape. According to Milroy, this trend would lead new business models and was set to stay.
“The Product as a Service model will become the norm in many industries. Over 70 per cent of Fortune 500 companies will operate Product as a Service business models, with the Automotive Industry and Electronics Industry expected to lead this revolution at 15 per cent and 13 per cent, respectively,” noted Milroy.
2016: Digital Services Outlook
A new set of digital services was emerging as opportunities. The 2 big opportunities for APAC were mobile payments and e-commerce. For SEA alone, the e-commerce segment was expected to grow at a CAGR of 23 per cent from 2015-2020 and will be valued at nearly US$20 billion for ASEAN countries with Indonesia, Malaysia and Singapore expected to show the strongest growth.
2016: Data Centre and Cloud Computing Outlook
The Asia-Pacific data centre market was in a state of flux with most service providers in the process of fine-tuning their strategies around data centres and Cloud computing. On the one hand, the industry was witnessing large scale data centre construction frenzy and with increasing demand from Cloud-enabled technologies, such as Big Data and IoT, there was greater competition than ever before. This was leading to price erosion in the market as well as industry consolidation due to lower than expected Return on Investments. Putting that into context, the Frost & Sullivan report has predicted that the industry would witness greater consolidation in the market, driven by the need to offload data centre assets. Lastly, Frost & Sullivan expected 25 per cent of all enterprise IT workloads to move to the Cloud by 2020, up from 12 per cent in 2015.
2016: IoT Outlook
The IoT market was one of the fastest growing segments in the Asia Pacific technology industry. The total Asia Pacific spending on IoT spending was forecast to be US$79 billion by 2020.
“With IoT, companies are moving from transactional product sales to a longer term relationship and service model, where everything can be offered as a service or ‘servicetization of industries’. As IoT moves from consumer and enterprise centric applications to vertical/ industrial applications, the potential growth of IoT is expected to exponentially grow over the next 5 years,” noted Mark Koh, Senior Industry Analyst, ICT, Frost & Sullivan, Asia Pacific.
Image Credit: Frost & Sullivan