Don't believe that the Internet of Things (IoT) has touched your life yet? Think again. If you've changed the temperature in your home from a remote location with the help of a smart thermostat, you've relied on the IoT. If you've used an EZ Pass to pay a toll without stopping at a booth to hand over money, you've relied on the IoT. And if you've used your Apple Watch to connect to another device, you've relied on the IoT.
There are so many different ways in which the IoT is used that most people probably don't recognize how extensively the technology touches their lives. The IoT has already achieved substantial growth, and it will likely become an increasingly integral part of our day-to-day lives. How significant, you ask? One study estimates that there were 2 billion IoT devices in 2006, and projects that the number of IoT devices will grow to 200 billion in 2020. Still unimpressed? No problem. There are plenty of other ways to characterize the enormity of the IoT.
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1. This market is going to be big -- more than $1 trillion big
With more and more industries finding applications for IoT technology, the market has grown considerably for machine-to-machine communications, and according to Fortune Business Insights, it will continue to grow until it reaches a market size of more than $1.1 trillion in 2026. That's certainly nothing to sneeze at. But it becomes even more impressive when you consider that the market size was estimated to be $190 billion in 2018. Should the IoT market achieve this size in 2026, that would indicate a compound annual growth rate from 2018 to 2026 of more than 24%.
While research firms can provide some insight into the market's trends, taking a look at the key players in the space can offer another perspective on how rapidly the IoT is growing. With the help of its Quark, Atom, Core, and Xenon processors, Intel (INTC -0.89%)one of the leaders in the IoT -- provides solutions for a broad range of applications, including smart cities and healthcare. In 2019, the company reported that its IoT business generated record revenue and operating income, and over the past five years, the IoT business has had "average revenue growth of 14% and operating income growth of 22% per year," according to the company's 2019 annual report.
2. The IoT is a driving force in 21st century transportation
Long gone are the days when the most complex machinery in a car was the engine. Nowadays, mechanics need to know a lot more than how to change spark plugs and replace an oil filter, for cars may have as many as 50 computer systems helping them to get you from point A to point B. One application of the IoT -- found in other uses besides automobiles -- is predictive maintenance, which constantly assesses the condition of the vehicle to anticipate when it will need servicing. IBM (IBM 0.05%), for example, provides its Maximo Asset Performance Management to assist in predictive maintenance solutions. According to Big Blue, predictive maintenance can reduce maintenance costs by up to to 25%, while it can eliminate breakdowns by up to 70%.
Image source: Getty Images.
Another application in vehicles where the IoT finds itself is connected cars, offering the ability for cars to communicate with each other -- something essential for autonomous driving. With its 2016 acquisition of Jasper, a leading cloud-based IoT service platform, Cisco (CSCO 0.37%) assumed a more prominent position in the field -- perhaps even the pole position.
Speaking to ZDNet, Tom Fisher, managing director for Cisco-Jasper Australia New Zealand, said: "Practically every single car manufacturer in the world ... anyone that's in the connected car space, it's more than likely that Jasper's powering that. We have more than 50 brands globally using the control centre."
3. IoT leaders love the blockchain
For most companies that employ IoT technology, the use of the blockchain is critical. According to a Gartner survey of over 500 U.S. companies, 75% of those that have implemented IoT solutions have also implemented blockchain or plan to implement it in the next 12 months. While respondents acknowledged that the increase in business efficiency and revenue opportunities were two important factors motivating them to adopt blockchain technology, the primary consideration for 63% of the companies surveyed that had combined IoT/blockchain projects was "increased security and trust in shared multiparty transactions and data."
4. IoT devices will generate almost 80 zettabytes of data in five years -- wait, what's a zettabyte?
According to International Data Corporation (IDC), the IoT devices will generate 79.4 zettabytes of data in 2025. For some perspective, consider that a zettabyte is equal to 1 trillion gigabytes. In the IDC report, its VP for the IoT, 5G, and Mobility Carrie MacGillivray said:
As the market continues to mature, IoT increasingly becomes the fabric enabling the exchange of information from 'things', people, and processes. Data becomes the common denominator – as it is captured, processed, and used from the nearest and farthest edges of the network to create value for industries, governments, and individuals' lives.
With the generation of these massive amounts of data, companies like Equinix (EQIX 0.06%), a leader in data centers, are providing computing solutions to accommodate the growing needs of computing at the edge -- not just in the cloud. According to the company, its Equinix Cloud Exchange Fabric "enables any customer to dynamically connect its own infrastructure across our more than 190 IBX data center locations or connect to any other customer on the Equinix global platform, regardless of location," to support IoT ecosystems.
What's an investor interested in the IoT to do?
Individually, there are plenty of metrics which indicate how large the IoT has become -- and will continue to be. In combination, however, these figures provide a compelling glimpse at how extensively the IoT will reach into various aspects of our lives; therefore, investors piqued by the potential of the IoT should strongly consider industry-leading providers of the equipment behind these solutions, like Intel, IBM, and Cisco, or a company at the forefront of data center services, like Equinix.
