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Global IoT connections set to reach 27 billion by 2025

To take advantage of the opportunities of the IoT, suppliers need to understand the key market dynamics and develop best practice, says study

By 2025, the IoT will generate more than 2 zettabytes of data, mostly by consumer devices
By 2025, the IoT will generate more than 2 zettabytes of data, mostly by consumer devices

The total number of IoT connections worldwide is forecast to rise dramatically from 6 billion in 2015 to 27 billion in 2025, a new study finds.


According to Machina Research’s annual report on the size of the IoT market, this represents a compound annual growth rate (CAGR) of 16 per cent and will generate revenue streams of $3 trillion by 2025.


Of this figure, $1.3 trillion will be accounted for by revenue directly derived from end users in the form of devices, connectivity and application revenue. The remainder comes from upstream and downstream IoT-related sources such as application development, systems integration, hosting and data monetisation, the report states.


“Every year we take a snapshot of the IoT market, pulling our latest forecasts to examine how the overall market had developed in the year,” said Matt Hatton, CEO, Machina Research. “This year the top line figures of 27 billion connections and $3 trillion of revenue are eye-catching and the opportunity is substantial.


“However it’s not just a case of rising tides lifting all boats. To take advantage of the opportunities in IoT, suppliers need to understand the key market dynamics and their competitive environment, and develop best practice.”


Other key findings reported were:


Today 71 per cent of all IoT connections are connected using a short range technology (WiFi, Zigbee, or in-building PLC). By 2025 that will only have marginally increased to 72 per cent. The big short-range applications, which cause it to be the dominant technology category, are consumer electronics, building security and building automation.


Cellular connections will grow from 334 million at the end of 2015 to 2.2 billion by 2025, of which the majority will be LTE. Some 45 per cent of those cellular connections will be in the connected car sector, including both factory-fit embedded connections and aftermarket devices.


China and the US will be neck-and-neck for dominance of the global market by 2025. China which will account for 21 per cent of global IoT connections, ahead of the US on 20 per cent, with similar proportions for cellular connections.


However, the US is predicted to win in terms of IoT revenue (22 per cent vs 19 per cent). The third largest market is Japan with 7 per cent of all connections, 7 per cent of cellular and 6 per cent of global revenue.


By 2025, IoT will generate over 2 zettabytes of data, mostly generated by consumer electronics devices. However it will account for less than 1% of cellular data traffic. Cellular traffic is particularly generated by digital billboards, in-vehicle connectivity and CCTV.