What is Internet of Things?
Internet of Things (IoT) is one of the most often discussed technologies today. The technology encompasses networks of physical devices, such as electronics, vehicles and machinery working together in an interconnected environment with software, operations, etc. IoT affects three main areas: consumers via connectivity of consumer devices; businesses via digitalization of activities and automation; infrastructure via interconnection of physical and IT assets.
Source: Euromonitor International
Internet of Things to kick-start hi-tech goods industry
The global hi-tech goods industry is valued at USD5.3 trillion as of 2017. The industry’s performance was mediocre over 2011-2017, up by 2% per annum, as a result of weak growth in Western markets, political uncertainties and poor demand for consumer products in most segments. The future outlook looks more promising, with a 5% CAGR expected over 2017-2025.
With consumer markets expected to be further suppressed by weak overall demand, business equipment production is set to gain importance as the industry’s driver. The emergence of IoT is set to benefit numerous hitech goods industries, such as electronics, infrastructure products, sensors, network connectivity instruments, and manufacturing process equipment.
Growing internet adoption brings new opportunities
Internet usage is growing around the world. In 2017, 3.8 billion consumers were already using the internet. By 2025 the figure is set to reach 5.4 billion. Currently, internet usage among businesses has already reached 90-98% in some regions. Mobile internet is a leading driver of internet adoption. Quick and reliable connection via 4G is usually available in all major urban areas around the world. 5G internet, which is seen as a core connecting technology in the era of IoT, is currently being developed. 5G technology is around three times faster and has five times lower latency compared to the 4G network. Connection quality and speed are expected to be crucial for IoT adoption in business operations.
Cloud computing grows in acceptance around the world
Cloud computing is one of the key technologies used in IoT. Cloud computing is already among the most widely adopted technologies in the corporate sector. Unsurprisingly, developed countries with strong infrastructure and an established legal base top the rankings of cloud computing readiness indices. Developing regions, meanwhile, lack the capabilities required to run new technologies efficiently. This primarily includes poor infrastructure, restricted internet freedom, a weak legislative base and limited technology use in the corporate sector.
Countries that are most ready to adopt IoT technologies
The most potential countries to adopt the IoT technologies are advanced economies. Strong investments in innovations, R&D institutions, business operations, technological advancement, infrastructure and education are seen as the core drivers directing growing IoT usage in developed countries. North America, Western Europe and developed Asia Pacific countries are the most probable adopters of the IoT in the short term, whereas the developing world is lagging behind due to an underdeveloped legislative base and insufficient infrastructure.
Source: Euromonitor International
Developed countries lead, yet China boasts largest potential
Asia Pacific remains a diverse, yet converging, region in many respects. Japan and South Korea strongly lead technological sophistication in the region, thanks to well-established infrastructure, innovation-minded enterprises and global companies’ presence created over the last decades. China is seen as one of the strongest frontrunners for the adoption of IoT in the longer term. A strong manufacturing sector, strengthening local enterprises and governmental initiatives are expected to drive the country’s technological advancement in the foreseeable future. A significant impact should be derived from by the Chinese Government’s “Made in China 2025” programme. The programme emphasises the country’s shift towards higher-end manufacturing using digital solutions. The sector’s transition is increasingly necessary due to high reliance on labour-intensive industries, which have slowed the sector’s overall performance in recent years.