ARM Holdings Study: Internet Of Things (IoT) Is Closer Than You Might Think

The Internet of Things (IoT) means many things to many people and there are many questions about how far we are from mass-market IoT adoption. Last week, ARM Holdings and The Economist published a very interesting research piece showing that amongst 779 senior business leaders, the IoT is a lot farther along than you may think. I’d like to share with you some of the more interesting findings I walked away with from this invite-only event.  First, I’d like to ground you what I think the IoT is.

As I published in my segmentation research two weeks ago, the IoT comes in two main flavors, the Industrial IoT (IIoT) and the Human (HIoT). The IIoT brings autonomous monitoring and operations capability to factory boilers, HVAC systems, and hospital medical systems. IIoT systems are very high availability, and companies like General Electric and Echelon play in this space. The HIoT comprise of more interactive, consumer-based devices like a FitBit, Revolv Hub, and a Nest Thermostat. ARM, the study sponsor, obviously plays heavily in both the IIoT and the HIoT.

Many interesting IoT adoption facts and figures came out of the ARM sponsored study conducted byThe Economist and fielded across 779 global business leaders:

  • 23% believe that IoT will change their business model or business strategy: This is huge. Respondents are basically saying IoT will disrupt the fundamental core of their company or the strategy on which they plan and execute their business. Business model changes can mean moving from a product to a service company.  Disruptions don’t get any bigger than this.
  • 30% believe that IoT will unlock new products and services from existing products and services: This is as impressive as the first one cited. How often do companies increase revenue from products already deployed in the field? Not often.  But it makes sense when you think of it. Think of a General Electric and Echelon example. General Electric has millions of HVAC systems and what if each one were connected by an Echelon solution? It seems like end customers would pay General Electric service fees to help them save energy, lower downtime and improve spare parts inventory management.
  • 95% believe their company will be using IoT in three years: While most in surveys are optimistic, this is a huge number when you think of it, even if, in reality, it’s four to five years. While I think 95% is overly-aggressive, this would be as pervasive as a smartphone or a personal computer use. It’s important to keep in mind that “will be using” could mean on one corporate division or inside one of 100 products.
  • 63% believe that companies slow to integrate IoT will fall behind the competition: The reality is that most companies play defense to protect their current interests versus going on the attack. Boards pretend to go on offense and talk a big game, but rarely approve big offensive plays. This is why this survey response answer is so important in that it gets under a lot of the base motivation for adopting IoT. If C-level execs and boards think they will become noncompetitive if they don’t deploy IoT, it’s a big driver to do so.
  • 68% have already made IoT investments: I read this as investments in full-blown deployments, pilots, or just research. This isn’t as clear on the investment magnitude, but it is positive that the investment has been made and is large enough to garner the attention of the C-level executive or board member.
  • 29% increased IoT investment over 10% YoY and 39% investedunder 10% YoY: This is somewhat of a mixed bag, and that companies are skewed into big investors and experimenters. Given 22% of the respondents are investing nothing in IoT, the thesis sounds plausible.
  • 17% already using IoT in its “external product or services”:  At first glance, this number seems low, but tracks quite nicely to moving beyond “early adopters”. It also points out just how much big the future deployment opportunity is at 83%.
  • 21% already using IoT in its “internal operations”: This brings usage very deep into the early majority adoption space.     
  • North America lags EMEA and APAC in “internal operations”: In the study’s IoT business index, on average, North America lagged both Europe and Asia by 10% in IoT for “internal operations and processes”.
  • APAC most optimistic that IoT will have a major impact in most industries: 43% of those surveyed in APAC believe the IoT impact will be big across all key industries. This compares to 35% in NA and 34% in EMEA.  This tracks well compared to overall technology optimism research on other tech sectors I have conducted or read.

So what do all of these facts and figures in the ARM  sponsored research indicate about IoT?

First of all, I believe the study indicates that business leaders are highly optimistic about IoT and its ability to transform their business, either by driving new sources of revenue or by making operations more efficient. This is a good sign that leaders think they can make more money and save more money. It isn’t often that you can find both of these together.

The study also shows that most companies are investing in IoT right now, but most are just researching what they can do with it versus planning, piloting, or implementing projects.  So how many years off are we from adoption inside all large organizations? The study doesn’t ask that specifically, but 95% of those surveyed in the ARM survey say that they believe their companies will be using IoT in three years.  And that’s really good for companies like General Electric, Echelon, Revolv, and, of course, ARM.

I’ll be looking forward to next year’s study to see if the needle actually does move.  You can find the ARM-sponsored research here.