IoT

The Next Decade in IoT: Steady Growth to 34.4 Billion Devices

What key IoT trends should we watch out for in the next decade?

May 23, 2023

The Next Decade in IoT: Steady Growth to 34.4 Billion Devices

At the end of 2032, there will be 34.4 billion connected IoT devices worldwide, according to the latest market forecast from IoT analyst firm Transforma Insights. In this article, Matt Hatton, founding partner of Transforma Insights, explores what is driving this growth and what the key trends will be for IoT over the next decade.

At the end of 2022, there were 13.2 billion IoT devicesOpens a new window active globally. By 2032 that figure will have grown to 34.4 billion, a trebling of the market courtesy of a compound annual growth rate of 10%. Annual device shipments will grow from 3.6 billion to 7.9 billion over the same period. 

The Diversity of IoT and Inherent Challenges Mean No Hockey-stick Growth

What is noticeable is that growth is very steady. The IoT market overall does not see ‘hockey-stick’ growth. This is a series of market with very different trajectories, which when combined under the umbrella of IoT, are collectively more steady than spectacular in terms of growth. And even when split into its constituent parts, the growth rates are broadly linear. The chart below shows the first tier of Transforma Insights’ segmentation, with the top 10 Use Cases. All of these follow the general IoT trend of more or less straight growth. 

Top iot 10 uses cases

Top 10 Use Cases, 2022- 2032
Source: Transforma Insights

Inertia and Slow Replacement Rates Inhibit Growth

Very rapid adoption is counter to the prevailing approach and market dynamics. IoT adoption typically must battle the twin challenges of inertia and slow replacement rates. 

Enterprises and consumers take a while to be convinced of the value of adopting IoT, not least because they often require a change of behavior that might not necessarily be easy to implement. While it may be hugely valuable to implement full automation of a warehouse or industrial process, it also necessitates proof-of-concept testing, implementation and integration with, and adaptation of existing systems and processes. Sometimes it’s like turning a super-tanker. 

Once they have been persuaded of the value, there is often a replacement cycle that further delays adoption. Connected cars, for instance, are dependent on the typical replacement rate of vehicles, which is somewhere between 10 and 20 years, depending on where you are in the world. I may want a car with factory-fitted connectivity, but I’m probably not going to rush out and buy a new car in order to have one. 

See More: IoT (Particularly Connectivity) Is in a Transition Phase: MWC Trends

A Few IoT Applications That Buck the Trend

There are a few particular applications that do see very rapid growth over just a few years. If we were to drill down into the most granular level of Transforma Insights’ forecasts, that of our 200-300 applications, we would find a few hockey-stick-type growth rates, but they are certainly the minority meaning they don’t have a significant impact on market growth overall. 

Typically these are either particularly appealing consumer devices that hit a sweet spot, such as the Amazon Echo or the Ring doorbell, or highly regulated markets. For instance, smart meter deployments tend to happen in an artificially accelerated time frame. However, even with that particular application group, the rules vary so much by country that we tend to see a set of overlapping hockey sticks for smart metering that, when combined, also show rather more even growth. Hockey sticks are certainly rare in IoT. 

The Biggest IoT Use Cases in 2032

In ten years, the biggest IoT use cases will be dominated by the consumer applications, which collectively account for 71% of connections. Of the top dozen IoT applications, five are consumer electronics: headphones, connected TVs, smart speakers, smartwatches and home video equipment. Several others straddle consumer and enterprise, including building lighting, smart electricity metering, and factory-fit vehicle head units. 

The biggest application overall is electronic shelf labeling, with 2.7 billion connected devices. Perhaps not the most glamorous IoT application, but with a need for large volumes and with a clear, demonstrable return on investment. 

IoT Is Dominated by Short Range Technologies

The favored technology in use in IoT, by a long way, is short-range. The hardware is cheaper, and there is no associated service fee, meaning that in those circumstances where they can use it, most organizations will opt to do so. The vast majority of IoT devices are deployed in locations with access to a short-range network, such as in the home, in an office or in a factory. 

As a result, almost three-quarters of IoT devices will be connected using short-range technology, such as Wi-Fi, Bluetooth or Zigbee. Of the remainder, most will be using cellular networks. 

Global IoT Installed base technology split 2032

Global IoT Installed Base Technology Split, 2032

Source: Transforma Insights

But LPWA Will Be Invaluable for Many Applications

The share accounted for by short-range technologies will decline over the decade to 2032, from 78% in 2022 to 73.5% in 2032. This is largely due to the increasing use of Low Power Wide Area technologies, including both 5G mMTC technologies (including NB-IoT and LTE-M) and unlicensed technologies such as LoRaWAN and Sigfox. Their capabilities and low costs promise to open up a whole set of applications, such as for smart labels or cheap environmental or asset monitoring devices. 

In total, we expect the LPWA technologies collectively to grow from 698 million in 2022, highly concentrated on NB-IoT use in China, to 5.2 billion connections. It is the mMTC technologies, using licensed spectrum, that will dominate, accounting for around two-thirds of LPWA connections over the period, from 62% in 2022 to 68% in 2032.

Satellite IoT Growth Is Good but Still Niche

The use of satellites for IoT is also set to increase rapidly due to the availability of new Low Earth Orbit constellations. However, the numbers are still very small. We estimate that in 2022 satellites accounted for just 0.05% of all IoT, which will grow to 0.17% in 2032. As such, satellite will substantially outperform the market overall but still won’t account for a particularly significant share.  

Conclusion

The growth of the global IoT marketOpens a new window and the opportunities over the next ten years is going to be an interesting journey to witness. Enterprises need to prepare keeping in mind which applications and verticals are ready to dominate in future, which technologies will be used, which countries will see the biggest growth and what is the revenue opportunity on offer.

What other IoT trends do you predict for the coming decade? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window . We’d love to hear from you!

Image Source: Shutterstock

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Matt Hatton
Matt Hatton

Founding Partner, Transforma Insights

Matt is a well respected commentator and technology industry expert with over 20 years experience at the cutting edge of technology research and consulting. He is a thought-leader in Digital Transformation and the Internet of Things. He is widely quoted in trade publications and a frequent speaker at conferences. His podcast, The Wireless Noodle is a weekly guide to the impact of disruptive technologies on business. In 2020 Matt co-wrote a book 'The Internet of Things Myth'. Matt was formerly a Founder and the CEO of Machina Research, the world's leading IoT and Big Data analyst firm, which was acquired by Gartner in 2016. Prior to founding Machina Research Matt was a technology industry analyst, working at firms including Analysys Mason and Yankee Group. Matt holds an MSc in Telecoms from University College London.
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