IoT market: 2021 trends and growth
Blog 07/03/2022

IoT market: 2021 trends and growth

In recent years, the IoT market has experienced double-digit growth with a slight pause during the pandemic. But the trends have picked up again now.


IoT market: 2021 trends and growth

The Internet of Things (IoT) has been one of the most interesting and dynamic trends in the digital world for many years, forming the basis of the 'digital transformation' that is irreversibly changing our organisational, economic and social systems.

In recent years, the IoT market had been experiencing double-digit growth, halted temporarily during the pandemic from which it now appears to have basically emerged safe and sound.

In this article, we will, therefore, analyse the value of the IoT market in Italy, the situation that has arisen due to the Covid19 pandemic and what the growth trends are for the future.


What is the IoT market worth?

The Internet of Things is a market with nine zeros: constantly growing in the last few years, capable of withstanding the impact of the pandemic and speeding towards the future.

This is because the technology of the Internet of Things has become a central part of our organisational systems and the benefits and advantages that it brings (not only in economic but also in environmental terms and the reduction of risk) have been evident in all segments of society, among consumers and even at the level of companies and public administration.

Take how connected devices, for example, can guarantee consumers reduction in domestic energy costs and how factories can optimise production processes by using machinery that can predict malfunctions.

The IoT market is worth billions in Italy as well. According to the Osservatorio Internet of Things of the Milan Polytechnic's School of Management, the value of IoT in this country, in fact, stood at 6 billion Euros in 2020. Let’s take an in-depth look at the sectors into which these are investments are divided.

The value of the IoT market in Italy: the sectors

As of today, there are 93 million active IoT connections in Italy, of which 34 million mobile phone connections (+10%) and 59 million enabled by other technologies (+15%).

The very top of the IoT market is occupied by Smart Metering & Smart Asset Management of Utilities, i.e. the entire sector for smart meters to measure consumptions. The overall value is 1.5 billion Euros, 25% of the total.

With 17.3 million vehicles connected and a revenue of 1.18 billion Euros, equal to 20% of the total, the second spot on the podium is occupied by Smart Cars, followed by Smart Buildings (with reference, in particular, to video surveillance and energy consumption management), for a value of 685 million Euros.

This is followed by Smart Logistics (610 million Euros), Smart Cities (560 million Euros), Smart Homes (505 million Euros), Smart factory solutions (385 million Euros, +10%), and the Smart Asset Management area of the non-utility field (265 million Euros).

At the tail end is Smart Agriculture (140 million Euros), which with a + 17% increase is the sector showing the most significant growth in Italy.


What are the three essential components of IoT?

In simple terms, the Internet of Things consists of a set of technologies which connect real objects to the Internet.

Once these objects are connected to the network, they become ‘smart’ and acquire their own identity in the digital world, capable of transferring a series of information and data. This means that the ‘real world’ and the ‘virtual world’ are connected thanks to them.

There is a well-defined and recurring architecture behind this technology which classifies the three components of the IoT into:

1. things, i.e. the objects which are connected on the network;

2. network, i.e. the network within which the various connections are made;

3. cloud, i.e. the storage space (server) in which the data of the connected objects are collected and analysed.


What are IoT devices?

We have mentioned ‘smart objects’ when talking about the Internet of Things, so all those objects which are connected to a network, which process data and exchange information with other objects.

But what exactly are these objects? There are an infinite number of application fields for IoT technology. These devices are now used in all the IoT market sectors, from smart agriculture to industrial IoT, from smart cities to smart metering, smart cars and smart homes.

To understand what IoT devices are, therefore, just take a look at what is around you. There are IoT devices in household electrical appliances for energy efficiency, watches which tell you how many calories you have burnt or cars that are easier for you to drive.

For an object to be defined as ‘smart’, the distinction must be made between at least two essential functions: the identification (i.e. its unique identification in the digital world) and the connection, of course.

The IoT market during the pandemic, what happened in 2020?

As noted by the Osservatorio Internet of Things, the Italian IoT market had recently been advancing at double-digit growth rates: in 2018, there was a +35% increase followed by a +24% increase in 2019.

In 2020, for the first time as a result of the Covid19 pandemic, the IoT market experienced a slight downturn (-3%), in line, however, with the findings at European level, where the market trend had been fluctuating between -5% and + 8%.

An inevitable pause, in short, that has not affected the great momentum with which the Internet of Things continues to advance on the Italian market.

Indeed, there are several areas in which there was growth in 2020 compared to the previous year, i.e. the Smart Agriculture (+ 17%), Smart Factory (+ 10%), Smart City (+ 8%), Smart Logistics (+ 4%) and Smart Building (+ 2%) sectors.

Two aspects, in particular, have determined this excellent performance even during the pandemic, the first of which is a constant increase in IoT connections that enable technological evolution.

At the end of 2020, in fact, the total volume was 93 million active IoT connections, up compared to the previous year, with 34 million mobile phone connections (+10%) and 59 million enabled by other technologies (+15%); including the advent of LPWA networks, reaching 1 million connections for the first time.

Above all, the advantages and benefits of IoT technologies have proved to be such that they cannot be undermined even by a global pandemic like Covid19. On the contrary, an increase in IoT technologies is expected from this point of view, linked also to EU policies to facilitate digital transition.

Technological trends in 2021: the IoT market position

At the end of 2020, when the 2021 technological trends were elaborated, it was already very clear that the global Covid pandemic would affect the technological levers of the following year.

As we have seen, the IoT market, after years of double-digit growth, underwent a slight downturn in 2020.

However, the most influential analyses on 2021 technology trends have still positioned it among the fastest growing sectors, given its penetration into all organisational sectors, into the private life of people as well as at corporate level and in public administrations.

These data were confirmed by the 2022 trends, which will be looked at the end of this article and allow us to imagine a future that is still quite rosy for the IoT sector.

At the end of 2020, in particular, Gartner had included among the 2021 trends what could be defined as a sort of 'evolution' of the Internet of Things, i.e. the Internet of Behaviours (IoB).

IoB means the set of technologies aimed at acquiring, analysing and connecting the behavioural data of individuals to act on and possibly guide their behaviour (e.g., the use of RFID devices in some American companies to check that workers wash their hands regularly).

It will be interesting to understand, as soon as the data for 2021 is available, whether this trend has been confirmed and how the problems related to the issue of privacy, in particular, have been handled, which immediately appeared of no secondary importance.


IoT and companies: at what point are we in Italy?

At what point are we in Italy with the use of IoT technology by companies? The overall situation is positive.

According to a survey by the Osservatorio Internet of Things, there is, in fact, an overall growth in the industrial IoT, i.e. in the industrial application of IoT technology, and a decrease in the gap between large companies and SMEs from the point of view of awareness and propensity to implement innovations.

The survey highlighted how 94% of the former are aware of the IoT solutions for industry 4.0 and how 68% of them have already initiated at least one project. These numbers fall to 41% and 29% respectively for SMEs, a gap that is, however, closed compared to previous years.

The Smart Factory (66%) and Smart Logistics (27%) sectors were the ones that recorded the biggest applications of Industrial IoT.

The survey, however, showed how the Covid19 pandemic has changed companies’ priorities.

In terms of starting new projects, in 2020, only 12% of large companies and 15% of SMEs considered prioritising IoT initiatives. As for investments, the budget for IoT projects of Industry 4.0 was increased by 22% by large companies and only 11% by SMEs.

This uncertainty among Italian companies, caused by the global pandemic, has not, however, halted the growth of the IoT industry, with a market that is gradually moving from the sale of hardware alone to the sale of additional services (first and foremost, IT and energy management services).

Deloitte also found, in its report on Industry 4.0 initiatives in the Italian manufacturing sector, that as many as 63% of Italian companies in the sector have continued to invest in industry 4.0 despite the economic crisis caused by the pandemic.

IoT: forecasts for the future What is the future of the Internet of Things?

According to the 'Predictions 2022', the report presented at the end of 2021 by Forrester, the US research and consultancy firm, smart infrastructures will see consistent growth in 2022, due also to the impetus by global governments to relaunch an economy left reeling after two years of Covid.

As indicated in the Predictions, “The future is at stake. Company leaders will use the harsh tests of 2020 and 2021 to create a path towards a more agile, resilient and creative future”.

IoT technology will play a decisive role in this process in Italy as well, as highlighted by the Osservatorio Digital Innovation of the Milan Polytechnic’s School of Management, for whom the market outlook for the IoT technology is more alive than ever.

Even McKinsey's forecasts, despite being adjusted downwards compared to the same 2015 report, forecast a bright future for the Internet of Things, which by 2030 could generate between 5,500 and 12,600 billion dollars globally.