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Where does the growth in connected devices come from?

MAY 26, 2020 | Jim Morrish
region: ALL sector: ALL Internet of Things

Transforma Insights recently published our forecasts of connected IoT devices through to 2030. Overall, connected IoT devices are forecast to grow from 7.6bn in 2019 to 24.1bn in 2030. Our forecasts are built with a detailed bottom-up methodology, including the analysis and forecasting of 164 individual applications for each country, and on a per-vertical sector basis within applications where relevant. With such a granular dataset, it’s interesting to investigate what is driving the top line growth in connected devices.

The USA is currently one of the biggest and most developed markets for IoT connections (although China is bigger by device count, and South Korea is more developed overall), so analysing growth in the USA seemed to be a good place to start. The chart below shows the growth in the top 24 applications by device count in the USA, ranked on installed base in 2019. Overall, IoT connected devices per capita grow from 4.47 in 2019 to 13.24 in 2030.

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It is clear that certain applications are contributing significantly more to the total growth than others. The biggest contributors are Personal Portable Electronics (including Bluetooth headphones, smart watches, and connected cameras such as Wi-Fi enabled Go-Pro), and a range of smart building applications including smart meters, Smart Home, Building Automation, Building Lighting, and others. In terms of device count, it is always going to be the case that these kinds of applications will account for the greatest share, since the addressable markets (people and buildings, respectively) are so large. Whilst potentially highly impactful, industrial applications such as connected ambulances are never going to account for anything like as many devices.

It’s interesting to look at how the growth varies across countries too. The chart below shows some of the currently most developed markets in terms of device count per capita, ordered on the basis of their 2019 device per capita figure. It is clear that some countries grow significantly more quickly between 2019 and 2030. To a large extent this is driven by countries that have been relatively fast adopters to date slowing adoption rates as markets mature. For instance, South Korea has been a relatively fast adopter of IoT solutions to date, and has more limited growth potential than a market like the United States.

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There are also significant differences in drivers of growth of IoT connections between different countries at the application level. The table below shows a few selected applications for three markets, with percentage figures showing the contribution that each application makes to overall device growth between 2019 and 2030. This is where specific differences between countries become apparent. For example, crop-based agriculture makes up a far larger share of the US and Australian economies that it does of the Taiwanese economy so the opportunity for crop monitoring is proportionally far larger in the USA and Australia than it is in Taiwan. Conversely, Taiwan is expected to deploy electricity smart meters to residential properties at a fast pace over the coming decade. Electricity smart meter deployment in the USA is already very well progressed, leaving less potential for growth in the coming decade. Differences in adoption rates for Building Automation, Building Lighting, and Headphones mostly reflect the differences in lifestyles between the different countries.

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