Any company wishing to target the IIoT market must fully understand the uniqueness of the vertical. More than any other IoT vertical, industrial IoT (IIoT) is a distinctive market in terms of value chain, technologies, players, and applications as shown in Omdia's IoT Enterprise Survey 2019/2020. To be successful any strategy developed for this market must be crafted taking into account all the unique factors of this space.
The evolution of the IIoT market must be built by channeling disruption into industry know-how and experience. These are the two key elements for any company targeting the IIoT opportunity and while technology disruption can be a significant asset it will not be enough if applied without an in-depth understanding of the industry.
The industrial vertical is unique, and this clearly emerged in the survey (1,746 respondents across eight verticals), where the responses from 288 manufacturing/industrial enterprises showcased why manufacturing is different. This was particularly evident in terms of preferred providers, deployed applications, and technology preference.
The industrial space is dominated by traditional vendors, such as Siemens or Bosch. This means that not all companies are equals when approaching this market and that partnerships are essential for new market entrants to build their businesses. According to the IoT Enterprise Survey, within the manufacturing sector, industrial or vertical specialist companies are key IoT solution providers, with 27% of survey respondents choosing them as best-placed company type to provide IoT solutions to their organization. This is in stark contrast with the category's overall 17% average across all verticals.
Not only providers, but also the applications that are currently deployed by manufacturing enterprises tend to be industry-specific. Two of the top three IoT applications deployed by manufacturing enterprises are vertical specific: predictive analytics or maintenance (57%), and production process and output quality monitoring (55%). The third widest deployed application by manufacturing-based enterprises is asset inventory tracking or geofencing (53%), which is a leading IoT application across multiple verticals and not specific to IIoT. The deployment of specific applications means that any IoT providers targeting this space must be able to understand what happens on the factory floor and what challenges and goals these applications aim to address.
Contrary to many other verticals, the manufacturing industry has never fully moved towards wireless, and wired is still a significant connectivity technology in the sector. Therefore, any new entrant in this space must adapt its offering to a wired and fragmented market. Wireless technologies such as 5G could really disrupt the status quo and value chain if they will deliver in areas such as security, reliability, and latency. In Omdia's survey 41% of manufacturing respondents use fixed connectivity such as ethernet to support their IoT projects. This is unlike the global average, where 35% of enterprises use fixed connectivity for their IoT projects.
The role of industrial/vertical IoT providers, the IoT applications deployed by manufacturers, and the technology preferences of the sector are three areas where the peculiarity of the manufacturing vertical emerges. There are potential changes appearing on the horizon of the industrial market with innovation such as 5G and private networks being prime examples of technologies with a potential disruptive impact. However, this disruption alone will not win over the market, but must be built on top of the traditional brownfield market where an in-depth understanding of the industry and a strong relationship with existing players are the essential steps to become an IIoT market leader.
Omdia Market Radar: CSPs' Industrial IoT Strategies and Propositions, IOT002-000023 (December 2019)
"CSPs must learn from each other and fine tune their strategies to lead the IIoT market", IOT002-000031 (January 2020)
5G Technology for the Industrial Internet of Things, IOT002-000006 (March 2019)
IoT Enterprise Survey 2019/20 – Interactive Analyzer Tool, PT0195-000001 (December 2019)
IoT Enterprise Survey 2019/2020 – Summary Report, IOT002-000028 (December 2019)
IoT Enterprise Survey 2019/2020 – Asia-Pacific, IOT002-000026 (December 2019)
IoT Enterprise Survey 2019/2020 – Europe, IOT002-000027 (December 2019)
Pablo Tomasi, Senior Analyst, IoT