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.

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.