Internet-connected devices approaching 10B units, IMS says
IMS Research | Date:
The number of devices that can connect to the Internet is forecast to increase to 9.6 billion by the end of 2012 according to IMS Research, recently acquired by IHS Inc. The company, which tracks the installed base of Internet capable equipment, believes that the third wave of connected device growth is accelerating, and this will drive further growth in the connected device market, leading to its forecast of 28 billion internet connected devices by the end of 2020.
While the 9.6 billion number is impressive, it is important to note that approximately 75 percent of these devices are from market segments which are considered “existing connected devices” today, i.e. fixed and mobile communications, computers, and consumer electronics. These segments are only projected to account for half of the total installed base by 2020, as internet connectivity becomes more common in the medical, industrial, and automotive sectors. The sectors represent significant growth opportunities as devices which are not internet connected today integrate internet protocol (IP) addressable connectivity and processing technology over the course of the extended forecast period to enable them to be internet connected.
According to Bill Morelli, associate director at IMS Research, “There are a number of key drivers behind the push to make more devices IP addressable. These include impressive advances in processor technologies, especially low power processors which will be critical for many previously unconnected industrial devices. Much of this equipment does not have ready access to power and will need to rely on batteries, driving this need for highly efficient, low-power processors.”
There are other drivers which are expected to help enable the rapid growth of internet connected devices. The first is the transition from internet protocol version 4 (IPv4) to internet protocol version 6 (IPv6) which greatly increases the number of available unique IP addresses. The IPv4 protocol has a maximum of about 4.3 billion unique addresses, many of which are already being utilized by existing connected devices. By comparison, IPv6 is capable of supporting a much greater number of unique addresses, which is important when considering applications such as building automation or industrial networking, which may need to support tens of thousands of nodes for each skyscraper or factory. The second important enabler is the aggressive rollout of next generation cellular networks. For consumer devices such as tablets and laptops, higher speed networks are critical, as rich media streaming is extremely bandwidth intensive. When considering the potential for cloud based services and applications, the capabilities of LTE networks are a significant driver.
While IMS Research believes that the potential for the internet connected devices market is significant, there is some uncertainty related to how long this market will take to fully realize. “When considering the near-term forecasts in particular, it is important to consider the global economic climate and how that will impact the near-term prospects for connected devices,” adds Morelli. “In particular, the next two to three years will see slower uptake as a result of some macro-economic factors. This includes a sluggish housing market which will have an impact on equipment categories such as home automation, smart appliances, and smart metering. Industrial spending on capital expenditures is also forecast to be lower, which translates to more infrequent equipment upgrades and slower implementation for new technologies.”
IMS Research's latest report, “The World Market for Internet Connected Devices – 2012 Edition” assesses the current and future market size for Internet connected devices, within a clearly defined scope and transparent methodology. IMS Research defines an internet connected device as any device that can connect to the internet directly and has a unique IP address. Internet connected devices can range from basic sensor and telemetry devices to powerful computing devices with a full operating system (OS) and a rich user interface (UI). This report provides detailed installed base and unit shipment analysis for eight different market segments and 31 market sub-segments, including market size estimates for 2010 and 2011 with forecasts to 2017. Additional long-range forecasts for both the installed base and new shipments are provided to 2025, each split by major market segment.