By this point, the Internet of Things — or Machine-to-Machine Communications, or the Internet of Everything, or, simply, “IoT” — is a term most people are familiar with. Defined as a system where items in the physical world, and sensors within these items, are connected to the internet, you may wonder why IoT has only in the past five years received so much buzz when really the concept of connecting the physical world to the internet is something we’ve been doing for decades. In fact, if you’re familiar with Gartner’s hype cycle, the Internet of Things currently stands at the very peak of the hype cycle, with estimated market sizes varying from 26 billion to 212 billion connected devices, representing trillions of dollars. There’s no question about it — the market opportunity for the Internet of Things is huge. And growing.
General buzz and awareness of the Internet of Things has largely been driven by the consumerization of IoT devices. Between wearables such as fitness bracelets, medical devices like insulin pumps, heart rate monitors, and connected home devices such as smart thermostats and smoke detectors, consumers have been buying into the idea of IoT. At the same time, growth in mobile adoption and cloud, as well as the decreasing cost of sensors and processors, have continued to drive market adoption for IoT. Startups, traditional companies, and VCs have all continued investing heavily in products and software to bring IoT to the consumer.
But what about the enterprise?
The Next Big B2B Opportunity?
At OpenView, we focus on making investments in expansion-stage enterprise software companies, and we’ve been keeping a close watch on IoT. The opportunity for IoT applications in the enterprise is growing, and just like any purchase, businesses are focused on solutions that offer the usual:
- Revenue growth and cost savings
- Increased process efficiencies
- Improved customer experience
- Greater insight into and control over assets
That said, I believe that enterprise-wide adoption of connected hardware is a few years away, with many opportunities for chip and device manufacturers. Soon thereafter, however, it will be up to software companies to collect, ingest, aggregate, analyze, learn from, and bring intelligence and context to all the data collected by the hardware. That is an extremely exciting challenge/opportunity, and I am very interested in the long-term and lasting impact IoT will bring to enterprises strategically.
Considerations such as security, compatibility with other devices and software, and scalability will be even more important to enterprise buyers. Other software industries such as device management software, endpoint security, and identity and access management will be elevated and even more prevalent. While enterprise-level adoption of IoT at the expansion stage may still be years away, I am convinced that its impact and importance to businesses cannot be overestimated.