Can we really predict the size of the Internet of Things Market?

April 29, 2015

Can we really predict the size of the Internet of Things Market?

lightbulb.jpgI had a very interesting discussion the other day with an executive for a technology company. He had just come from a presentation about the Internet of Things (IoT) market. The presenter projected that the market would be valued at around $7 Trillion market within the next decade. What did I think about this projection? Is it correct? Is this the true size of the market? Now, as a disclaimer, I don’t do market sizing. I assume that those smart people who figure out how big or small a market will be use sound judgment. However, I don’t think that as we sit at the dawn of this new era we can truly project the financial impact of the IoT new market. The reality of the growth and impact of a this market will depend on many factors.  For example, can we anticiapte new types of sensor devices that will emerge? Can we project the new uses that smart entrepeneurs will discover that we can’t even image today? What ecosystems will emerge to take advantage of the platform and the resulting data.  Likewise,  we also cannot know the potential inhibitors of growth of the market because of unknown factors such as security. What are the unintended consequences of the use of sensor data?

To explain my thesis let’s look at one of the most profound innovative markets – the commercialization of the electric light. If a market researcher were to project the number of light bulbs that would be sold over the following five years it would not have been that impressive and the market size would have been modest. But the commercialization of the light bulb was responsible for a massive transformation of society and the invention of hundreds of new markets, new industries. Here are a couple of examples:

  • Factories could run multiple shifts all night
  • New forms of entertainment emerged because citizens didn’t feel compelled to go to sleep as soon as it became dark
  • New industries such as motion pictures emerged
  • Surgery could be conducted with better procession

These are only a few examples of the image of the light blub. So, the reality is that if one did a study about the size of the light bulb market it would not have mattered at all. What matters were the ecosystems that emerge from an invention? Remember that the real money made during gold rush in the U.S. west in the 1800s was made by the entrepreneurs who sold equipment to the miners.

So, let’s get back to the IoT market for a moment. I assume that the predictions of a $7 Trillion market projection for IoT over the next decade may not understand the depth of the impact. Let’s assume that the ability to understand and analyze data from sensors becomes an important market. The companies that sell software that analyzes this type of semi-structured data will make money. Let’s assume that there is a market for vendors who can create a new generation of sensors that measure new type of devices. However, the market for IoT will be predicted on the type of solutions that are invented to manage everything from cities to industrial infrastructure to healthcare transformation. The transformations enabled by IoT could be far reaching in terms of impact and market size. Just as no one could have imaged the impact that the electric light bulb would have, we may not be able to anticipate the long-term impact of IoT.

Judith Hurwitz , , , ,
About Judith Hurwitz

Judith Hurwitz is an author, speaker and business technology consultant with decades of experience.

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