IoT Analytics published an analysis based on the “Generative AI Market Report 2023–2030” report and highlights the landscape with its top players in the data center GPU, foundational model and platform, and generative AI services markets.

Key insights:

• The generative AI market went from nearly nothing to a hot market within a year, as shown by IoT Analytics’ latest research report.
• IoT Analytics analyzed 3 interconnected markets for generative AI: 1) data center GPUs, 2) foundational models and platforms, and 3) generative AI services. Each has distinct aspects and market players.
• NVIDIA leads the data center GPU segment with a 92% market share, while OpenAI and Microsoft have a combined share of 69% in the foundational models and platforms market. The services market is more fragmented, with Accenture currently seen as the leader with a 6% market share.

Key quotes:

Knud Lasse Lueth, CEO at IoT Analytics, remarks: “The speed of generative AI innovation with new offerings coming on the market on a weekly basis is fascinating monitor. Nvidia with 92% market share for data center GPUs as well as Microsoft and OpenAI with a combined 69% market share in the models and platforms segment are firmly in the lead in their respective market segments. With hyperscalers developing their own data center chips, with the availability of powerful open-source models and with giants like AWS and Google looking to differentiate with their new offerings, it will be interesting to watch how much the early lead is worth for the current market leaders. I personally do expect both Microsoft and Nvidia to maintain their strong positions in the coming years but the gap to the competition will likely close a bit.”

Philipp Wegner, Principal Analyst at IoT Analytics, adds that:

“The Generative AI market is rapidly evolving, with established leaders and a growing number of startups. In 2024, it’s a make-or-break year for Gen AI vendors, as they navigate a crowded field of competitors.”

The leading generative AI companies

The rise of generative AI

Following its release of ChatGPT in 2022, OpenAI experienced an impressive one-year, zero-to-$1 billion revenue bump—surpassed only by US-based chipmaker NVIDIA, which managed to increase its data center GPU sales from $3.6 billion in Q4 2022 to an expected $16 billion in Q4 2023. When it comes to generative AI companies, these two stand out.

The generative AI foundational models and platforms market is expected to reach nearly 5% of global software spending by 2030

According to IoT Analytics’ Generative AI Market Report 2023–2030 (published December 2023), the generative AI software and services market reached $6.2 billion in 2023. Although it is still very early to forecast where things are going from here, the IoT Analytics research team expects the generative AI foundational models and platforms market to make up nearly 5% of global software spending by 2030 due to its disruptive nature and tremendous value potential.

However, this does not include the market for individual generative AI solutions. The team believes generative AI will become standard within most software in the near future. This also does not include the hardware market, such as for data center GPUs, since this market is looked at separately from software but is discussed below.

In this article, we dive into the data center GPU, generative AI foundational model and platform, and generative AI services markets, discussing what aspects of the generative AI field make up each market and highlighting the leading generative AI companies within them.

Market segment 1: Data center GPU market

a.) Market overview

The data center GPUs market refers to specialized GPUs designed to handle the extensive computation demands of modern data centers, which are the backbone of generative AI. Originally designed for rendering graphics, GPUs excel at parallel processing, which is fundamental for deep learning computations used in generative AI.

The report shows the data center GPUs market reached $49 billion in 2023—a booming increase from 2022 (+182%), mostly driven by one company alone: NVIDIA. Although the market for data center GPUs has seen steep price increases and is undergoing severe supply constraints, there is currently no reason to believe demand will decline in the next two years.

b.) Leading data center GPU companies

The data center GPU market at this point has one very clear leader. However, the market report shows that there are other promising startups and other established companies trying to make inroads.

The data center GPU market at this point has one very clear leader. However, the market report shows that there are other promising startups and other established companies trying to make inroads.

1. NVIDIA

NVIDIA leads the data center GPU market by a long shot, owning 92% of the market share. In 2023, the company’s quarterly revenue jumped 272%, from $4.3 billion in Q1 to a forecasted $16 billion in Q4.

The NVIDIA A100 Tensor Core GPU is the de facto standard for data center GPUs. However, as discussed in the report, hardware is not the only differentiator for NVIDIA. Some consider their developer ecosystem, CUDA, as NVIDIA’s biggest moat, and it is often cited as the key reason why NVIDIA is not set to lose its dominant position anytime soon.

2. AMD

The Data Center segment of US-based semiconductor AMD player, NVIDIA’s first real GPU challenger, grew by 21% from Q2 2023 to Q3 2023 and shared 3% of the market. However, AMD has big ambitions in 2024 to eat into NVIDIA’s market share. In early December 2023, it announced the release of its Instinct MI300 Series accelerators, which are cheaper than NVIDIA’s comparable accelerators and, as AMD claims, faster. AMD’s CEO, Dr. Lisa Su, forecasted at least $1 billion in revenue in 2024 through this chip alone, and Microsoft, Meta, and OpenAI stated they would use the Instinct MI300X in their data centers. AMD also recently launched ROCm 6.0 to provide developers with an ecosystem that is equally attractive to CUDA.

3. Intel and others

US-based chipmaker Intel, the traditional competitor to NVIDIA and AMD, has lagged behind on the data center GPU front. In May 2022, Intel’s Habana Labs released its second generation of AI processors, Gaudi 2, for training and inferencing. Though not as fast as NVIDIA’s popular H100 GPU, it is considered a viable alternative when considering price to performance.

Meanwhile, in July 2023, startup chipmaker Cerebras announced it had built its first of nine AI supercomputers in an effort to provide alternatives to systems using NVIDIA technology. Cerebras built the system, Condor Galaxy 1, in partnership with the UAE, which has invested in AI research in recent years.

Market segment 2: Generative AI foundational models and platforms market

a) Market overview

The foundational models and platforms market comprises two related areas. Foundational models are large-scale, pre-trained models that can be adapted to various tasks without the need for training from scratch, such as language processing, image recognition, and decision-making algorithms.

Generative AI platforms, in turn, refer to software that enables the management of generative AI-related activities outside of foundational models. Notably, IoT Analytics identified six platform types: 1) development, 2) data management/databases, 3) AI IaaS/GPU as-a-service, 4) middleware & integration, 5) MLOps, and 6) user interface and experience (UI/UX).

The foundational models and platforms market exploded with the public release of ChatGPT in late 2022, reaching $3.0 billion in 2023. This is substantial growth over 2022, which saw next to nil in terms of revenue. IoT Analytics’ analysis projects strong market growth in the coming years as enterprises invest billions in—and report real value from—generative AI implementations and continuous improvements.

b.) Leading generative AI foundational model and platform companies

Unsurprisingly, the foundational model and platform market are currently led by OpenAI, with several well-known technology companies trying to catch up.

1. OpenAI

With the November 2022 launch and subsequent success of ChatGPT, OpenAI leads in the share of the foundational model and platform vendors market with 39%. Since the release of ChatGPT, OpenAI’s generative pre-trained transformer (GPT) models went from GPT-3.5 to GPT-4 to GPT-4 Turbo, showcasing the continued development of the model. OpenAI’s models continue to impress in independent model assessments and rankings—often coming out in the top three of all tested models. Although many experts expect the foundational model space to become a commodity over time, at this point, OpenAI’s flagship models remain the top foundational model on the most common benchmarks.

According to IoT Analytics’ What CEOs Talked About series, in 2023, ChatGPT skyrocketed in boardroom discussions in Q1, but as other foundational models and generative AI applications became available, mentions of ChatGPT steadily declined as “generative AI” separated and continued to rise. (The What CEOs Talked About in Q4 2023 report and blog is expected to be released mid-December 2023.)

2. Microsoft

On OpenAI’s heels at 30% market share is Microsoft, its largest shareholder. Microsoft’s platform, Azure AI, offers Azure OpenAI, which uses OpenAI’s LLMs but goes beyond the public ChatGPT offering by promising greater data security and custom AI apps. This is suited for enterprises who want to secure their proprietary data when leveraging the benefits of generative AI since ChatGPT’s terms of use state that they can store and use content (both input and output) to improve their services. In November 2023, Microsoft reported over 20,000 active paying customers for its Azure AI platform, adding that 85% of Fortune 100 companies used it in the past year.

Despite Microsoft’s strong partnership with OpenAI, Microsoft also heavily promotes the usage of other models, such as Llama 2, via its platform, thereby enabling customers to freely choose and test different models and providers. Another key priority for Microsoft is integrating AI capabilities into its existing product portfolio, such as Azure, Microsoft/Office 365, and Bing.

3. AWS

AWS has an 8% share of this market. Its Bedrock service, publicly released in September 2023, provides access to models from several AI companies, such as Anthropic, AI21 labs, and Cohere (each with a 2% share of this market), and combines them with developer toolsets to help customers build and scale generative AI applications.

AWS has quickly claimed the third spot in this market because the company is the market leader in public cloud services and quickly got its existing customer base excited about its differentiated approach to Generative AI. In contrast to Google and Microsoft, AWS Bedrock focuses on providing a platform service that gives users access to a number of both general and domain-specific foundational models from a variety of vendors—providing choice, flexibility, and independence.

4. Google

In 2022, most experts credited Google as being the one tech company at the forefront of AI. Many experts interviewed by the IoT Analytics team continuously praised Google for its AI and its data products and innovations. In 2023, the picture is different, and Google is fighting to defend its position as an AI leader.

Vertex AI is Google Cloud’splatform focused on machine learning (ML) ops. It is integrated with other Google Cloud services, such as BigQuery and Dataproc, and offers a Jupyter-based environment for ML tasks. In early December 2023, Google released a preview version of its new multi-modal flagship model, Gemini. The related technical report states that the largest of the Gemini family outperformed other existing models in 30 out of 32 common ML benchmarks. Initially, the announcement of Gemini was widely received as positive, but a popular demo video released by Google later turned out to be staged.

Market segment 3: Generative AI services market

a) Market overview

The generative AI services market represents a specialized segment dedicated to consulting, integration, and implementation support for organizations aiming to integrate generative AI capabilities. With generative AI having risen as one of the top discussion points in boardrooms, services companies are sensing a large opportunity in helping companies formulate their generative AI strategies (e.g., what use cases to implement), advising them on technical architecture choices (e.g., which models to use) and helping them implement and build individual solutions.

IoT Analytics assesses that the generative AI services sector’s opportunity is now. Due to the novelty of generative AI, organizations often lack skills and experience, and the only option is to look for professional services firms that have or are in the process of building up the required expertise.

b) Leading generative AI services companies

The generative AI services market is more dispersed than the other two markets highlighted here.

1. Accenture

Accenture is estimated to have the largest generative AI services market share at 6%. The company announced in June 2023 that it is investing $3 billion in data and AI practice over three years to double its AI talent and develop new capabilities. Additionally, Accenture disclosed in its Q4 2023 earnings press release that its revenue for generative AI projects grew to $300 million for 2023.

In November 2023, Accenture announced plans to launch a network of generative AI studios in North America where companies can explore ways to integrate generative AI applications. These studies are expected to be at Accenture Innovation Hubs in Chicago, Houston, New York, San Francisco, Toronto, and Washington, DC.

2. IBM

US-based technology corporation IBM makes up 2% of this market. To position itself for the opportunities that generative AI brings, the company announced it had established a “Center of Excellence (CoE) for generative AI,” which as of May 2023, already had over 1,000 consultants specialized in generative AI. The CoE operates alongside IBM’s AI and Automation practice, which includes over 21,000 data and AI consultants.

3. Capgemini

France-based IT services company Capgemini also has a 2% share in this market, offering consulting services intended to help clients adopt key technologies such as the cloud and AI. In July 2023, Capgemini announced the launch of a portfolio of generative AI services, including in the following areas:

• Strategy
• Customer experience
• Software engineering
• Custom solutions for enterprise

One of Capgemini’s current customers is London Heathrow Airport which aims to improve traveler experiences through its “Generative AI for Customer Experience” offer. Heathrow’s Director of Marketing and Digital, Pete Burns, stated that the project is intended to “assist, empower and delight passengers” with tailored customer service solutions.

4. The many others

Past this point, the remaining 86% of the market becomes a cornucopia of specialized generative AI services providers and larger general consulting and system integration companies, each taking a bite of the rapidly growing segment.

As an example, in April 2023, UK-based professional services company PwC announced plans to invest $1 billion over three years to not only grow its AI offerings but also transform how it works by using generative AI. Additionally, in July 2023, global consultancy firm McKinsey & Company announced it partnered with AI startup Cohere to provide customized AI solutions to its enterprise clients.

Generative AI company landscape outlook

The enterprise generative AI market is roughly a year old, and already, the generative AI companies landscape appears vast.

IoT Analytics released its first generative AI report, the Generative AI Trend Report, in March 2023. Since then, more foundational models and platforms have emerged, e.g., OpenAI’s GPT4 Turbo, Google’s Gemini, or Microsoft’s Phi-2. At the same time, the demand for data center GPUs exploded, which is also mirrored in NVIDIA’s stock performance (+231% year-to-date as of 14 December 2023). Finally, consulting giants have made investments to position themselves in the generative AI services market, such as Accenture’s $3B investment in AI and its pledge to double “AI talent.”

As part of this research, we talked to 30+ experts in the field and gathered information on 270+ generative AI projects and analyzed which industries and departments are fastest to adopt and which vendors are most selected today.
The coming months will reveal how many of those projects will deliver value besides just being a marketing coup or how many of those currently in the proof-of-concept stage will move forward. Most companies are only now forging their generative AI strategies and considering whether to build foundational models from scratch based on industry-specific data, use an out-of-the-box propriety model, or fine-tune open-source models. All of this comes as generative AI companies release new products at unprecedented speed.

There is still a lot of movement in the generative AI company landscape, and there will be more in the foreseeable future. IoT Analytics will stay on top of this space, with a follow-up report expected in 2024.

The post The leading generative AI companies appeared first on IoT Business News.

IoT Analytics published an analysis based on the “Predictive Maintenance & Asset Performance Market Report 2023–2028” report and highlights 5 key insights related to the $5.5 billion predictive maintenance market.

Key insights:

• The global predictive maintenance market grew to $5.5 billion in 2022–a growth of 11% from 2021—with an estimated CAGR of 17% by 2028, according to the Predictive Maintenance and Asset Performance Market Report 2023–2028.
• With median unplanned downtime costs larger than $100,000 per hour, the importance of accurately predicting failures of large assets has never been higher.
• This article shares 5 key highlights of the predictive maintenance market: 1) The market is valued at $5.5 billion, 2) there are 3 different types of predictive maintenance, 3) predictive maintenance software tools share 6 features, 4) predictive maintenance is commonly being worked into the maintenance workflow, and 5) successful standalone solutions vendors specialize in an industry or asset.

Key quotes:

Knud Lasse Lueth, CEO at IoT Analytics, remarks: “Predictive Maintenance continues to be one of the leading use cases for Industry 4.0 and digital transformation, especially in process industries where asset failures can quickly go into the hundreds of thousands of dollars. It is great to see that the market is moving ahead with AI integration into existing APM and CMMS systems and that prediction accuracies are improving. Nonetheless, we still have a long way to go as false alerts remain commonplace.”

Fernando Brügge, Senior Analyst at IoT Analytics, adds that “Predictive maintenance is reaching new heights of maturity and sophistication thanks to the rapid advancements in artificial intelligence, hardware, and data engineering. We are at the point where these technologies enable us to collect, process, and analyze massive amounts of data from multiple sources, and use them to build more accurate and reliable models of machine health and behavior, as well as to determine potential courses of action to fix machine issues. In this way, predictive maintenance is not only a smart way to optimize equipment performance and lifecycle, but also a strategic way to enhance operational efficiency and competitiveness in a rapidly evolving industrial space.”

Predictive maintenance market: 5 highlights for 2024 and beyond

One accurately predicted failure of a large asset is worth more than $100,000 in many industries.

Our latest research highlights, among many other things, that the median unplanned downtime cost across 11 industries is approximately $125,000 per hour. With critical unplanned outages in facilities in industries such as oil and gas, chemicals, or metals occurring several times a year, an investment into predictive maintenance can amortize with the first correct prediction.

Unfortunately, there is a flip side: the accuracy of many predictive maintenance solutions is lower than 50%. This creates headaches for maintenance organizations that often run to an asset to find it is perfectly fine, eroding trust in the entire solution.

That said, vendors have been making strides to increase prediction accuracy, with more data sources and better analysis methods becoming available, including AI-driven analysis. There are positive signs that this determination for better prediction accuracy is helping end users: our research indicates that 95% of predictive maintenance adopters reported a positive ROI, with 27% of these reporting amortization in less than a year.

General search interest in predictive maintenance and related concepts has been on the rise for the last 12 years. Online searches for the term have grown nearly threefold since we initiated coverage on the topic in 2017 and have outgrown condition-based maintenance and asset performance management (APM) related searches.

Indeed, predictive maintenance appears to be well on track to be the must-have killer application we made it out to be in 2021.

In this fourth installment of our predictive maintenance market coverage, we look at 5 important highlights to note about the market going into 2024:

1. The predictive maintenance market is valued at $5.5 billion (2022)
2. There are 3 different types of predictive maintenance, with anomaly detection on the rise
3. Predictive maintenance software tools share 6 common features
4. Integration into the maintenance workflow is becoming important
5. Successful standalone solutions vendors specialize in an industry or asset

Highlight 1: The predictive maintenance market is valued at $5.5 billion

The predictive maintenance market reached $5.5 billion in 2022. Uncertain economic conditions and other manufacturing priorities in the last 2 years resulted in 11% market growth between 2021 and 2022. With companies reinvesting in efficiency, safety, and operational performance, we expect the market for predictive maintenance to grow to 17% per year until 2028.

Our research indicates that industries with heavy assets and high downtime costs are driving the adoption of predictive maintenance solutions (e.g., oil & gas, chemicals, mining & metals).

Highlight 2: There are 3 different types of predictive maintenance, with anomaly detection on the rise

As the market has evolved, 3 noticeable predictive maintenance types have developed:

1. Indirect failure prediction
2. Anomaly detection
3. Remaining useful life (RUL)

The difference between these largely comes down to the objectives, methods of data analysis, and type of output/information they provide. RUL is the hardest to achieve due to resource demands and environmental factors that make it difficult to scale. Indirect failure prediction has been the most used approach, but our research indicates that anomaly detection is on the rise.

1. Indirect failure prediction

The indirect failure prediction approach generally takes a machine health score approach based on a function of maintenance requirements, operating conditions, and running history. This approach often relies on general analysis to yield this score, though supervised machine learning methods can be used if a significant amount of data is available.

Benefits:

• Scalability – Indirect failure prediction can be more easily scaled since they rely on equipment manufacturers’ specifications that are more or less the same across machines of the same type.
• Cost effective – Indirect failure prediction can use existing sensors and data, reducing the need for additional instrumentation.

Limitations:

• Failure time-window accuracy – Indirect failure prediction does not give a timeline of when machines will fail. This can be a problem for organizations with very costly downtimes (e.g., heavy equipment industries).
• Dependent on historical data – Indirect failure prediction’s effectiveness relies on the availability of extensive historical data for accurate modeling.

2. Anomaly detection

Anomaly detection is the process of finding and identifying irregularities in the data (i.e., data points that deviate from the usual patterns or trends). While the indirect failure prediction and RUL approaches use failure data to predict future failures, anomaly detection uses the “normal” asset profile to detect deviations from the norm. These deviations can indicate potential problems, such as faults, errors, defects, or malfunctions, that need to be detected and addressed before they cause serious damage or downtime.
This approach makes it easier when there is not a good repository of failure data, and it often relies on unsupervised machine learning.

Benefits

• Low data and hardware requirements – Anomaly detection models can identify issues without being trained on failure data. Further, since these models need less data, they do not demand high computing power.
• High scalability and model transferability – Anomaly detection models are trained on normal operation data, so they can easily be applied to different machines without retraining or adaptation.

Limitations

• Failure time-window accuracy – As with indirect failure prediction, anomaly detection models do not give a timeline of when machines will fail, which can be a problem for organizations with very costly downtimes.
• Presence of false positives – While most solutions in the market can distinguish between critical and noncritical anomalies, the choice of unsupervised machine learning models is still important as it can affect how well this distinction can be made (e.g., autoencoders and generative adversarial networks do not capture the complexity of normal operations).

3. Remaining useful life (RUL)

RUL is the expected machine life or usage time remaining before the machine requires repair or replacement. Life or usage time is defined in terms of whatever quantity is used to measure system life (e.g., distance traveled, repetition cycles performed, or the time since the start of operation).

This approach relies on condition indicators extracted from sensor data—that is, as a system degrades in a predictable way, data from the sensors match the expected degradation values. A condition indicator can be any factor useful for distinguishing normal operations from faulty ones. These indicators are extracted from system data taken under known conditions to train a model that can diagnose or predict the condition of a system based on new data taken under unknown conditions.

Predictions from these RUL models are statistical estimates with associated uncertainty, resulting in a probability distribution.

Benefits

• Failure prediction time-window – RUL is especially useful for industries where maintenance is very costly and needs advanced planning, such as heavy-equipment industries.
• Output robustness – Since RUL estimates rely on high-quality and detailed data, they tend to be more robust and reliable.

Limitations

• Resource demand – Training large models requires powerful computing hardware, especially if done on-premises.
• Model transferability and scalability – Different environments and usage patterns can cause different failure modes for the same type of equipment. This means the model needs to be retrained for each specific case, reducing its scalability and generalizability.

Highlight 3: Predictive maintenance software tools have 6 common features

Software is the largest segment of the predictive maintenance tech stack, making up 44% of the predictive maintenance market in 2022.

Our report shows that even though most successful predictive maintenance software vendors specialize in industries or assets, there are 6 common features between their various solution software suites:

1. Data collection
2. Analytics and model development
3. Pre-trained models
4. Status visualization, alerting, and user feedback
5. Third-party integration
6. Prescriptive actions

We will delve further into these features and offer an example snapshot for each from various software vendors. The examples are to help readers understand some approaches to these common features.

Feature 1: Data collection

Data collection tools within predictive maintenance software collect, normalize, and store data on asset health/condition parameters. They also collect other data types needed to identify and predict upcoming issues, such as business and process data.

Snapshot:

US-based predictive maintenance software vendor Predictronics offers PDX DAQ, an application that allows users to synchronize data collection from multiple sources for any given period of time. The solution creates a database that harmonizes all the timestamps from different sensors, which Predictronics claims yields the necessary information for analysis and producing real-time, impactful results.

Feature 2: Analytics and model development

Analytics and model development tools within Predictive Maintenance software analyze, interpret, and communicate data patterns, including analytics discovery (e.g., RCA, AD modules) and modeling (e.g., feature engineering and model selection and testing).

Snapshot:

US-based predictive maintenance software vendor Falkonry (recently acquired by IFS) offers Workbench within its Time Series AI platform, a low-code ML-based solution aiming to help users—specifically, operational practitioners, including production, equipment, or manufacturing engineers—discover patterns such as early warning or stages of deterioration in complex physical systems. It also aims to enable users to analyze large amounts of data and build predictive models.

Feature 3: Pre-trained models

Pre-trained models are just that: ready-to-use models typically designed for specific assets in specific industries. These models include capabilities and references for specific assets or failure modes (e.g., fouling for heat exchangers, wear and corrosion for fans, or valve leakage for compressors). These are meant to help end users see examples of models so they can build on them or develop custom predictive maintenance algorithms.

Snapshot:

US-based asset management software vendor AspenTech (recently acquired by Emerson), offers Mtell, an application that includes pre-populated, industry-specific asset templates to help users select sensors for common asset categories and AI functionality to create and deploy models quickly for PdM applications (e.g., for specific compressors, turbines, and blowers).

Feature 4: Status visualization, alerting, and user feedback

Status visualization, alerting, and user feedback tools within predictive maintenance software automatically communicate asset-related data/insights for various personas. These insights often include status dashboards and automatic alerts that trigger work orders or corrective actions, maintenance planning, and optimization. These tools also enable users to provide feedback concerning the accuracy of alerts.

Snapshot:

US-based analytics software vendor SAS Institute offersAsset Performance Analytics, which includes status dashboards and automatic alerts intended to notify operations staff and managers of impending failure so that organizations have time to identify and fix issues before they become costly problems.

Feature 5: Third-party integration

Third-party integration enables users to connect their predictive maintenance software to other software systems and workflow management tools, such as ERP, MES, CMMS, APM (more on APM integration in Highlight 4), and Field Service.

Snapshot:

SKF, a Swedish bearing and seal manufacturing company also offering maintenance products, offers a condition monitoring and predictive maintenance solution that interfaces with existing plant control systems (e.g., MES or SCADA) and other external dashboards (e.g., ERP). It also provides insights to operators in the field via alarms and visualization on handheld devices.

Feature 6: Prescriptive actions

Prescriptive action features typically suggest the optimal actions to take in case of an (upcoming) failure. These actions are typically prioritized by criteria that are set when the algorithm is designed.

The actions that are prescribed by the software vary depending on the nature and urgency of the issue. They may require multiple steps or interventions. For instance, some actions may involve automatically adjusting the equipment parameters or informing the maintenance and operation teams about the necessary procedures to ensure equipment efficiency.

Snapshot:

Marathon, a predictive maintenance software solution from Norway-based Arundo, provides a feature known as Investigations that aims to provide the workflow and instructions to resolve equipment problems according to prescribed corporate standards.

Highlight 4: Integration into the maintenance workflow is becoming important

In its early days, predictive maintenance was mostly a standalone solution developed by startups to address specific customer needs. However, our report highlights a notable trend of sophisticated predictive maintenance solutions integrating into larger APM and computerized maintenance (CMMS) solutions.

APM is a strategic equipment management approach designed to help optimize the performance and maintenance efficiency of individual assets and entire plants or fleets. APM aims to improve asset efficiency, availability, reliability, maintainability, and overall life cycle value.

Various APM vendors are introducing predictive maintenance software tools within their APM offerings. The solutions aim to tie the different capabilities into 1 thread:

• Knowing when a machine will fail and mapping how failures could affect production or output
• Estimating how much fixing or preventing an issue will cost
• Making recommendations on whether it is worth fixing or preventing a problem

By including a sophisticated predictive maintenance solution in an end-to-end asset flow, APM players are trying to become the main partners for their customers’ digitalization journeys.

Our report lists 9 key components of APM:

1. Asset health monitoring
2. Maintenance optimization
3. Reliability analysis
4. Integrity management
5. Performance optimization
6. Failure prediction <- Predictive maintenance resides here 7. Digital asset twin 8. Sustainability management 9. Energy optimization

We assess in our report that improving the failure prediction module of APM solutions is currently one of the key initiatives of leading APM vendors.

Highlight 5: Successful standalone solutions vendors specialize in an industry or asset

Our research found that 30% of predictive maintenance vendors offer standalone, industry- or asset-specific solutions. By tailoring their efforts to specific niches in which they have acquired domain knowledge, they can discern the types of equipment and industries in which their solutions offer the most end-user benefits.

Snapshot:

Israel-based data science company ShiraTech Knowtion uses its equipment expertise in its offering of Predicto, an industrial IoT platform focused on industrial maintenance teams. The platform enables reading and processing of sensor data from production plants, ideally based on its own multisensing devices (iCOMOX). The company has developed specific offerings for motors, pumps, conveyors, and pipes. These asset-tailored offerings enable the company to scale.

6 considerations for predictive maintenance vendors

Six questions that predictive maintenance vendors should ask themselves based on insights in this article:

1. Market growth and strategy: Given the market’s growth to $5.5 billion and the projected increase to $14.3 billion by 2028, how can our company align its strategy to capitalize on this market expansion?
2. Accuracy improvement: Considering the current lower-than-50% accuracy of many predictive maintenance solutions, what innovative approaches or technologies can we adopt to enhance the accuracy of our predictions?
3. ROI communication: How can we better communicate the positive ROI of predictive maintenance to potential customers, especially those who are skeptical due to past experiences with inaccurate solutions?
4. Industry specialization: Given that the most successful vendors are specialized in specific industries, assets, or use cases, should we consider narrowing our focus, and if so, in which areas?
5. Data collection and integration: Are we effectively collecting the right kinds of data (including business and process data) and integrating it into the right IT systems for optimal predictive maintenance?
6. Software tool features: Do our software tools encompass the 6 common features identified in the report (data collection, analytics and model development, pre-trained models, status visualization, third-party integration, prescriptive actions), and are they competitive in the current market?

8 considerations for those looking to adopt or update predictive maintenance solutions

Eight questions that those looking to adopt or update predictive maintenance solutions should ask themselves based on insights in this article:

1. Solution type suitability: Which type of predictive maintenance solution (indirect failure prediction, anomaly detection, or RUL) best aligns with our specific maintenance needs and operational goals?
2. Integration with existing systems: How easily can predictive maintenance solutions integrate into our existing maintenance workflows and asset management systems?
3. Vendor specialization: Should we look for a vendor specialized in our industry, specific assets, or use cases, and how would that benefit us over a generalist provider?
4. Data collection and analysis: Do we have the necessary infrastructure for effective data collection and analysis to support a predictive maintenance system?
5. Accuracy and trustworthiness: How can we evaluate and ensure the accuracy of the predictive maintenance solution to build trust within our maintenance team?
6. Scalability and future growth: How scalable are the predictive maintenance solutions, and can they accommodate our future growth?
7. Software features and functionality: Do the software tools offered by vendors have all the key features we need, such as data collection, analytics, and third-party integration?
8. Market trends and innovation: Given the evolving nature of the predictive maintenance market, how can we stay informed about the latest innovations and ensure that our solution remains cutting-edge?

The post Predictive maintenance market: 5 highlights for 2024 and beyond appeared first on IoT Business News.

IoT Analytics released a new analysis, based on the ’Industrial IoT & Industry 4.0 Case Study Report 2023’.

Key insights:

• Digitalization has become essential for industrial companies worldwide, as IoT Analytics expects the industrial IoT market to reach $145 billion in 2023.
• The Industrial IoT and Industry 4.0 Case Studies Report 2023 delves into 22 case studies, exploring their project objectives, technologies deployed, lessons learned, challenges, and outcomes.
• In this article, we share five learnings from the report: 1) Upgrading the ERP is often the first step in digital transformation, 2) cloud-native data storage and streaming are coming up, 3) first successful implementations of private 5G use cases, 4) digitalization becoming a prerequisite to achieving sustainability, and 5) the continued journey toward predictive maintenance.

Key quotes:

Rajini Nair, Analyst at IoT Analytics, remarks: “Upon analyzing the case studies outlined in the report, it becomes evident that digitalization is a key catalyst driving technological progress in industrial settings. This includes the enhancement of ERP systems and the migration of data to cloud platforms equipped with real-time streaming capabilities. Furthermore, digitalization proves essential in harmonizing companies with their sustainability objectives. Strategies such as the implementation of predictive maintenance algorithms and the adoption of private industrial 5G use cases are leveraged to improve operational efficiency. Looking forward, the technological landscape is transforming with the rise of AI, poised to shape the future of manufacturing.”

Digitalization has become crucial to manufacturers globally

Digitalization has become crucial for manufacturers in their respective competitive landscapes. IoT Analytics estimates the industrial IoT market to reach $145B in 2023, with a CAGR of 17.9% until 2030, as more and more companies undertake digital transformation initiatives.

For many, digitalization has already become a game changer:

• Carmaker Mercedes has achieved 25% greater efficiency in its S-class assembly after optimizing the value chain and introducing innovative technologies at its Germany-based Factory 56 facility.
• Energy giant TotalEnergies aims to generate $1.5 billion annually in savings with its digital solutions by 2025.
• Chemical company Covestro increased efficiency and reduced unnecessary downtime by shifting from calendar-based to condition-based maintenance.

These are just some of the benefits of the digital transformation initiatives our research uncovered as part of the 255-page Industrial IoT and Industry 4.0 Case Studies Report 2023. The report delves into 22 recent industrial digital transformation case studies, looking at initiatives related to digital transformation, data architecture, predictive maintenance, AI, and industrial 5G.

Benefits of case studies for digitalization journeys

Case studies by peers or companies in other industries are a great way to learn about digitalization, identify common challenges, develop a view of best practices, and understand how companies manage to scale.

The 22 case studies in our report offer readers a diverse set of manufacturing examples of current IIoT and Industry 4.0 projects, along with project objectives and takeaways from each. Our analysis of these takeaways yielded many trends in these companies’ digital transformation journeys, five of which we will delve into in this article (including selected highlights from the report):

1. ERP: An upgraded ERP is often the first step to digital transformation.
2. Cloud: Cloud-native data storage and streaming are increasingly accepted.
3. 5G: First manufacturers have successfully implemented private 5G use cases.
4. Sustainability: Digitalization is becoming a prerequisite to achieving sustainability objectives.
5. Maintenance: The journey toward predictive maintenance and remote monitoring continues.

Learning 1: An upgraded ERP is often the first step to digital transformation

Our analysis found that many manufacturers elect to prioritize upgrading their ERP systems to ensure their various data sources are connected before prioritizing other digital transformation initiatives. Since ERP systems are often the central nervous system of a business, prioritizing an updated ERP allows different departments to share and operate on the same data, reducing errors and improving efficiency.

Selected highlight: Celanese

In recent years, US-based chemical manufacturer Celanese has acquired several businesses or divisions from other companies. Celanese had been operating on a legacy SAP ERP system, and the acquired assets had different legacy ERP environments, making cross-section integration difficult. Celanese’s global CIO, Sameer Purao, did not want the company to invest in integrating the new acquisitions into older technology. Given this situation and Celanese’s adoption of a strategic, long-term approach to a scalable digital transformation plan, an ERP upgrade became necessary.

“Our previous ERP system had been a backbone, but it was close to 20 years old. Given its age, we didn’t want to invest in transforming until we upgraded that piece first. The acquisitions underscored that it wouldn’t make sense to invest in integrating them into older technology, so we opted to upgrade.” – Sameer Purao, senior vice president and global CIO, Celanese Corporation

In May 2023, Celanese announced that it had completed its upgrade to SAP S/4HANA. Further, since Celanese acquired DuPont’s Mobility & Materials (M&M) business just six months prior, it quickly cutover to upgrading M&M’s legacy ERP system as well, which is expected to be completed in the first half of 2024.

While there are other major aspects of Celanese’s digital transformation journey detailed in our report, this upgrade to its ERP provided a stronger backbone from which other digitalization solutions could be built. Another benefit of this upgrade is improved visibility and collaboration, enhancing transparency and teamwork and allowing for efficient data access across the enterprise.

Learning 2: Cloud-native data storage and streaming are increasingly accepted

The cloud market nearly doubled between 2020 and 2022, growing from $109 billion to $206 billion, based on our analysis of global cloud projects. While the COVID-19 pandemic certainly played a major role, it was not the only growth factor. Our analysis found that large-scale enterprise digitalization efforts and strong SaaS adoption also helped fuel this growth.

Cloud storage and data streaming allow companies to centralize and share their data with a smaller footprint than running their own on-premises servers, which comes with footprint and maintenance costs. Moving these services to the cloud also allows companies to scale without the need for significant capital investment in physical hardware.

Selected highlight: Michelin

In 2019, tire manufacturer Michelin started using Apache’s Kafka event streaming platform on-premises in its data centers to gain real-time insights and process data as continuous streams. However, as its operational footprint expanded, so did the resources it had to dedicate to maintaining the solution. By Q4 2019, Michelin’s IT department initiated its migration to the cloud, with Microsoft Azure as the cloud partner.

“One of the challenges with [streaming technology] Kafka was its operational complexity, especially as the footprint expanded across our organization. It’s a complex, distributed system, so we had to allocate a lot of our valuable technical resources and expertise to babysit it and keep it running.” – – Olivier Jauze, now CTO of Experiences Business Line, Michelin

By 2021, Michelin migrated its services to Confluent Cloud for Azure, a Kafka-based platform, to support its multi-cloud environment. Soon after, the company began exploring use case projects and has since migrated one of its most critical projects, online order management, to the cloud—replacing its on-premises orchestrator. By 2023, Michelin expanded its cloud-based event streaming architecture into several departments, including supply chain management, customer services, manufacturing, and R&D.

Through its adoption of cloud-native data storage and streaming, Michelin achieved the following benefits (among other things):

• Cost savings: Estimated 35% in cost savings in the cloud compared to on-premises operations
• Improved uptime: 99.99% uptime

Learning 3: First manufacturers have successfully implemented private 5G use cases

As 5G continues its public rollout globally, some manufacturers have successfully deployed private 5G networks to enable new use cases within their facilities. While faster speeds and lower latency may seem like key adoption drivers, our analysis found that improved reliability over Wi-Fi, enhanced cybersecurity, and the ability to access data locally are the core motivating factors.

Our analysis also found that during the public rollout of 5G, some companies did not simply dive into integrating 5G-specific technology. Instead, many integrated robust LTE solutions that were upgradable to 5G with relative ease (or so-called 4.9G solutions) once the technology evolved or became approved for industrial use.

Selected highlight: Airbus

To increase aircraft production and validation efficiency, European multinational aerospace corporation Airbus partnered with Ericsson, a Swedish multinational telecommunications company, in 2021 to implement private industrial 5G networks at 11 aircraft assembly manufacturing sites in Europe. The approach began with implementing 4G networks that either already had 5G capabilities or could seamlessly upgrade to 5G.

However, Airbus is not limiting this deployment to its European facilities. During a Q&A at the 5G Manufacturing Forum in November 2022, Hakim Achouri, the 5G and IoT solutions expert for digital aviation at Airbus, noted, “Airbus is going way beyond 11 networks at 11 sites, expanding beyond its core European manufacturing bases in France and Germany, to also deploy private 5G in Canada, China, Spain, the UK, and the US.”

With its implementation of private 5G networks at its production and assembly facilities, Airbus has realized the following benefits:

• Ability to implement advanced use cases: This includes site surveillance, efficient flight-to-ground data offloads, quality inspections, and the operation of automated guided vehicles (AGVs).
• Enhanced user experience: With increased speed, bandwidth, and reliability, employees at the production sites have access to more data, making operations smoother, more efficient, and more secure.
• Scalability through reusability: By developing a pattern in its strategy, Airbus was able to roll out private 4G/5G networks across its many sites with consistent quality and performance.

Learning 4: Digitalization is becoming a prerequisite to achieving sustainability objectives

We recently noted a trend of companies deploying digital twins to help realize their sustainability goals. But it is not simply digital twins assisting companies on this front—digitalization projects overall are helping companies monitor energy consumption, optimize resource usage, and reduce their environmental footprint in the manufacturing process.
Backing this awareness and trend toward sustainability are data points from our latest What CEOs Talked About report, where “sustainability” and related terms remained among the most discussed topics in boardrooms.

Selected highlight: TotalEnergies

French multinational energy and petroleum company TotalEnergies has publicly declared its ambition to achieve carbon neutrality by 2050. To meet this goal, the energy company has leveraged digital solutions to advance the implementation of sustainability measures on its offshore platforms.

For instance, TotalEnergies retrofitted their pipes with LoRaWAN-connected temperature sensors to detect gas leaks along their flare networks. As hydrocarbons are released, the temperature of the pipes significantly changes. When this change is detected, operators are alerted via emails for immediate action. This not only helps limit the release of hydrocarbons but also saves TotalEnergies money by reducing the loss of product.

Learning 5: The journey toward predictive maintenance and remote monitoring continues

According to our Predictive Maintenance and Asset Performance Market Report 2023–2028 (published in November 2023), the predictive maintenance market reached $5.5 billion in 2022. While the report notes several tailwinds supporting this interest and market growth, such as skill shortages and interest in reducing energy usage and CO2 emissions, costs are a major driver, as noted in our case studies report as well.

Equipment failure, especially during core operational hours, reduces productivity and adds repair expenses. To avoid these costs, companies often use preventative maintenance procedures, such as time-based inspections and repairs or condition criteria from sensors or physical measurements to trigger preventative intervention. However, intervening based on time can be inefficient since the equipment may not be in need of repair at that time, and data collection/monitoring requires personnel to conduct these tasks.

By implementing digital solutions, companies can remotely monitor the condition of critical equipment and establish conditions in which intervention is actually needed well before failure occurs.

Selected highlight: Battalion Oil Corp

US-based Battalion Oil Corp partnered with Novity, a US-based predictive maintenance solutions company, to pilot a predictive maintenance solution to detect valve leaks within their compressors and reduce unexpected compressor downtime. Initially, Battalion would sporadically measure valve cap temperatures using handheld devices to identify potential gradual leaks that could lead to a failure. While the checks were intended to be conducted daily, varying daily maintenance tasks and priorities often disrupted these important checks.

“Predictive automation is a game-changer for the oil and gas industry. By analyzing data in real-time and making accurate predictions about future events, drilling companies can optimize their operations to maximize efficiency, reduce costs, and improve safety. This technology has the potential to transform the way we do business and stay competitive in today’s market.” – John Smith, CEO of Oil and Gas Exploration Company

An initial step in the solution was to use a crank angle sensor and pressure transducers. However, physical crank angle sensors are usually the most difficult and expensive sensors to install, so the engineers developed a virtual crank angle sensor based on physics-based and data-driven methods using data from the pressure sensors.

After validating that the rotational position calculated by the virtual sensors matched the position provided by the physical sensors, engineers applied prognostic methods to the data from the virtual crank angle sensor and physical pressure sensors. The result was predicted gradual valve failures several weeks in advance—five to seven days on average before temperature checks indicated a gradual leak.

The digital transformation journey carries on

The Industrial IoT and Industry 4.0 Case Studies Report 2023 delves further into the above-mentioned and 18 other case studies of ongoing digital transformation projections. While these companies and many others are advancing in their digital transformation journeys, there is still a long road ahead for many companies, some of which still rely on analog, pen-and-paper methods in their facilities. Even still, many companies are already experiencing real value, e.g., Mercedes’ achieving 25% greater efficiency and Battalion observing signs of gradual valve failures several weeks in advance.

Digitalization has become more than a nice-to-have for manufacturers today—it has become crucial for them in their respective competitive landscapes. The market reflects this assessment: according to our enterprise IoT market dashboard, the IIoT market size in 2023 is approximately $145 billion, with a forecasted CAGR of 17.9% between 2023 and 2030.

Looking ahead, AI continues to become a major theme in companies’ digital transformation initiatives. According to our continual series What CEOs Talked About, the topic and its related terms have already been of high and growing interest in boardrooms throughout 2023. We see a plethora of generative AI projects across the board, even in the industrial space (which we will report on soon). We will continue to monitor this space and highlight interesting case studies from adopters.

The post Industry 4.0 check-in: 5 learnings from ongoing digital transformation initiatives appeared first on IoT Business News.

A new report from IoT Analytics highlights eight notable trends helping to advance and promote digital twins.

Four of these trends are discussed in detail in this article. These trends are shaping the future of the digital twin market and influencing investment priorities for companies across various industries.

Key insights:

• According to our Digital Twin Market Report 2023–2027, the digital twin market is expanding, with a projected CAGR of 30% between 2023 and 2027.
• 29% of global manufacturing companies have either fully or partially implemented their digital twin strategies. Further, job posts related to digital twins have increased by 11% compared to October 2021, while openings for other tech topics have declined in the same timeframe.
• The report notes eight notable trends helping to advance and promote digital twins, four of which are discussed in this article.

Digital twin market snapshot

Data from our Digital Twin Market Report 2023–2027 indicates that 29% of global manufacturing companies have either fully or partially implemented their digital twin strategies, marking a noticeable increase from 20% in 2020. Moreover, the proportion of these companies not contemplating the implementation of digital twins appears to have reduced to 9% in 2023, down from 33.6% in 2020.

Supporting this trend, an analysis of job postings on SimplyHired suggests a growing demand for digital twin expertise. Postings mentioning “digital twin” increased by 11% in October 2023 compared to just two years prior, while openings for most other tech topics declined in the same timeframe. Notably, among the 60 tech-related skill sets we tracked, digital twin-related skills experienced one of the most significant growths.

Based on these observations and additional insights from our report, our current projection estimates that the global digital twin market could grow at a CAGR of approximately 30% between 2023 and 2027.

Against the backdrop of this growing market, the report notes eight trends that help promote the advancement and adoption of digital twins. Here, we will focus on four:

1. Digital twins deployed to meet sustainability goals
2. Digital twins employed as virtual sensors in complex conditions
3. Partnerships between cloud hyperscalers and OT and simulation specialists
4. Initiatives promoting interoperability of digital twins across multifaceted systems

Before we dive into these trends, and to provide context, it is helpful to understand how IoT Analytics defines digital twins and the digital twin market.

Defining digital twins and the digital twin market

In our March 2023 Decoding Digital Twins article, we define digital twins as a virtual model replicating the behavior of an existing or a potential real-world asset, system, or multiple systems. This definition captures a macro concept of digital twins, but our report and previous article present a three-dimensional, cuboid model to help classify digital twins so apple-to-apple comparisons can be made. Each axis of the cuboid represents one dimension of a digital twin:

1. Life cycle phase: The X-axis represents the six life cycle phases a digital twin is used for, from design to decommissioning.
2. Hierarchical levels: The Y-axis represents a digital twin’s five hierarchical levels, from information to multi-system.
3. Use/purpose of implementation: The Z-axis represents the seven most common uses for digital twins, such as simulation and prediction.

Based on this model, there are 210 potential combinations (5 x 6 x 7 = 210); however, our research indicates that many digital twin initiatives are tailored to multiple combinations.

In terms of the digital twin market, our market model only considers software spending for digital twins, which we break into two scopes:

• Broad digital twin market – includes the revenue for all software solutions that provide capabilities that are used for digital twins, such as solutions that integrate data sources into a digital twin and are capable of simulation, visualization, and predictions
• Narrow digital twin market – only considers spending for digital twin-specific software, such as software intended to model the digital twin data

Though hardware and services related to digital twins can bolster the capabilities of digital twin software, we only view them as supporting services for the software, and we do not consider them in our digital twin market model. That said, this ability to bolster capabilities means they can aid digital twin market growth, as shown in some of the trends below.

Digital twin market trends

We will now look at four trends helping digital twin market growth.

Trend 1: Digital twins deployed to meet sustainability goals

Sustainability was discussed in approximately 21% of recent CEO earnings calls and has remained a consistent topic throughout 2023. This pairs with our report’s analysis that the pursuit of sustainability goals is a tailwind macro factor for the digital twin market.

To achieve their sustainability goals, many companies are exploring digital twins. Due to their ability to simulate real-world conditions and deliver real-time information, organizations can optimize resource usage, reducing carbon emissions and improving supply and transportation networks.

According to Capgemini Research Institute’s 2022 digital twins report, 57% of organizations agreed that one of the key drivers for their digital twin investments was improving their sustainability, and 51% agreed that digital twins would help achieve their organization’s environmental sustainability goals.

In our report, a former VP at an industrial automation vendor shared, “Digital solutions provide the visibility, analysis, and insight needed to address the challenges inherent in sustainability goals. A digital twin strategy as part of an overall digitalization plan can be a crucial capability for asset-intensive industries and needs to encompass the entire asset lifecycle, process, and value chain from design and operations through maintenance and strategic business planning.”

Example: Aden, a Chinese integrated facility service provider, created a digital twin for one of its commercial centers in Chengdu, China. The digital twin was designed to help facility managers inspect, maintain, and repair building assets. 3D simulations assist facility managers in visualizing, predicting, and optimizing energy consumption, and the expected benefits include lower annual energy consumption, water usage, and waste.

Trend 2: Digital twins employed as virtual sensors in complex conditions

Virtual sensors approximate data that otherwise cannot be obtained via physical sensors, often due to physical sensors being impractical, costly, or hazardous to employ. Companies are now building digital twins to model hardware and calculate data based on other conditions. This not only allows the collection of data from complex equipment but also enables operators to track equipment performance and predict maintenance and downtimes.

Example: In large motor applications, such as room-sized motors that pump high volumes of gas, oil, or other chemicals, operators need to monitor the motors’ temperatures—especially if the motors are high-powered and repeatedly started. If a motor is too hot during a restart, the components could cause serious damage. Unfortunately, using a direct, physical sensor within a motor is often impractical, and operators must work from an assumptive time it takes for the motor to cool (with an additional safety buffer time). This means motors can be down longer than necessary, impacting efficiency and revenue.

To address this issue, Siemens developed a prototype virtual sensor based on a digital twin. It offers a simulation of how a physical sensor would operate if it were possible to install it within a motor. Using AR headsets, operators can see a simulation of the motor and its interior with a demonstrator superimposed over it, and they can see the motor’s temperature.

Trend 3: Partnerships forged in the clouds: Hyperscalers team up with OT and simulation specialists

In the last few years, cloud hyperscalers like AWS and Microsoft Azure have introduced digital twin platforms, e.g., AWS IoT TwinMaker and Azure Digital Twins, that allow for interconnecting various data sources and building digital twin topology. However, these companies realize they cannot deliver end-to-end digital twin solutions by themselves and are thus partnering with OT and simulation companies to add capabilities to their networks.

Hyperscalers and OT companies

OT companies provide industrial data management capabilities and connections to millions of local physical assets. By partnering with hyperscalers, OT companies can reach broader audiences looking for digital transformation solutions by offering typical cloud benefits like storage and computation power.

Example: In 2021, Siemens and AWS announced an expansion of their partnership, with digital twin technology being an area of focus. The companies aimed to accelerate Siemens Xcelerator adoption and democratize new digital twin solutions using AWS IoT TwinMaker, a service intended to make creating digital twins that incorporate multiple data sources faster and easier.

Hyperscalers and simulation companies

Simulation companies bring specialized expertise in creating accurate, high-fidelity models of physical entities, be it machinery, buildings, or entire ecosystems. By partnering with a hyperscaler, simulation companies can harness these cloud services’ data storage and computational power to create more robust, responsive, and accurate data twins that can be scaled and integrated seamlessly into broader IT ecosystems.

Example: In 2023, Ansys and Microsoft announced a partnership to help customers envision digital twins on a large scale. In cooperation with Tata Consultancy Services, Ansys and Microsoft integrated Ansys’s Twin Builder’s physics-based simulation capabilities with Azure Digital Twin and IoT data to allow Twin Builder users to run scenarios and obtain predictions on how their systems will behave.

Trend 4: Initiatives promoting interoperability of digital twins across systems from different vendors

Agreement on integration standards among the various digital twin technology providers is crucial for building cross-system digital twins. With standards, manufacturers can offer services that can be applied to unique situations with other digital twin technology and software.

Recognizing this, countries and industry organizations have taken several steps to address this need:

Plattform Industrie 4.0 and CESMII

Plattform Industrie 4.0 and the Clean Energy Smart Manufacturing Innovation Institute (CESMII) partnered to establish standards for manufacturers in Germany and the United States to better enable smart, sustainable competition. The partnership addressed similar challenges related to Industry 4.0 and Smart Manufacturing.

DTC digital twin interoperability framework

The Digital Twin Consortium (DTC), a collaborative partnership of industry, academia, and government experts, released the Digital Twin System Interoperability Framework to “unify a nascent ecosystem of high-value, multi-vendor services that can seamlessly ‘plug into’ a multi-dimensional, interoperable system of systems.”

DTC and IDTA collaboration

DTC and the Industrial Digital Twin Association (IDTA) announced a liaison agreement to collaborate on standardization requirements, enabling interoperability through discussions, aligning work in horizontal domains, and collaborating on open-source projects, contributions, and reference implementations.

DTC and OPC Foundation collaboration

DTC and the OPC Foundation announced a liaison agreement to “accelerate the development and adoption of digital twin-enabling technologies,” promoting interoperability standards and processes to advance the use of digital twins in manufacturing across multiple industries.

Considerations for digital twin vendors

3 questions digital twin vendors should ask themselves based on research findings discussed in this article:

1. Sustainability goals: Given the emphasis on sustainability and the role of digital twins in achieving it, is my company’s digital twin solution well-equipped to support sustainability objectives? Are there new features we need to develop?
2. Interoperability: Is our digital twin solution currently designed to be interoperable with other systems and technologies, especially those from different vendors?
3. Product development: How aligned is our product development roadmap with the emerging trends highlighted in the report, especially around end-user and technological advancements?

Considerations for adopters

3 questions adopters should ask themselves based on research findings discussed in this article:

1. Infrastructure readiness: Do we have the necessary infrastructure and resources in place to support the deployment and effective use of digital twins? If not, what investments are required?
2. Data integration: How compatible are our current data sources and systems with digital twin technologies, especially in terms of sensor data (both physical and virtual/soft)?
3. Interoperability concerns: As we use multiple software solutions across our operations, how important is interoperability between digital twin technologies and our existing systems?

The post Digital twin market: Analyzing growth and 4 emerging trends appeared first on IoT Business News.

IoT Analytics, a leading provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, today released the results of the quarterly company earnings call analysis.

This analysis is based on a comprehensive dataset of Q3 2023 earnings calls from 4,000+ leading US-listed firms. The findings from Q3 2023 show that three pivotal themes are currently trending in CEO discussions: 1. AI and Generative AI, 2. AI chips, and 3. sustainability. These influential topics have captivated boardrooms worldwide and are shaping the future investment priorities for companies across various industries.

KEY INSIGHTS:

• According to the latest “What CEOs talked about” report, three themes gained noticeable traction in earnings calls in Q3 2023: 1) AI and most of its related application topics, 2) AI chips, and 3) sustainability.
• ChatGPT is losing traction as the AI keyword of choice, and economic worries and uncertainty appear to be easing.

KEY QUOTES:

• Knud Lasse Lueth, CEO at IoT Analytics, comments: “I’m encouraged to see that as concerns of a potential recession fade, the emphasis on sustainability remains robust. AI, particularly generative AI, is emerging as the dominant theme of 2023. It’s evident that generative AI isn’t just another passing trend like blockchain or the metaverse. CEOs must take decisive action now to be at the forefront of this technological revolution.”
• Philipp Wegner, Principal Analyst at IoT Analytics, adds that “The surge in discussions around AI strategy and AI chips in Q3 2023 is a clear indicator that businesses are moving beyond the ‘what’ and ‘why’ of AI to the ‘how.’ CEOs are now grappling with the logistical challenges of integrating AI into their existing infrastructures, and that’s where the real transformation begins.”

The big picture

In Q3 2023, topics related to economic worries remained prominent in boardroom discussions globally but continued to decline quarter-over-quarter (QoQ). Mentions of the most talked about topic, inflation, dropped 5% QoQ to 47% of calls. Supply chain worries saw the smallest drop, 2% QoQ, while recession experienced the largest drop of 38% QoQ, now appearing in 11% of earnings calls.

Key quote on the macro environment: “Our base case today assumes a mild recession.” – Mark Mason, CFO, Citigroup, July 14, 2023

Key rising themes in Q3

AI : In Q3 2023,the broader topic of AI rose fairly steeply to 29% (+37% QoQ), and its subfield generative AI continued to rise in importance to 10% (+56% QoQ). During their quarterly earnings calls, CEOs appeared to be separating AI and many of its subfield topics from discussions about ChatGPT, which declined this QoQ (as discussed below in “Declining themes”).

Our analysis also shows a marked incline in the mentions of AI strategy and AI infrastructure, rising 128% and 103% QoQ, respectively.

Key CEO quote on generative AI: “Generative AI is at the forefront of customer conversations. However, enterprises are also realizing that they cannot have an AI strategy without a data strategy to base it on.” – Frank Slootman – CEO, Snowflake, August 23, 2023

AI chips : Mentions of GPUs greatly outpaced mentions of CPUs, with the former climbing 102% QoQ to 2.8% in Q3 2023 earnings calls and the latter climbing 47% QoQ to 1.7%. Coinciding with this trend is GPU chipmaker Nvidia climbing 146% in mentions to 1.9% compared to Intel only climbing to 1.2% (+48% QoQ) and AMD to 0.8% (+11% QoQ) in reference to AI chips.

“We’ll actually take the Nvidia hardware as fast as Nvidia will deliver it to us. Tremendous, tremendous respect for Jensen and Nvidia. They’ve done an incredible job. And frankly, I don’t know if they could deliver us enough GPUs.” – Elon Musk – CEO, Tesla, July 19, 2023

Sustainability, energy transition, and renewable energy : Mentions of sustainability, energy transition,and renewable energy slightly rebounded to 21.4% (+9.2% QoQ), 5.3% (+15.4% QoQ), and 5.2% (+10.9% QoQ), respectively. These topics are lower than their peaks in Q1 2022; however, since Q3 2022, each topic has remained generally consistent in its percentage of earnings call mentions.

“We don’t talk a lot about grid … but increasingly here in the U.S., people appreciate how critical grid modernization will be to the energy transition.” – Larry Culp – CEO, General Electric, August 28, 2023

Declining themes in Q3

ChatGPT: As mentioned, ChatGPT experienced a decline in its number of mentions in the earnings reports, dropping 34% QoQ to 2.5%. Last quarter, we saw a transition from CEOs specifically discussing ChatGPT to them discussing enterprise-wide applications of generative AI. That transition still appears to be occurring, as the other AI topics saw significant rises in mentions:

• LLM rose 98% QoQ to approximately 2%.
• Computer vision rose 60% QoQ to 1%.
• Chatbot rose 58% to 1%.

Remote work: The topic of remote work dropped the most of the key topics we tracked, falling 48% QoQ to 0.5% of earnings calls. This decline comes amid new concerns of a COVID-19 infection surge due to a newly detected SARS-CoV-2 variant. Early studies show that antibodies from vaccinations and past infections may enable immune systems to detect and combat the variant sufficiently, which could be easing boardroom concerns of a significant surge (of note, mentions of Corona dropped 8% QoQ to 0.9% of earnings calls).

This decline in discussions around remote work also comes amid increasing so-called return-to-office mandates, with 90% of US companies expected to require employees to work in person at least a few days a week by the end of 2023.

Deep-Dives

#1 AI

In the first quarter of this year, ChatGPT was the hot new (AI) topic for CEOs. In Q2, generative AI shared the stage with ChatGPT as AI proponents discussed other generative LLMs. Now, in Q3, ChatGPT is no longer the hot topic, but rather, generative AI, AI strategy, AI infrastructure, and AI Chips—with companies realizing that ChatGPT is just one tool of many in the new AI portfolio. However, AI is an evolving topic, and OpenAI continues to conduct research and development into ChatGPT, so there is no reason to suspect ChatGPT will completely fade from discussions in the near term.

AI use cases like coding and chatbots are starting to climb

AI use cases like coding and chatbots are also starting to climb, but they have not yet reached the same level as the aforementioned topics. These use cases will likely roll out in the next 6–12 months, so we assess these (and other) topics to grow in Q4 and into 2024.

Of the AI umbrella (not counting AI chips, which we dive into more below), generative AI was the most talked about by CEOs. LLMs, AI infrastructure, and AI strategy saw significant rises in discussions, though they only appear within 1%–2% of the earnings reports overall.

Technology and communication services sectors lead in AI discussions

The technology and communication services sectors lead most AI and AI subfield discussions. 67.6% of technology sector earnings calls mentioned the general topic of AI, while 50.8% of the communications services sector earnings calls discussed it. Generative AI was also fairly high for both sectors, with it mentioned in 33.9% of technology sector earnings calls and 24.2% in communications services sector calls. Of note, the industrial sector showed the third highest interest in generative AI, with 6% of their earnings calls mentioning the topic.

Coinciding with the topic of AI and subfields is a rise in AI strategy and infrastructure discussions. Though hovering between 0.5% and 1% of earnings calls, they rose 128% and 103%, respectively. This could be a sign that as companies look to AI to increase productivity and assess future investments, they are also considering AI implementation strategies.

Key CEO quotes on AI and its subfields

“Generative AI really [instantiated] AI in software, which means developers play a bigger role rather than data scientists. And that’s where you really see the business impact, and I think that impact will be large over the next three to five years…” – Dev Ittycheria – CEO, MongoDB, September 01, 2023

“The application of AI has both horizontal and vertical components. Horizontal is building out the AI infrastructure.” – Anirudh Devgan – CEO, Cadence, July 24, 2023

#2 AI Chips

Also coinciding with the rise in AI discussions are GPUs, most noteworthy Nvidia, the leading GPU vendor in the market. While general discussions of GPUs rose approximately 102% QoQ to 2.8% of earnings calls, Nvidia rose 146% QoQ to 1.9%. On the chipset front, CPUs only saw a 47% climb QoQ to 1.7% of earnings calls. Meanwhile, on the vendor front, Intel saw a decent climb in discussions (~48% QoQ), and AMD a subtle climb (~10% QoQ).

GPUs are becoming the core of choice for AI applications largely due to their architectural advantages over CPUs. While CPUs are optimized for task switching and fast sequential execution with only a few, large cores, GPUs often have many more, smaller cores designed for parallel processing. Deep learning involves performing many mathematical operations, including floating-point arithmetic (often used in rendering graphics) simultaneously, making GPUs a natural fit.

GPUs also offer better cost efficiency for scaling. Though more expensive than CPUs, the time savings they offer for training large language models can more than compensate for that cost. Given that the race is on for AI market dominance, time can actually be money in this case.

Key CEO quotes on AI chips

“I think you can look at 2023 as really a year of planning for AI, because as I said, there’s tons and tons of GPUs being purchased.” – Jayshree Ullal – CEO, Arista Networks, July 31, 2023

#3 Sustainability

Since their peaks in Q1 2022, the rate of discussions of sustainability, emissions, energy transition, and renewable energy in earnings calls have remained generally consistent each quarter, with each topic generally ticking up and down QoQ. This consistency signals a continued awareness of climate impact considerations in the sectors without it being a growing discussion topic in general.

That said, our analysis showed a general trend of CEOs emphasizing real-world projects for energy transition and renewable energy. It is worth highlighting that this emphasis comes amid a year (even quarter) of record temperatures. The US National Oceanic and Atmospheric Administration (NOAA) found that July 2023 had the warmest monthly sea surface temperature of any month and declared August 2023 the warmest August since NOAA started keeping global climate records 174 years ago.

Basic materials, utilities sectors and EMEA companies lead discussions on sustainability

The basic materials and utilities sectors led the discussions on sustainability—45.7% and 40.9% of their respective earnings calls—with utilities taking the general lead in discussions of emissions, climate, batteries, and renewable energy (including solar power). Of note, the energy sector had the second-highest mentions of emissions (39.3%) and the fourth-highest mentions of sustainability (30.8%).

By region, our analysis showed that European, Middle Eastern, and African (EMEA) companies talked about sustainability the most in Q3 2023, with mentions rising approximately 17% QoQ to 38.5%. Meanwhile, Asia-Pacific (APAC) companies continued to increase their number of mentions over North American companies—the former reaching 28.1% in Q3 2023 while the latter remained stagnant around 17%.

Key CEO quotes on sustainability, energy transition, and renewable energy

“The main areas of investment will be in generative AI, next-generation social infrastructure, and renewable energy.” – Junichi Miyakawa – CEO, SoftBank, August 06, 2023

“The downturn in the global economy is not—across the board—even, and consequently, there [is] still a lot of capital being moved […] And it holds for the energy transition, which is almost a given that we have to move forward one way or another.” – Tom Erixon – CEO, Alfa Laval Corporate AB, July 20, 2023

What it means for CEOs

5 things CEOs should ask themselves based on findings in this report:

1. Generative AI and data strategy: How is our company planning to leverage generative AI? Are we strategizing how to deal with this technology breakthrough and do we have a solid data strategy to ensure its effective application? Are we willing to play the “waiting game” and become a smart follower as other companies charge ahead with their generative AI plans.
2. AI chips: With GPUs seemingly becoming the hardware of choice for AI processes, how are we positioned in terms of hardware infrastructure? Do we have access (directly or through strategic partners) to the compute capacity we may need?
3. Macroeconomic concerns: With inflation, supply chain worries, and recession discussions seemingly on the decline, are we prepared for a potentially better than anticipated 2024?
4. Remote work and in-person mandates: With some companies calling employees back to the office and others continuing to operate remotely or flexibly hybrid, what are we communicating to our teams?
5. Sustainability: With an increasing focus on sustainability, what is our strategy to achieve net-zero? Are we really doing enough and have we baked in unforeseen challenges into our calculations, such as high electricity demand through the upcoming AI wave?

What it means for those serving CEOs

There is an opportunity for employees, service providers and other stakeholders to help CEOs excel at the topics they care about. Here are 5 questions those people serving CEOs could ask themselves based on findings in this report:

1. Generative AI implementation: How are we helping the CEO prioritize and implement generative AI projects? Are we helping in aligning the teams behind the opportunity and help secure the infrastructure that may be needed?
2. Making the most of generative AI: Beyond ChatGPT and obvious use cases such as chatbots or coding, what other generative AI technologies are on the horizon that might be relevant to our operations? How can we ensure that our CEO is briefed on these potential opportunities?
3. Economic pulse: While macroeconomic concerns like inflation and recession are declining in discussions, how are we ensuring that our CEO gets regular, concise, and clear updates on these topics and their potential impacts on our operations?
4. Work model adaptation: How can we help the CEO formulate a remote/hybrid work policy that ensures productivity, ongoing learning, employee happiness and safety for the employees?
5. Sustainability initiatives: Do the company’s current projects and investments reflect the increasing importance of sustainability and renewable energy? How can we help the CEO better communicate these initiatives to shareholders and the public?

The post What CEOs talked about in Q3/2023 appeared first on IoT Business News.

IoT Analytics, a leading provider of market insights and strategic business intelligence for the Internet of Things (IoT), has published its latest research on the global cellular IoT module and chipset market for Q2/2023.

The report reveals that 66% of IoT modules shipped in Q2 2023 had no dedicated hardware security and 29% had no security features at all, exposing them to potential risks and vulnerabilities.

The research analyzes the security features of 772 unique modules from 36 vendors and 150+ chipsets from 13 vendors that IoT Analytics tracks. It shows that only 30% of the modules available on the market, had dedicated hardware security features. Additionally, the article highlights the differences between the global and North American markets, where the latter has a higher share of non-dedicated hardware security features, such as TrustZone or secure boot.

KEY QUOTES:

Commenting on the importance of IoT security, Principal Analyst Satyajit Sinha noted:

“As cybercrime operates much like a business, criminals invariably opt for the path of least resistance. Implementing multiple layers of security increases the time and cost required for hackers to breach a system, thus making it more likely for them to abandon the effort and seek out less well-protected targets.”

Mr. Sinha added, “Cellular IoT modules are crucial for connectivity in IoT devices across industries. They provide a vital connection to the internet and are managed remotely. Ensuring their security is vital for safeguarding the broader IoT ecosystem.”

KEY INSIGHTS:

• The cellular IoT module market was stagnant in Q2’23 according to IoT Analytics latest data.
• Although IoT modules with dedicated security features are increasingly adopted, 66% of IoT modules shipped in Q2’23 had no dedicated hardware security and 29% had no security features at all.
• Recent demonstrations of vulnerabilities in non-dedicated hardware security features should drive the market further towards hardware-based security. Post-quantum cryptography is also an important consideration in IoT module security.

Updated cellular IoT module market

29% of cellular IoT modules shipped in Q2 2023 had no dedicated security features and only 34% had hardware-based security. Overall, the shipment and revenue of the $6.7 billion market (2022) remained generally flat in Q2’23 quarter-over-quarter, with 0% shipment and 0% revenue growth. Reasons for this stagnation include a weakened demand environment, which we discussed in our Q1’23 analysis of the cellular IoT module market.

IoT module security at the center of attention

With markets stagnating, we are putting a spotlight on cellular IoT module security by looking at the security features of 772 unique modules from 36 vendors and 150+ chipsets from 13 vendors that we track. IoT module security is of particular interest right now in light of the US Congress’ 7 August 2023 letter to the US Federal Communications Commission (FCC) regarding potential security risks of using Chinese cellular IoT modules.

Our analysis of the updated tracker and forecast shows the following breakdown of IoT module security features out of the aforementioned modules/chipsets available on the market in Q2’23:

• 30% had dedicated hardware security features, often embedded in chipsets or standalone components implemented through hardware security modules
• 42% had non-dedicated hardware security features, or features used to either create secure environments for processes to run or ensure only authorized firmware is loaded on the device
• 28% had no security features

However, the share of purchased/shipped modules with these security classifications in Q2’23 differs, with a significant difference between the global and North American markets as well:

While the global market shows a relatively balanced share of these three categories, the North American market skews heavily toward non-dedicated hardware security features. The low share of cellular IoT modules without security features in the North American market indicates that module security is a concern for its consumers, though there appears to be a reliance on non-dedicated hardware security features, such as TrustZone or secure boot.

This indication is consistent with recent concerns that the US Congress expressed to the FCC regarding the security of Chinese-made cellular IoT modules within US infrastructure (either directly or as part of the manufacturing supply chain), such as FirstNet Authority networks and devices used by first responders across the country (Quectel and Fibocom have published press releases responding to the US Congress’s concerns in early September 2023).

Why dedicated hardware security is the way forward amid supply chain concerns

Software and network security solutions have historically overshadowed dedicated hardware security features in IoT since they are more visible and easier to address, while dedicated hardware security features can be more complex and costly to implement. An alternative to software and network security solutions are non-dedicated hardware security features, such as ARM’s TrustZone, which creates a secure environment for processes to run, and secure boot, which ensures systems boot without intrusions.

Unfortunately, researchers recently demonstrated side-channel attacks against TrustZone during the Black Hat Asia 2023 conference. For their part, ARM has responded to this demonstration by stating that the attack is not unique to ARM’s Cortex-M architecture or TrustZone; rather, it’s a failure in application code—such attacks “may apply to any code with secret-dependent control flow or memory access patterns.” However, such attacks, no matter the core system they possess, demonstrate that adding dedicated hardware security solutions to these non-dedicated hardware security solutions can enhance the overall security of a module.

Shahram Mossayebi, Ph.D., founder and CEO of Crypto Quantique, explained the following to IoT Analytics when asked about cellular IoT module security:
“[W]e rely on security features such as TrustZone, but to achieve trust, we need to go beyond them. A root of trust is a set of cryptographic features (which soon must be quantum secure) for encryption, digital signature, and device identity. The hardware root of trust is the foundation for building trust with any IoT [device] and it is a crucial part of hardware security.”

With a hardware-based root of trust, manufacturers and consumers can ensure the authenticity of the modules—helping to address cloning and counterfeiting—and protection of the device’s keys. Once manufacturers can guarantee the authenticity and security of these keys, they can add additional security components like TrustZone and secure boot.

Where hardware security should be implemented

Implementing security measures at the device level during manufacturing is a foundational step, aiding in establishing device authenticity and partially curbing the infiltration of counterfeit components in the supply chain. However, this strategy only offers a partial solution since vulnerabilities still exist, particularly in the potential theft and cloning of device identities within supplier factories. Thus, an even more nuanced approach is required to bolster the defenses against such nefarious activities that seek to undermine the system from its very core.

To combat these risks more effectively, embedding hardware security at the MCU level within typical modules is highly recommended. This strategic positioning not only presents a formidable barrier against cloning and counterfeiting issues but also fosters the establishment of secure authentication protocols and the creation of unique device identities. Secure MCUs can provide a seamless integration of essential security features, such as robust authentication processes, potent encryption capabilities, and secure boot functionalities. These functionalities come together to create a fortified environment, essential for the optimal functioning of connected IoT applications, thereby ensuring a safer, more reliable network where devices can communicate and operate with an enhanced level of security and trust.

IoT module security outlook: Post-quantum security is becoming crucial for IoT

Currently, the general life span of most IoT devices is 8–12 years, with automotive 5G module applications lasting 10–15 years. With these long life spans, when building cellular IoT modules, it is essential that manufacturers look beyond current threats; specifically, they should start planning for the commercialization of quantum computing and the potential for state actors and cybercriminals to crack complex, commonly used encryption methods.

In October 2019, Google announced quantum supremacy in the journal Nature with its 54-qubit Sycamore processor, which Google claims was able to perform a complicated task in 200 seconds that would take the world’s most powerful supercomputer 10,000 years to perform. Many countries and companies are also advancing with quantum computing, such as the Chinese Academy of Sciences and QuantumCTek, a quantum information technology developer. Other Google competitors, such as IBM, Microsoft, Amazon, and Intel, along with several new startups, have all invested heavily in developing quantum computing hardware in recent years.

While quantum chips have not reached widespread commercialization yet, manufacturers can start considering quantum security solutions today. Governments are already looking at standards and quantum-proofing solutions for their agencies and companies, and the following are just some examples:

• In January 2022, the French National Agency for IT Systems Security (ANSSI) published its views and recommendations for PQC transition, offering a 3-phase process expected to last at least until 2030.
• In July 2022, the US Department of Commerce’s National Institute of Standards and Technology (NIST) announced its selection of four quantum-resistant cryptography algorithms, constituting “the beginning of the finale of the agency’s post-quantum cryptography (PQC) standardization project,” which NIST expects to complete and publish in 2024.
• In August 2023, the US National Security Agency (NSA), Cybersecurity and Infrastructure Security Agency (CISA), and NIST published a PQC migration readiness sheet to help the government and private sector start planning their quantum readiness.

Further, some companies are already developing post-quantum solutions. For example, Thales Group offers 5G security solutions with end-to-end encryption and authentication to safeguard organizational data as it moves across front-haul, mid-haul, and back-haul operations. These solutions rely on Thales’ 5G Luna Hardware Security Modules (HSMs). Further, in February 2023, Thales Group announced that it successfully piloted what it called a post-quantum resilient, end-to-end encrypted call using its Cryptosmart mobile app and its 5G SIM.

What it means for cellular IoT module manufacturers

5 key questions that cellular IoT module manufacturers should ask themselves based on the insights in this article:

1. Product strategy and security implementation: How can we realign our product strategy to prioritize the implementation of dedicated hardware security features without significantly escalating costs?
2. Response to political and legislative changes: How are we positioning ourselves to address the potential political and legislative changes affecting the market, particularly concerning the US Congress’s concerns regarding Chinese cellular IoT modules?
3. Security standards and compliance: Are we in line with the recent security standards and guidelines issued by agencies like ANSSI, NIST, and NSA, and are we preparing for the expected security transitions in the coming years?
4. Consumer education and advocacy: How can we educate consumers on the importance of dedicated hardware security features and advocate for a broader shift towards these in the market?
5. Post-quantum security solutions: Are we collaborating with communications companies and other stakeholders to develop and pilot post-quantum security solutions that can safeguard organizational data across various operations effectively?

What it means for users of cellular IoT modules

5 key questions that device/equipment makers and end users that adopt cellular IoT module should ask themselves based on the insights in this article:

1. Security implementation: Given the demonstrated vulnerabilities in non-dedicated hardware security features, what strategies should we adopt to integrate dedicated hardware security features without escalating costs significantly?
2. Compliance and legislation: In light of the concerns raised by the US Congress regarding the use of Chinese cellular IoT modules, how can we ensure compliance with evolving regulations and maintain the trust of our North American consumers?
3. Post-quantum security: Given the advancements in quantum computing, what steps should we take to incorporate post-quantum security solutions in our cellular IoT modules, keeping in mind the projected long life span of these devices?
4. Research and development: How can we foster innovation in our R&D department to develop unique hardware security features that offer robust protection against present and future threats?
5. Customer education: How can we educate our customers on the security features we use, developing trust into the security of the devices they use?

The post Cellular IoT module market Q2 2023: 66% of IoT modules shipped without dedicated hardware security appeared first on IoT Business News.

The semiconductor market saw its first market growth since 2021 amid continued trade tensions, slow economic growth, and chip shortages.

IoT Analytics, a premier source of market insights and strategic business intelligence for the Internet of Things (IoT), has unveiled new research on the IoT semiconductor market.

This comprehensive report delves into the current status and market trends, along with the drivers, challenges, and opportunities for IoT semiconductor firms and IoT device/equipment manufacturers.

A key trend underscored is the increasing incorporation of AI chipsets in edge devices. This integration facilitates quicker and more intelligent data processing and decision-making at the source. Further investigation reveals how AI is capitalizing on NVIDIA chipsets, which are predominantly employed for high-performance computing and deep learning applications. Instances of industrial AI platforms based on various NVIDIA GPUs, including Jetson AGX Orin and Jetson Orin Nano, are presented. Additionally, a comprehensive analysis of other significant trends and technological advancements in the IoT semiconductor market is provided.

The findings are derived from the IoT Chipset and IoT Module Trends Report 2023, which is grounded in thorough research and interviews with industry experts and stakeholders. It serves as a crucial resource for anyone keen on comprehending the current landscape and future trajectory of the IoT semiconductor market. The report can be procured from the IoT Analytics website.

KEY QUOTES:

Knud Lasse Lueth, CEO at IoT Analytics, comments that “In an age underscored by chip shortages, geopolitical tensions, and the ascendancy of AI, the semiconductor landscape pulsates with innovation. The unfolding narratives around IoT semiconductors not only offer solutions to pressing global challenges like sustainability and energy efficiency, but also seize fresh horizons, such as harnessing AI at the edge.”

Satyajit Sinha, Principal Analyst at IoT Analytics, added that:

“The ongoing trade tensions between the US, China, and Taiwan have significantly impacted global chip supply chains, leading to disruptions, increased costs, and delays in production. The semiconductor industry is experiencing a significant transformation due to the rising demand for AI chipsets and IoT connectivity. However, the industry also faces challenges, such as a severe shortage of AI GPUs and automotive chips. Also, it affects IoT chips based on mature nodes.”

The post Latest study highlights increased incorporation of AI chipsets in edge devices appeared first on IoT Business News.

A new study conducted by IoT Analytics, a leading provider of market insights and strategic business intelligence for the Internet of Things (IoT), has uncovered the best practices and common pitfalls of IoT software go-to-market and commercialization strategies.

While IoT continues to create winners and losers, excelling at IoT software commercialization is key to being amongst the winners. The study identified seven crucial factors for successfully commercializing IoT software, including running own webinars, deploying social media tactics and helping customers with their most pressing challenges such as IoT integration. Not only this, it also highlights the importance of learning from both successful and unsuccessful IoT commercialization ventures.

The study aims to help IoT software vendors excel at IoT software commercialization and be among the winners in the competitive IoT market. It is part of the IoT Software Go-to-Market & Commercialization Report 2023, highlighting insights from 60 IoT software executives on their current go-to-market strategies, including their views on what works and what does not.

KEY QUOTES:

Knud Lasse Lueth, CEO at IoT Analytics, comments that “The complex nature of IoT makes marketing and selling IoT software challenging. Reflecting on past IoT marketing mishaps, such as Android Things, and learning from those that are successful in the market can help avoid repeating mistakes and instead focus on the things that work.”

Dimitris Paraskevopoulos, Senior Analyst at IoT Analytics, added that

“Webinars have emerged as the #1 key factor for a successful go-to-market strategy for IoT software vendors. By leveraging the power of webinars, vendors can simultaneously educate customers and their own teams, improve their professional social media presence, and support customers through the complex IoT integration process. When managed effectively, webinars are a valuable asset for IoT software vendors looking to succeed in the market.”

KEY INSIGHTS:

• 7 factors are considered important for a successful IoT software commercialization according to the IoT Software Go-to-Market & Commercialization Report 2023.
• Running own webinars and deploying social media tactics but also helping customers with their most pressing challenges like IoT integration play a key role.

Successful IoT software commercialization: 7 important considerations according to IoT executives

Learning from IoT software failures and successes

Not every IoT software venture marks a success story, as illustrated by Google’s Android Things. Google launched the IoT OS platform in 2018 with the vision to empower a nexus of connectivity through an array of smart devices. However, it could not foster community engagement and support. Ultimately, Google ended new device registrations and projects in January 2021 and shut down Android Things in January 2022.

While some of the criticism for Android Things relates to the product itself, such as Android Things devices being bigger and more expensive than typical IoT form factors or exhibiting integration challenges with various different types of hardware, it apparently faced IoT software commercialization issues as well. For starters, there seems to have been an awareness issue. As one Android developer in a public forum stated, “I have Android Studio installed and do a little Android development. I should have heard about Android Things. I had not.” Another IoT marketing-related issue that users brought forward was the lack of community support, especially for specific IoT use cases and common IoT devices in various verticals.

Experiences like this showcase why it is important to learn from successful and unsuccessful IoT commercialization ventures. IoT Analytics’ 160-page IoT Software Go-to-Market & Commercialization Report 2023 (published in August 2023) highlights insights from 60 IoT software executives on their current go-to-market strategies, including their views on what works and what does not.

Here are the 7 important considerations which, based on our research, improve a company’s chances of being successful in the IoT software market.

1. Creating own portfolio of webinars

The number 1 tool that IoT software executives said worked for their companies is running their own webinars (Note: We queried for 19 different marketing tools). 81% of surveyed vendors indicated that this tool brought success in terms of ROI, with 50% of the respondents marking “very successful.”

Webinars offer a great opportunity for a company’s technical experts to present information about the products and answer technical questions, making the webinars engaging and interactive. By managing their own webinars, companies get to own the script and format, providing them with the time they need to offer demonstrations or run a thorough Q&A.

Further, companies can build a portfolio of webinar recordings that customers can access later. With a portfolio, the marketing teams can decide on general categories that are of interest to their company’s target industries and provide content within those categories. Examples of such categories include introduction to IoT topics, IoT in business topics, IoT case studies, and hands-on workshops.

IoT software commercialization success example: The What is IoT? webinar that Israel-based Friendly Technologies ran in November 2017 has led to widespread awareness for the company. As of September 2023, the YouTube upload of the webinar—which discusses various IoT standards and IoT device management practices—has been viewed by more than 176,000 people.

2. Improving professional social media presence

76% of the IoT executives indicated that managing their own social media content for professionals (e.g., LinkedIn) brought success in terms of ROI (18% “very successful” and 58% “somewhat successful”). Though not as high in the “very successful” category, its overall performance suggests that IoT software vendors can find success with this tool. This can be especially true if a vendor pairs this channel with another marketing tool—e.g., marketing own webinars on LinkedIn.

Managing professional-oriented social media content can be as simple as having the main company account discuss new technology and software, but several vendors found higher engagement by leveraging employee and advocate posts, especially when using third-party communications management platforms. Employee advocacy is a cost-effective approach that can establish trust and credibility, as people in an employee’s network are more likely to trust what their employee connection says, and it can help with reach and visibility.

IoT software commercialization success example: Microsoft is known to run a global employee advocacy program, allowing employees to access content tailored either to their region or to a global scale and expand the reach of social media campaigns. The former CMO of Microsoft France, Sébastien Imbert, estimates that with 10,000 employees in the program, Microsoft could see 350 million–500 million impressions per year and achieve $5 million–$10 million in equivalent advertising value.

3. Educating own team and sales force

The (perhaps surprising) top success factor for driving customer adoption, according to IoT software executives, is companies educating their own teams (not their customers), especially their own sales forces, about their products (rated 4.3 out of 5, with 1 being not important at all and 5 being extremely important). The following are 3 best practices identified in the report to support team/sales force education:

1. Tailored training: Tailor training sessions based on each team’s involvement and needs. For instance, sales teams require training on how new software works and how customers can get engaged.
2. Access to resources: Ensure their teams have access to resources like eBooks, white papers, toolkits, and internal experts that can assist their learning journeys.
3. Hands-on, cross-functional workshops: Run interactive sessions with practical learning and real-life scenarios specific to the new IoT software.

IoT software commercialization success example: The product manager of one IoT software vendor noted that communication and education between their sales team and the product management team, including their leadership was crucial. Further, the product manager added that service-level agreements for product managers to respond to sales inquiries quickly, a library of documentation for repetitive inquiries, and a “single source of truth” to capture customer requests and feedback proved to be very valuable.

4. Providing excellent, dedicated support

Overall, IoT software executives marked providing dedicated support as the second most important factor for customer adoption (4.2/5 on average). It is interesting to note that while North American and European IoT software executives remained aligned on their top three customer adoption factors, APAC executives only aligned with them on providing dedicated support, marking it as their most important adoption factor (4.4/5 on average).

This point of regional alignment is not surprising. As customers adopt and implement IoT solutions, having direct access to excellent, knowledgeable, and specialized support becomes an important factor for them. Dedicated customer support ensures customers receive tailored, specialized support for their needs, especially when the support team is well-trained and educated on the products. Further, since customers are likely making a significant investment in their IoT solutions, having the vendor–customer relationship feel more like a partnership can help with overall customer satisfaction.

IoT software commercialization success example: An example of excellent customer support, discussed in the report, is from Red Hat, with 5 key elements identified:

1. Customer portal: An online portal offering access to product documentation, knowledge base articles, and video classrooms.
2. Technical account managers: A service for customers requiring a more tailored level of support, offering a dedicated technical advisor who understands their customers’ unique environment and needs.
3. Support policies: Policies detailing the lifecycle and levels of support so customers know how long the products will receive updates and support.
4. Global reach: With a global presence, Red Hat offers timely support regardless of where a customer is located.
5. Certified ecosystem: Red Hat works with a vast ecosystem of certified partners, ensuring that third-party applications and hardware work seamlessly with Red Hat products, and if an issue arises, Red Hat can often collaborate with these partners to find solutions.

5. Supporting customers with technical integration

The number 1 customer adoption roadblock, according to IoT software executives, is “complexity of technical integration.” The VP of manufacturing/operations in a North American company provided that their “customers report that they often must deal with multiple vendors with overlapping service, [which] usually results in significant slowdowns.”

The following are 4 things IoT software vendors can do to help their customers master technical integration:

1. Provide comprehensive documentation and support: Along with offering excellent, dedicated customer support, detailed user manuals can help customers through the integration process. Further, community forums enable customers to gain insights from others who have faced and overcome similar integration challenges.
2. Offer dedicated training and education: Provide on-site training and online courses specifically addressing integration into common tools and frameworks.
3. Build integration-specific customer feedback loops: Customer support teams can establish feedback loops with customers to learn about their integration challenges and work with development teams to improve integration capabilities based on the feedback.
4. Offer IoT integration services: Build internal teams or partner with reliable system integrators so that various “integration” services can be offered to customers.

IoT software commercialization success example: German IoT platform provider Software AG offers a number of IoT professional services to help companies adopt, learn, and manage their digital transformation solutions, and it also offers a readiness guide that explains the typical digital transformation journey, the pain points, and other considerations.

6. Helping customers overcome internal resistance to change

IoT software executives marked “resistance to change” as the second-ranked customer adoption roadblock. A core theme in the survey responses revolved around familiarity with old and new software. The VP of a company in the UK noted “there is a tendency to not want to adopt new solutions, especially by relatively older employees.”

The following are 5 things IoT software vendors can do to help their customers reduce internal resistance to change:

1. Provide data that supports the value proposition: Offer data-driven evidence on how the software can improve efficiency, save time, reduce costs, or provide any other tangible benefits.
2. Engage key stakeholders early: Identify and engage decision-makers and influencers within the customer’s organization from the onset. If they see value in the software, they can become champions who drive adoption.
3. Offer pilots: Allow customers to run pilot programs. This lets them test the software in a limited capacity, reducing risk and giving them a taste of the potential benefits.
4. Share case studies: Share success stories from other similar enterprises. When potential users see that their peers have benefited, they may be more inclined to adopt.
5. Provide communication templates: Provide the enterprise with communication templates or tools they can use to convey the importance and benefits of the software to their teams.

IoT software commercialization success example: The IT manager of an IoT software vendor in the Philippines shared the following successful strategy: “Usually, the customer’s concerns are around familiarity. They are so used to an old model that when we introduce new software, they are afraid/overwhelmed. We can alleviate that by having highly trained individuals who can explain the new systems thoroughly and point out similarities of the new software to the one that the customer is already familiar with so that they can better understand.” This goes back to vendors putting emphasis on training and educating their own teams as well as building up knowledge to understand other software and how it compares.

7. Considering regional adoption rates and strategic rollouts

When designing a go-to-market strategy, IoT software vendors should consider in which region they roll out their software first. 70% of the surveyed vendors indicated that North America had “very quick” or “quick” adoption of software, with Central Europe and East Asia following at 58% and 54%, respectively.

Regions with faster IoT software adoption typically have a higher demand for the software and a willingness to invest in IoT solutions. Focusing on these regions that have faster adoption rates can help vendors realize ROI faster. However, this does not mean that other regions should be ignored. Rather, when going to market, focusing on regions with faster adoption rates affords vendors more customer success stories that they can reference for potential customers in other, slower regions.

10 questions IoT software vendors should ask themselves now

This article highlights 7 of many insights that IoT software executives in the IoT Software Go-to-Market & Commercialization Report 2023. Based on the insights presented here, executives at IoT software vendors should discuss these questions to help avoid becoming the next Android Things:

1. How can we expand our portfolio of IoT webinars and ensure that they address the specific needs and interests of potential and existing customers more effectively?

2. Are we utilizing the potential of our own employees to enhance our presence on professional social media platforms like LinkedIn?

3. How can we improve our team education strategies to make sure every member is not only informed but also adept at communicating the unique selling points of our products?

4. Are our support teams sufficiently equipped with the resources and training to offer exceptional, dedicated support to our customers?

5. How can we innovate our integration tools to reduce complexity and facilitate a smoother transition for customers shifting from legacy systems?

6. What strategies are we implementing to lessen resistance to change among customers (e.g., helping customers involve key stakeholders)?

7. Are we considering the regional adoption rates adequately while strategizing our market rollouts?

8. How can we foster a community where customers can share their experiences and learn from each other, potentially reducing the resistance to change?

9. How effective are the mechanisms we have put in place to gather continuous feedback from our customers, ensuring that our products are constantly evolving to address their pain points (e.g., technical integration)?

10. How can we leverage customer success stories more effectively to build trust and accelerate adoption (e.g., in regions with slower uptake rates)?

The post New study reveals the hidden secrets of successful IoT software commercialization appeared first on IoT Business News.

This article is based on insights of the 82-page Digital Operation Signals – Industrial IoT Solution Spotlight (July 2023) report, published by Microsoft with research conducted by IoT Analytics. The report takes a deeper look at 300 recent IIoT initiatives, their challenges, their successes and particularly how they are implemented. IoT Analytics surveyed key stakeholders working on their respective employers’ IIoT initiatives between October and December 2022 and conducted in-depth interviews with a subset of them.

State of Industrial IoT in 2023

Industrial IoT (IIoT) in 2023 is on the way to becoming mainstream:

• Two-thirds of industrial organizations reported they are executing an IoT strategy.
• IoT projects have a 14% higher success rate than five years ago.
• The median time for IIoT projects to break even has decreased from 24 to 20 months over the same period.
• Common challenges such as budget availability, project complexity, and data management have diminished by approximately 50%.

While IIoT is becoming more mainstream, a core question persists: should companies try to buy a readily available IIoT solution, should they custom-build an IIoT solution, or is there a middle option?

The research shows that there is no universally best approach to IIoT implementation. However, there is often a right approach for individual projects.

Build, buy, or buy and integrate?

Finding the right approach for individual IIoT projects depends on several organizational factors, including:

• Available budget
• Desire to differentiate from competition
• Break-even / ROI goals
• Use cases at hand

The research found a growing trend toward the buy approach: 30% of projects that began in 2021 or 2022 used the buy approach compared to only 9% of projects completed in or before 2020. This growth has come at the expense of a reduced preference for the buy-and-integrate approach, which dropped from 50% to 28%.

“We clearly see a trend that people prefer proven standardized solutions”

IoT solutions providers have recognized this trend as well. David Shook, Chief Data Officer of US-based Uptake, which helps customers realize IoT solutions, explains, “We clearly see a trend that people prefer proven standardized solutions rather than building something from scratch.”

However, many organizations are still opting for the build and buy-and-integrate approaches. The report offers insight into the decision-making process for each approach.

1. The build approach to IIoT solutions

47% of respondents stated their IIoT initiatives used the build approach, with 40% stating that their custom-built solutions exceeded their expectations. Different industries have different solution footprints. For example, 89% of respondents from the buildings industry reported using the build approach, while 33% from the machinery industry reported the same.

“If you build it, you own it.”

Key reasons to build

In the words of a US cloud integration advisory firm VP, “If you build it, you own it.” This sentiment captures the core benefit of the build approach: organizations that build their IIoT solutions own the intellectual property rights, and they can incorporate any features they desire. The approach provides the freedom to customize the entire IIoT solution, from how it integrates with new and current equipment to the user interface/user experience. In addition to this, organizations don’t have to lock in with a vendor.

Key reasons not to build

The decision to build an IoT solution comes with costs in terms of money, effort, and time. First, organizations either need a robust IT department or a reliable partner to not only build and integrate the solution for them but also to maintain and update the solution.

Next, developing a solution can come with high or unexpected costs, with large funding often taking time to get approved. 20% of respondents experienced budget constraints, the largest challenge faced with this approach, and the strategy director for a Spanish electronics company explained, “Huge funds were required for this initiative, and it took a long time for us to collect such a large sum of money.”

Finally, building an IIoT solution typically leads to the longest project timeline out of the three approaches, from start to large-scale roll-out. The report shows that the stakeholders reported a median of 9 months just to develop the business case—versus 6 months for the buy approach. The other phases of development and launch, including median time to amortize investments, were also longer than the buy approach.

2. The buy approach to IIoT solutions

With IIoT becoming more commonplace and IoT developers from various industries sharing lessons learned, more off-the-shelf solutions are coming to market, though availability is still limited. As organizations standardize their operations with standard industrial hardware or IT architecture, tried-and-tested IIoT solutions can integrate with these tools for better operability and analysis. For new companies, starting with a ready-made solution allows them to build IT/OT architecture around their IIoT solution rather than trying to integrate after the fact—a ground-up approach.

“It is rarely necessary to go for a custom-made solution in the first stages”

Key reasons to buy

Newer or smaller organizations with limited budgets and resources can benefit from ready-made solutions. A director of logistics for a European machinery equipment company noted that “it is rarely necessary to go for a custom-made solution in the first stages of [a business] journey” since companies need to learn and understand their customers’ needs, adding that “starting with standard products accelerates projects and reduces overall cost.”

Reduced implementation time is another benefit of the buy approach. The research found that with this approach, the median time required to complete the first two phases of an IIoT project was 9 months, compared to 16 months for the build approach. Since the buy approach offers ready-made, reliable solutions, organizations and vendors only need to customize the solution to the organization’s needs and equipment.

The research also found that 43% of respondents that used the buy approach experienced reduced break-even points, with a median time of 12 months from the first project-related expense to reaching the commercial break-even point compared to 20 months for other approaches.

Finally, the buy approach allows an organization to remain slim. The external developers of ready-made solutions will often offer continued support and updates for the solutions, meaning the organization does not need to maintain an internal team just for this purpose.

Key reasons not to buy

While the buy approach limits necessary resources and shortens implementation time, only 13% of respondents stated that the approach exceeded their expectations. The report shows that 30% of projects using ready-made solutions were missing end-user capabilities, and 20% faced challenges with addressing cyber threats.

13% of projects experienced both internal cooperation and resistance to change issues as well. Because commercial IIoT solutions come with their own processes, workflows, and (sometimes) equipment, organizations may find it difficult to integrate the solution into their own processes and architectures. A senior engineer of a German chemicals company stated, “To support the maintenance team for IoT devices, the change management team had to do several hands-on trainings.”

3. The buy-and-integrate approach to IIoT solutions

38% of IIoT initiatives in the dataset use the buy-and-integrate approach. Buying and integrating an IIoT solution allows organizations to combine proven technology and product support with the freedom to customize the solution to their IT/OT and user experience needs. It also helps address some of the limitations of the build and buy solutions, such as implementation time and end-user capabilities.

The report shows that the electronics and machinery industries saw the most build-and-integrate solutions (57% and 52% of projects, respectively).

“Buying and integrating allows to combine proven technology with the freedom to customize”

Key reasons to buy and integrate

Opting for the buy-and-integrate approach can often come out of necessity, including some of the following factors:

• Lack of off-the-shelf solutions that meet an organization’s IT/OT architecture
• Limitations on capability in fully developing and/or maintaining a solution
• Budgetary constraints
• Cyber security needs not met by available solutions

The decision to use this approach can also include preferential reasons, including:

• The freedom to customize a majority of the solution
• Creating a defendable competitive advantage that a widely available off-the-shelf solution cannot provide
• Limiting reliance on vendors, balancing necessary support and updates with the ability to adapt to changes in-house.

One respondent, the chief experience officer of a US pharmaceuticals company, stated a combination of necessity and preferential factors: “We did not have adequate in-house knowledge in IT or operations to consider building from scratch. We did not want to be entirely dependent on third parties for maintenance. A tailored solution was essential to ensure operator confidence, so a hybrid model was best.”

Complex integration projects can also benefit from the buy-and-integrate approach, where a custom-built solution would be too costly and ready-made solutions are not designed to handle the complexity. An engineering manager for an FMCG manufacturer said, “Because the size of our plant is too large, it became really difficult for us to sync our machines with the various sensors and software tools in use.” Opting for the buy-and-integrate approach allowed the company to integrate the various commercial software tools and their various OT equipment.

Key reasons not to buy and integrate

While the buy-and-integrate approach finds a positive middle ground between the other two approaches, it also absorbs some of the disadvantages of those approaches. First, ready-made solutions are often built with specific applications in mind, so engineers and developers need to understand the solutions and work with vendors to develop additional integration services. This requires additional management of internal and external stakeholders.

Additionally, though the buy-and-integrate approach may be ideal for complex projects, the complexity of implementation and integration was the top challenge faced by adopters of this approach (19% of projects). Second to this was organizations lacking IT capabilities to customize and integrate the solutions (15% of projects), requiring further dependency on vendors to develop and maintain solutions.

Finally, the development of additional integration services becomes an additional project for the organization, meaning uncertain costs can come into play.

These reasons are some of the factors leading to this approach having the longest break-even time of the three options.

Which approach to choose

While there is no universal best solution, the report shows that organizations should carefully weigh which approach best fits their budget, their desire to differentiate themselves from competitors, their break-even goals, and the use cases.

The post IoT solution development: Build, buy, or a bit of both? appeared first on IoT Business News.

According to IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), the industrial IoT gateways market accelerated significantly from 2021 to 2022, growing ~14.7% to reach $860 million (38% of the overall IoT gateways market).

KEY QUOTES:

Knud Lasse Lueth, CEO at IoT Analytics, comments that:
“Industrial IoT gateways are critical for connecting legacy systems with modern technology. They also play an important role to support the migration of manufacturing applications to the cloud. In the future I also expect a number of smaller applications to sit directly on IIoT gateways, leveraging containerization technology, more powerful storage and computation and in some cases even AI chips for ML inference.”

Kalpesh Baviskar, Analyst at IoT Analytics, added that:

“IoT gateways have emerged as a highly cost-effective solution for deploying IoT systems with multiple sensors. They play a crucial role in connecting legacy equipment and devices that were previously unconnected.”

“In recent years, we have seen the integration of high-performance processors and AI chipsets into IoT gateways, transforming them into edge IoT gateways. These edge gateways can perform local data processing and analytics, significantly reducing the amount of data that needs to be sent to the cloud. This can lead to significant cost savings and performance improvements for IoT applications.”

KEY INSIGHTS:

• According to the IoT Gateway Market Report 2023–2027, the $0.9B industrial IoT (IIoT) gateway market experienced accelerated growth between 2021 and 2022, which is set to continue on the back of several favorable tailwinds.
• IIoT gateways are enabling IT and OT convergence by securely and efficiently sharing data between floor-level OT equipment and IT equipment or the cloud—with implementation typically as part of one of four broader IoT architectures.
• There are several IIoT gateway advancements e.g., in security, edge computing, and storage.

The vital role of industrial IoT gateways in bridging IT and OT

IIoT gateways: Market and role

The industrial IoT gateways market accelerated significantly from 2021 to 2022, growing ~14.7% to reach $860 million (38% of the overall IoT gateways market), and we forecast continued growth at least through 2027. The factors driving this growth include the following:

• Connecting the unconnected. Many companies are retrofitting their legacy equipment with sensors and controllers, using IIoT gateways to perform necessary protocol and data transformation and transfer the data to an IT endpoint.
• Software applications are migrating. Companies with connected equipment are moving some key applications to the cloud, with IIoT gateways emerging as the main nexus point for information flow in and out of industrial premises. Some applications are also now run locally on the gateway itself.
• More powerful hardware. New, enhanced gateways with embedded multi-core processors, AI chipsets, and secure elements are enabling faster and more secure data processing and transmission (to an IT endpoint or cloud).

These factors reflect our assessment that IIoT gateways are becoming the juncture for IT and OT convergence.

Note: When we refer to IIoT gateways, we refer to (ruggedized) hardware that connects sensors, IIoT devices, and industrial equipment to cloud or on-premises servers or PLCs/IPCs operating on distinct industrial networks. For an exact definition, refer to our report.

How IIoT gateways connect the IT and OT worlds

Many companies maintain legacy equipment that does not have sensors or control devices. Even if the legacy equipment has sensors or controllers that connect locally, such as to a human-machine interface or panel PC on the factory floor, it may not offer connectivity options or use messaging protocols that end equipment (like an IT server or cloud) uses. Meanwhile, companies that possess IoT-enabled equipment may desire to move data off-premises (e.g., to remote IT equipment or the cloud) or enhance local data computation for automated responses before transmitting the data.

In cases like these, IIoT gateways can connect with standalone or integrated sensors—either wirelessly or wired through I/O module masters—to transmit data to IT or cloud servers. As described below, they fit within many architectures found in industrial IoT solutions.

IIoT gateways within IoT architectures

Whether a company builds or buys an IoT solution, the solution will align with an IoT architecture to collect and transmit data to the endpoint. While a direct sensor-to-cloud architecture does not require the use of an IIoT gateway, IIoT gateways are commonly found in 4 general types of IoT architectures.

1. Sensors/devices to PLC/IPC to IIoT gateway to cloud

In industrial environments with existing automation hardware, the sensors/devices to PLC/IPC to IIoT gateway to cloud architecture is very common. Field sensors or actuators are connected to I/O module masters. These I/O module masters transmit data to the on-premises PLC or IPC. The PLC/IPC is then connected to the IIoT gateway, which serves as a bridge between the PLC/IPC and the cloud.

This architecture can be very powerful but also potentially dangerous. The IIoT gateway can technically be configured to remotely access the entire architecture that sits below the PLC/IPC. While this setup enables any data to flow between IT and OT and thus any imaginable use case, it also has the biggest potential attack surface (potentially the entire facility), e.g., in case of a misconfigured security architecture.

2. Sensor to I/O modules to IoT gateways to cloud

In the sensor to I/O module master to IoT gateways to cloud architecture, simple sensors connect to I/O module masters. The I/O module master then uses wired or wireless connectivity standards to transfer data to IIoT gateways, bypassing any PLC or IPC. This architecture proves to be highly effective in scenarios where multiple sensors are arranged into clusters—the I/O module master acts as the central node for each cluster of sensors, efficiently gathering and transmitting data to the cloud via an IIoT gateway.

3. Sensors in devices to IoT gateway to cloud

In the sensors in devices to IoT gateway to cloud architecture, devices equipped with single or multiple onboard sensors are connected directly to the IIoT gateway. This architecture is often deployed where non-standalone IoT devices are used (i.e. devices that cannot connect to the internet by themselves).

4. Sensors to IoT gateway to cloud

In the sensors to IoT gateway to cloud architecture, IIoT gateways enable connections between sensors and cloud servers directly. This architecture can for example be found when retrofitting specific sensors on an asset (e.g., for condition monitoring) with the desire to bypass all other existing networks (to not interfere with them and create a new security risk).

Advancements in the capabilities of IIoT gateways

As IIoT gateways have become more common in IIoT solutions, they have become capable of offering more for their users. In general, IIoT gateways typically offer 8 key functions:

• Protocol translation
• Data management
• Device management
• Computation
• Communication
• Resource management
• Security management
• Managing quality of service

As the IIoT gateway market has grown, these functions have advanced. The following are just some examples of advancements.

“A growing number of customers [are] requiring proof of security level from manufacturers for their industrial IoT equipment.”

Security management

As the number of connected devices continues to increase, the risk of cyberattacks and unauthorized access becomes more significant. This is especially true for companies looking to connect factory equipment to external IT or cloud servers. Fortunately, to address these risks, IIoT gateway vendors are proactively incorporating security features into their products and adhering to industry-specific regulations and standards, allowing OT monitoring and control to reside securely behind layers of policies and access controls.

A notable series of standards is IEC 62443, approved in 2021, which directs all IEC 62443-certified products to adhere to specific product development requirements from the early stages of design. This set of standards has become mandatory technical requirements in many countries, and according to Pascal LeRay, Head of Cyber Security at Bureau Veritas, “a growing number of customers [are] requiring proof of security level from manufacturers for their industrial IoT equipment.”

In our research, IIoT gateway companies noted the importance of incorporating security standards in their products. Teltronic’s CEO, Juan Ferro, stated that “the sudden irruption of cybersecurity in the industry has been interpreted by Teltronic as an opportunity to improve both [our] products and associated processes,” adding that the pre-emptive adoption of security standards placed them ahead of other companies in their sector.

Along with standards, IIoT gateways are increasingly incorporating hardware security, using embedded secure elements either within processors or on the PCB/modules as trusted platform modules (e.g., TPM 2.0). Ultratronik’s A1 IoT gateway integrates NXP’s EdgeLock SE051 secure element, and Eurotech’s RELIAGATE 10-14 series maintain IEC 62443-4-1, -4-2, and PSA Level 1 certifications and have a TPM 2.0 security chipset—OPTIGA TPM SLM 9670 from Infineon Technologies.

“The milliseconds of latency [between] an industrial robot and many real-time systems can be the difference between a safety hazard and a productive assembly line.”

Computation

IoT gateways in general have trended toward more processing power. In industrial solutions, this has helped companies move data processing and computation toward the solution’s edge—nearer to the data collection point—saving them bandwidth and communications power and freeing their IT and cloud servers to manage other tasks. Additionally, there has been a trend of integrating AI chipsets into some IoT gateways to facilitate edge computing. A noteworthy example is AAEON’s AIOT-AVID IoT Video Analysis Gateway, which incorporates Intel’s Myriad X vision processing unit (VPU).

The ability to process and automate data in real time can mean much for a company’s bottom line, as one senior VP stated, “The milliseconds of latency [between] an industrial robot and many real-time systems can be the difference between a safety hazard and a productive assembly line.”

Data and resource management

Local data storage helps enable data processing at the edge. Further, some industrial use cases may call for data sorting and analysis before being transmitted to an IT or cloud server, either due to limited network connectivity or the desire for more efficient use of IT equipment.

The need for local data storage has led to eMMC flash memory and SSD solutions on IoT gateways in general. In mid-2022, Robustel launched three ARM-based IIoT gateways with varying DDR and eMMC sizes to meet application needs. A few months later, Compulab announced its IOT-GATE-RPI4, a Raspberry Pi-based IIoT gateway that offers up to 128 GB of eMMC memory and mPCIe slots for SSD storage expansion up to 256 GB. Other examples include MOXA’s AIG-301 series IIoT gateway with 16 GB of eMMC and Belden’s Hirschmann OpEdge-8D with 64 GB of SSD flash memory.

Device management

With integrated storage comes the ability to containerize applications for deployment on IoT gateways, including device management software. Traditionally, deploying applications on IoT gateways involved installing them directly on the equipment’s operating system, which had limitations in terms of scalability, flexibility, and ease of management. However, companies are increasingly using containerization as a deployment strategy for applications on IIoT gateways, offering platforms like Kubernetes and runtimes like Docker. These technologies provide a way to create lightweight and isolated runtime environments, known as containers, where applications can run consistently across various platforms and environments.

Many gateway OEMs are also building app stores with hundreds of ready-made applications that end users can deploy to their gateways (and in the cloud), such Bosch Rexroth’s ctrlX store, Siemens’s Industrial Edge Marketplace, and Advantech’s WISE-Marketplace.

Key Benefits of IIoT Gateways

In our analysis of 65 case studies, we identified numerous benefits of IIoT gateway implementations based on various use cases. The following are 3 of the main benefits companies cited.

1. Better IT/OT integration

Indeed, this is a key goal of implementing IIoT gateways, and our analysis shows that many companies have achieved this goal. A common goal of IT/OT integration is remote monitoring and response. As an example, Vitesco Technologies Italy used Zerynth’s 4ZeroBox, an on-premises IIoT system for real-time monitoring and predictive maintenance. This solution enabled Vitesco to predict pneumatic valve malfunctions 24 hours in advance, which reduced assembly downtime and increased productivity.

2. Reduced labor costs

IIoT gateways are often deployed for automation purposes and as such can reduce labor costs, human effort, and human errors. While Vitesco saw a 50% reduction in its manual labor requirement with its 4ZeroBox application, Colombian steel manufacturer Corpacero cut costs associated with repair labor after partnering with Senzary to deploy RotaryIQ and InsightsIQ solutions for predictive maintenance and remote machine management.

3. Energy savings

Enterprise energy management analytics software provider Wattics partnered with Kontron to use Kontron’s KBox A-101 as a central ‘edge node’ for Wattics Sentinel software at the customer’s site. It connects to the local energy grid and the Sentinel grid, facilitating meter configuration, reliable data collection, pre-processing, compression, and secure communication.

IoT gateway market outlook

With many companies seeking to either retrofit their equipment or enhance their IoT solutions, we have seen solid growth in the IIoT gateway market (8.1% CAGR) between 2018 and 2022, with acceleration specifically from 2021 to 2022. We assess that this trend will continue since use cases in manufacturing and certain applications continue to demand real-time processing, low latency, and secure data handling. Further, the following 5 trends, which are discussed in more depth in the IoT Gateway Market Report 2023–2027, support this assessment:

1. IoT gateways are becoming more modular, allowing IIoT gateway vendors to offer a range of options and configurations to meet customer needs and enable easy scalability.

2. IoT gateways are supporting more wireless connectivity options, such as secure cellular solutions with eSIM/iSIM technology, enabling IIoT gateways to handle multiple connected devices in an expanded perimeter of operations.

3. IIoT gateway vendors are collaborating to combine hardware and software solutions, simplifying deployments and reducing costs.

4. OT hardware is starting to consolidate (e.g., I/O module masters shifting to IIoT gateways)

5. Virtualization of workloads (e.g., virtual PLCs) allows IPCs and IIoT gateways to perform tasks that were previously tightly coupled to other pieces of hardware.

IIoT gateways play a pivotal role in bridging the gap between legacy machinery and modern systems, facilitating retrofits and brownfield installations. As industries strive for global connectivity and centralized management of OT devices, IIoT gateways will continue to play a major role in integrating operations across various locations.

What it means for IoT gateway vendors

5 key questions IoT gateway vendors should ask themselves based on the findings of the report:

1. Do our IIoT gateways remain compliant with updated security standards?

2. Do our customers require AI edge capabilities as a general offering?

3. Have we explored local data storage options to increase computation while decreasing latency?

4. Should we containerize our edge IIoT applications? And if so, how?

5. Are our general solutions enabling seamless IT/OT integration for customers? If not, should we focus on tailored solutions for our customers?

What it means for IoT adopters

5 key questions IoT adopters should ask themselves based on the findings of the report:

1. Have we assessed the various available IIoT gateways and their potential impact on our overall IoT strategy?

2. Which IoT architecture(s) are we using? Can an IIoT gateway offer improvements?

3. Do our current IIoT gateways meet current security standards? If not, what updates do we require to meet these standards?

4. Have we assessed the possible benefits of edge computing (e.g., automating controls locally based on the data)?

5. Should we leverage local data storage and containerized applications for better device management and updates?

The post The vital role of industrial IoT gateways in bridging IT and OT appeared first on IoT Business News.

According to IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), the eSIM/iSIM market is set to surpass 500 million units in 2023 as it brings in the new age of cellular IoT.

More information can be found in IoT Analytics’ new Global IoT eSIM Modules and iSIM Chipsets Market Tracker, which provides quarterly data on worldwide IoT eSIM modules and iSIM chipsets from 2018 to Q1 2023.

KEY QUOTES:

Satyajit Sinha, Principal Analyst at IoT Analytics, comments:

“Looking ahead, it’s evident that eSIMs are positioned to become the primary SIM technology in the next 2-3 years, surpassing their counterparts. This shift is expected to be followed by the emergence of iSIMs, which are predicted to gain popularity due to their advanced security features, including a hardware root of trust. We’ll likely see a gradual transition from eSIMs to iSIM technology, as iSIMs are expected to become the preferred choice in the long term due to their inherent security advantages.”

KEY INSIGHTS:

• eSIM/iSIM is transforming the dynamics of the cellular IoT market, offering increased flexibility, reduced provisioning time, smaller form factor, enhanced security, and sustainability.
• The eSIM/iSIM IoT market is poised to surpass the 500-million-units mark in 2023.
• Two factors will likely drive the growth of eSIM and iSIM in the cellular industry: cybersecurity regulations and GSMA specifications.

Entering the new age of cellular IoT: eSIM/iSIM market to surpass 500 million units in 2023

Market overview

The cellular IoT market is undergoing a significant shift: physical subscriber identity module (SIM) cards as we know them are becoming virtualized in the form of embedded SIMs (eSIMs) or integrated SIMs (iSIMs).

In 2023, the IoT module eSIM/iSIM market is poised to surpass the 500-million-unit mark. Just in the first quarter, over 450 million IoT modules were already capable of supporting eSIM or iSIM—roughly 16% of the 2.8 billion active global cellular IoT connections. This data indicates the growing demand for flexible, fast, and efficient connectivity solutions in the new age of cellular IoT.

eSIM/iSIM is transforming the dynamics of the cellular IoT market

The rise of eSIM/iSIM technology is not just a mere technological advancement; it is a paradigm shift. It is about the seamless integration of IoT devices, the simplification of connectivity, and the enhancement of user experience. The use of eSIMs/iSIMs can help businesses decrease time to market and improve the efficiency of IoT deployments.
This technology offers several advantages over traditional SIM cards, including:

1. Increased flexibility for IoT solutions

eSIM/iSIM technologies offer increased flexibility and reduced provisioning time for IoT devices. By allowing devices to be provisioned with different carrier profiles remotely, they enable seamless switching between networks without the need for physical SIM card changes. This flexibility is particularly beneficial for businesses deploying IoT devices in multiple countries or regions. Additionally, the ability to remotely provision and update eSIM/iSIM saves time and simplifies the deployment process, especially in large-scale IoT deployments, empowering businesses to adapt quickly and optimize their IoT deployments.

Several car companies, including BMW, Audi, Tesla, and Volkswagen, have implemented eSIM technology to offer connected car services. Through their respective platforms, these companies can remotely activate, manage, and switch mobile network profiles. This allows for more flexibility and scalability in IoT deployments.

2. Compact eSIM/iSIM enables smaller IoT devices

eSIM and iSIM technology allows for more compact IoT device designs. This makes devices smaller and more lightweight than traditional SIM-card-based devices. Notably, eSIM/iSIM technology has facilitated the development of smart labels, which are paper-thin devices that offer precise, accurate, and secure tracking of small and lightweight items.

DB Schenker, the logistics arm of Deutsche Bahn, implemented an ultra-thin smart-label solution to track small freight consignments globally. Sensos, an Israeli group company of the Sony Semiconductor Solutions Corporation, developed the solution, which leverages Kigen’s iSIM technology embedded within Sony Semiconductor Solutions’ low-power wide-area (LPWA) chipset.

3. Enhanced security with embedded secure elements in eSIM/iSIM

eSIM/iSIM technology incorporates embedded secure elements, providing advanced security features compared to traditional SIM cards. The secure element acts as a hardware root of trust for asymmetric encryption, ensuring secure end-to-end communication. The GSM Association’s (GSMA) IoT SAFE specifications leverage a single eSIM/iSIM as a hardware root of trust.

Meanwhile, chipset vendor Sony Semiconductor Israel’s ALT1250 and ALT1350 chipsets integrate two secure elements for application security and UICC identity (Sony Semiconductor Israel was formerly known as Altair Semiconductor and is now a group company of Sony Semiconductor Solutions Corporation).

The eSIM in Tesla vehicles enables features such as remote vehicle monitoring, software updates, and over-the-air (OTA) updates for the vehicle’s firmware. The eSIM acts as a hardware root of trust by securely storing cryptographic keys and certificates used for authentication and encryption.

4. Sustainable eSIM/iSIM technology reduces waste and emissions

eSIM/iSIM technology eliminates the need for physical SIM cards, reducing electronic and plastic waste. Additionally, the elimination of physical SIM card shipments to IoT modules or devices helps reduce emissions associated with transportation. These environmental benefits make eSIM/iSIM a sustainable choice for IoT connectivity.

Journey to 500 million: eSIM market penetration increased, iSIM is emerging, and GSMA streamlines deployment

Per IoT Analytics’ Global IoT eSIM Modules & iSIM Chipsets Tracker, eSIM penetration within cellular IoT modules experienced a significant increase, with quarterly shipments of eSIM-capable modules rising from 7% in Q1 2018 to 31% in Q1 2023. Notably, there was a period of stagnation in this growth during 2021; however, from Q1 2022 onward, we observed a consistent adoption rate through Q1 2023.

Meanwhile, iSIM is still an emerging technology in IoT. Sony Semiconductor Israel’s ALT1250 is the only iSIM-based cellular IoT chipset that reached mass shipments.

So far, the implementation of eSIM/iSIM IoT standards has been slower than initially anticipated. This is primarily due to the complexities of remote SIM provisioning and different standards for consumer IoT and machine-to-machine (M2M) technologies.

To address this issue, GSMA developed new eSIM IoT specifications, namely SGP.31 and SGP.32, that are designed to complement the existing M2M (GSMA SGP.02) and consumer IoT (GSMA SGP.22) eSIM standards. The new specifications allow for remote control and configuration of eSIMs via a dedicated management module, adapting from the current eSIM Consumer and IoT Specification.

This approach eliminates the need for user interaction when provisioning, simplifying IoT connectivity and reducing the time to market for IoT deployments. Moreover, this enhancement may eliminate the need for carrier integration, giving enterprises the same flexibility and control as consumers, thus marking a significant advancement for IoT implementations.

The release of GSMA SGP.31 and SGP.32 marked significant changes in eSIM IoT deployment in three ways:

• Introducing the eSIM IoT Remote Manager (eIM)
• Transforming Local Profile Assistance (LPA) into IoT Profile Assistant (IPA)
• Replacing Subscription Manager Secure Routing (SM-SR) with Subscription Manager Discovery Server (SM-DS) and IPA in the architecture

These changes streamline both remote profile management and provisioning processes and eliminate the need for SM-SR in eSIM IoT deployments.

The future of eSIM/iSIM in cellular IoT

Looking ahead, we expect eSIM/iSIM technology to further increase its penetration in the cellular IoT market.

Currently, the market is still dominated by a combination of physical SIM cards, uSIM, and soft SIMs (software-based UICCs in a trusted execution environment), with a combined (shipment-based) market share of approximately 67%. (Note that Soft SIMs are not considered to be secure, as they lack an anchor with a hardware root of trust.)

As the industry progresses, we assess that eSIMs will become the dominant SIM technology in the next 2–3 years. Afterward, with the next cycle of module hardware, iSIMs are likely to start grabbing market share since they offer enhanced security features and are anchored with a hardware root of trust, making them a more secure option. In the long run, it is expected that even the eSIM market will migrate toward iSIM technology, with iSIM then dominating the market.

Two factors will likely drive the growth of eSIM and iSIM in the cellular industry:

1. Cybersecurity regulation

The importance of robust security measures in cellular IoT cannot be overstated. Cybersecurity regulations are playing a pivotal role in strengthening IoT security, particularly through the implementation of hardware-based solutions.

Given the recent activity around EU and US technology regulation, it is likely that the coming years will see new laws mandating stronger IoT security, potentially requiring the use of a hardware root of trust.

In this context, eSIM/iSIM technology emerges as a practical solution for implementing chip-to-cloud security. By leveraging the secure element as a hardware root of trust, it is possible to enable asymmetric encryption, thereby bolstering the overall security framework. It is noteworthy that cellular IoT vendors are already guided by GSMA’s IoT SAFE specifications, which provide valuable insights and guidelines in this area.

2. GSMA specifications

GSMA’s SGP.31 and SGP.32 will play a crucial role in the future of eSIM/iSIM in cellular IoT. By streamlining the remote profile management and provisioning processes, these specifications will simplify the deployment of IoT devices and reduce the time to market. Furthermore, the introduction of eSIM and the transformation of LPA into IPA will provide businesses with greater control over their IoT deployments, enabling them to adapt quickly to changing market conditions and customer needs.

The post eSIM/iSIM market to surpass 500 million units in 2023 appeared first on IoT Business News.

IoT Analytics has conducted an extensive keyword analysis based on a comprehensive dataset of approximately 75,000 earnings calls from leading US-listed firms.

The findings from the second quarter of 2023 reveal crucial discussions led by CEOs, focusing on three pivotal themes: Generative AI applications, bank challenges, and economic uncertainty. These influential topics have captivated boardrooms worldwide, ultimately shaping the future investment priorities for companies across various industries.

KEY QUOTES:

Philipp Wegner, Principal Analyst at IoT Analytics, comments:

“CEOs are now discussing how their companies can use generative AI applications. The discussion shifted to actual deployment of Large Language Models.”

KEY INSIGHTS:

• According to the latest “What CEOs talked about” report, three themes noticeably gained traction in earnings calls in Q2/2023: 1. AI & Generative AI, 2. Bank troubles, and 3. Reshoring.
• Discussions around economic uncertainty, sustainability, and supply chain disruptions lost traction.

The big picture

In Q2 2023, economic uncertainty remained the most discussed theme in boardrooms globally.

There was a notable decline in the number of CEOs discussing inflation, with only 50% mentioning the keyword (a 21% decrease from the previous quarter). Similarly, other related topics also experienced a decrease in prominence, with interest rates being discussed by only 33% (-13%) of CEOs and the term “recession” being mentioned in just 18% (-15%) of all earnings calls in Q2/2023. Despite these slight variations in the focus on economic topics among CEOs, it is important to note that overall, economic uncertainty remains a prevailing concern in boardrooms.

Key CEO quote on the macro environment:

“We expect macro headwinds will continue with the potential for a recessionary environment across both the U.S. and Europe.” – Ian Broaden – Executive Vice President and Chief Financial Officer, McDonald’s, May 2, 2023

Key upcoming themes

(Generative) AI

Generative AI discussions, specifically around use cases and applications, continue to increase.
The mention of Generative AI experienced a significant increase of +129% in the last quarter, with 6% of discussions specifically referencing it. Additionally, the broader topic of AI was discussed in 21% of earnings calls (+21%), while the more technical term, “large language model” (LLM), saw a 229% increase in mentions, and was present in 1% of all earnings calls.

Banks

CEOs discussed banks more frequently in Q2 2023 (+36%). Following the banking turmoil involving several institutions including Silicon Valley Bank (SVB) and Credit Suisse in Q1 2023 companies discussed about a potential fallout as well as stricter lending regulations from some (regional) banks.

Key CEO quote on banks:

“We have seen a number of banks pulling back from auto lending, which is kind of a hallmark of banks through difficult markets, and that’s created a bit of a pricing opportunity for us, as well as improvement in share – financing share for us.” – Marion Harris – CEO, Ford Motor Company Credit Company, 02 May 2023

Reshoring

Discussions around reshoring increased by +30% in Q2 2023. 1.3% of all companies and 5% of industrial companies talked about the topic. Given the ongoing tensions between China and the USA, many US-based companies appear to prioritize enhancing the resilience of their supply chains, and some have concluded that bringing production closer to home is the solution.

Key CEO quote on reshoring:

“Reshoring continues to be a prevalent topic among our customers, and we expect near and longer-term benefits from this trend.” – Frank Dellaquila – CFO, Emerson Electric Co., 03 May 2023

Declining themes

Sustainability and climate change

Despite record temperatures around the world (e.g., temperatures in the North Atlantic Ocean increased to records highs), discussions on climate (-16%), emissions (-25%) and sustainability (-17%) experienced a decline in Q2/2023.

Supply chain disruptions

With supply chains slowly improving and supply shortages easing, discussions regarding supply chains in general (-19%), and supply chain disruptions (-54%) in particular, decreased strongly in Q2/2023.

Deep dives on select themes

#1 (Generative) AI

The release of ChatGPT by OpenAI in November 2022 ignited an unprecedented discussion about the use cases of generative AI in boardrooms. Generative AI was mentioned by 6% of all CEOs in Q2/2023 – a remarkable increase of +129%, compared to the previous quarter. Discussions have transitioned from specifically discussing the tool ChatGPT itself (mentioned by 3.7% in Q2, an increase of 28%) to actual enterprise-wide applications of generative AI. Moreover, an increasing number of CEOs also delved into technical details: The keyword LLM (large language models, the foundation for ChatGPT) was discussed by 1%, representing a substantial increase of +229% compared to the last quarter.

In Q2/2023, numerous companies started to roll out generative AI as part of their core product. For instance, the online flower shop 1-800-flowers.com launched MomVerse, an AI-powered poetry tool to assist individuals in expressing their love for mothers on Mother’s Day. E-commerce giant eBay has also started to use generative AI to support its marketplace sellers in composing suitable product descriptions. Lastly, travel company Booking Holdings has rolled out ChatGPT as a virtual travel assistant. These are just three examples of companies who are infusing generative AI into their business.

Unsurprisingly, the companies that talked most about generative AI in Q2/2023 were from the Technology sector (22.2% of all tech earnings calls) and Communication Services (22.1%). Consumer Cyclical (3.7%), Consumer Defensive (3.4%) and Industrials (2.8%) also had their fair share in debates.

When it comes to the various generative AI and LLM tools mentioned during these calls, OpenAI clearly dominates the field. OpenAI‘s ChatGPT accounted for over ~99% of the mentions among generative AI tools. Other tools such as Google’s Bard, Meta’s LLaMA or Aleph Alpha were only sporadically mentioned as examples.

Key CEO quotes on generative AI:

“With the emergence of generative AI capabilities, we moved quickly to create a fun and playful way to intertwine the emerging AI technology with our gift-giving experience. Just in time for Mother’s Day, we launched the 1-800-FLOWERS MomVerse.” – Chris McCann – Chief Executive Officer, 1-800-flowers.com, 11 May 2023

“Generative AI has a number of exciting use cases outside of descriptions, and we’re exploring numerous potential applications across our marketplace that can enable truly magical customer experiences.” – Jamie Iannone – CEO, eBay Inc, 26 April 2023

“There are current challenges given that current LLMs sometimes produce inaccurate outputs. Nevertheless, we are excited to be exploring how we can make use of these technologies for the benefit of our customers. Some of our brands, like KAYAK and OpenTable, are experimenting regenerative AI plug-ins, while others are building ways to integrate the technology into their own offerings.” – Glenn Fogel – President and Chief Executive Officer, Booking Holdings, 4 May 2023

“We are in advanced stages to apply generative AI across our portfolio, and we are working as an early release partner of OpenAI and together with other vendors. We are planning to announce new disruptive AI use cases.” – Christian Klein – CEO, SAP SE, 21 April 2023

#2 Supply chains

Long lead times and strained supply chains have been a persistent concern for CEOs. We previously highlighted supply chain disruptions as a prevalent topic of discussion, such as in our Q4 2022 analysis, or Q3 2021 analysis.

In Q2 2023, supply chain disruptions were mentioned in 4% of all earnings calls. That is a decrease of -54% compared to Q1 2023. The tone of these discussions has shifted, as many companies now discuss how they have successfully overcome these disruptions and managed the challenges. Although the Global Supply Chain Pressure Index has receded back to pre-pandemic levels, not all earnings calls mirror that sentiment, with some companies still grappling with longer-than-desired lead times.

Key CEO quote on supply chains:

“We have seen now that the supply chain disruption has normalized, and we will see that the inventory level will decrease starting actually in Q3 of this year.” – Yves Mueller – Hugo Boss AG, 4 May 2023

“Last 2 or 3 years have seen extreme swings on inventory up and down, given the supply chain disruptions which we all faced in the industry. I think we now see more normalized trade inventory levels. And from what we see across the board, most trade inventory levels in the Q1 were pretty much normalized.” – Marc Bitzer – Chairman and Chief Executive Officer, Whirlpool Corporation, April 25, 2023

“Our inventories will remain high throughout the year also to preserve our agility in a context where the fluidity of the supply chain is not yet fully restored.” – Antonio Picca Piccon – Chief Financial Officer, Ferrari N.V., 4 May 2023

#3 Climate change

In 2023, global temperatures have risen by 1.1 °C from pre-industrial levels, and news regarding climate-related catastrophes continues to make headlines regularly (e.g., major floodings in Pakistan, record heat in the North Atlantic or severe droughts in the western Mediterranean).

Our analysis reveals a significant increase in discussions related to climate and sustainability during earnings calls from Q1 2019 to Q1 2021. However, since then, the prevalence of these topics has leveled off or even experienced a slight decline. In Q2 2023, 20% of CEOs discussed sustainability (-17% compared to the previous quarter), and 11% focused on the climate (-16%) during their earnings calls.

Economic uncertainty and the emphasis on AI use cases seem to have sidelined the sustainability and climate topic. Amazon, for example, quietly gave up parts of its climate pledge recently. Additionally, several companies, including Yamaha (as seen below), have acknowledged falling short of their previously set targets.

On a positive note, numerous vendors offering sustainability-related products are experiencing significant adoption. Microsoft and Siemens, for example, highlight the considerable customer demand for sustainability-related products.

Key CEO quote on climate and sustainability:

“Our Cloud for Sustainability is seeing strong adoption from companies in every industry, including BBC, Nissan and TCL as they deliver on their respective environmental commitments.” – Satya Nadella – Chairman & CEO, Microsoft Corporation, Apr. 25, 2023

“We are in the sweet spot with automation and digitalization and in particular, with the sustainability offerings we have for our customers to help them transitioning in their business models.” – Ralf Thomas – CFO, Siemens AG, May 17, 2023

“As for the sustainability efforts, in fact, we have made greater progress in some of the areas, but the sustainable timber usage ratio was affected by the change in the model mix. So, we have not achieved much numerical results to mention yet.” – Takuya Nakata, CEO, Yamaha Corporation, 9 May 2023

The post What CEOs talked about in Q2/2023 appeared first on IoT Business News.

IoT Analytics published the Q1/2023 update of their “Global Cellular IoT Module and Chipset Market Tracker & Forecast” – an interactive dashboard and structured market tracker that includes quarterly data on worldwide cellular IoT modules and chipsets from 2018 to Q1 2023, and forecast data from Q2 2023 to 2027.

KEY QUOTES:

Satyajit Sinha, Principal Analyst at IoT Analytics, comments:

“The cellular IoT module market experienced a decline in Q1 2023, due to cautious end-user spending, device makers reducing inventory, and the ongoing semiconductor chip shortage. The slow recovery of the Chinese market and global uncertainties have significantly impacted the market. However, this Q1 market weakness is seen as a bump in the road, with more than 6 billion cellular IoT connections expected by 2027, driven by various sectors and the emergence of 5G technologies.”

KEY INSIGHTS:

• In Q1 2023, global cellular IoT module revenue declined 6% YoY; shipments declined 16%.
• The key reasons for the decline are: 1. Cautious end-user spending; 2. Inventory reductions; and 3. Chip supply issues.
• The top five cellular IoT module companies—Quectel, Fibocom, Telit Cinterion, Sierra Wireless, and LG Innotek—currently account for 66% of the global market.
• The Q1 market weakness is seen as a bump in the road, with six billion cellular IoT connections expected by 2027, driven by various sectors and the emergence of 5G technologies.

Global cellular IoT module market declined 6% in Q1 2023 in a weakening demand environment

The Cellular IoT Module Market: Overview

This month, IoT Analytics updated the in-depth Global Cellular IoT Module and Chipset Market Tracker & Forecast, which provides a quarterly look at the revenues and shipments of the companies providing IoT modules and chipsets for cellular IoT deployments.

According to the latest data, the market declined 6% in Q1 2023 on a revenue basis and 16% on a shipment basis (year-on-year). It is important to note that the cellular IoT module market only accounts for roughly 3% of the global IoT enterprise market, so the impact this segment has on the total IoT market is limited. Yet, it is an indication that the general IoT market weakened in Q1 2023. Earlier this year, we forecasted IoT enterprise spending to grow 19% in 2023.

The decline in the cellular IoT module market in Q1 can be attributed to three main factors:

1. There has been cautious end-user spending on the back of economic uncertainties.

Spending for IoT connectivity modules has slowed on the back of budget constraints in a globally uncertain economic environment characterized by high inflation, trade tensions, political instability, and post-pandemic ripple effects in China. Our data show that the retail industry and the Eastern Europe regions are the biggest reasons for the Q1 decline.

“The primary reasons for this decline were the slow recovery of the Chinese market and uncertainties in the global market.” – – Quectel, Q1 2023 financial results

2. Device makers are reducing their inventories.

In response to the economic uncertainties and fluctuating market conditions, device makers that build IoT modules into their products have focused on reducing costs and managing inventory more efficiently. As these companies deploy a lower-inventory strategy to avoid overstocking and minimize costly excess inventory, orders are getting delayed and order quantities get reduced. This has decreased demand for cellular IoT modules.

“Some of our customers pushed out orders to later this year due to their inventory stock levels.” – A cellular IoT module company, Q1 2023

3. A few companies are still facing a shortage of semiconductor chips.

Although lead times for most standard semiconductors have improved steadily since the peak in early 2022, these lead times remain elevated and particularly high for specific chips, particularly in the automotive industry, e.g., vehicle-to-everything (V2X) connectivity modules. LG Innotek, Adient, Cars.com, and Group 1 Automotive are some of the companies that highlighted the chip shortage in their investor reporting in Q1 2023.

“We are experiencing weaker demand and ongoing tightness in the semiconductor chip supply.” – LG Innotek, Q1 2023 financial results

Competitive landscape of the top five cellular IoT module companies

The top five cellular IoT module companies (based on revenue)—Quectel, Fibocom (including Rolling Wireless), Telit Cinterion, Sierra Wireless, and LG Innotek—account for 66% of the global cellular IoT module market in revenue. Recently, #2 Fibocom and #3 Telit Cinterion boosted their positions in the global ranking due to M&A activities in the space.

Here are some of the Q1 highlights from the top 5 vendors:

1. Quectel: As the market leader in shipment and revenue, Quectel experienced an 11% YoY decline in cellular IoT module revenue, a higher YoY decline than in Q4 2022. According to the company, the primary reasons for this decline were the slow recovery of the Chinese market and uncertainties in the global market.

2. Fibocom: Fibocom completed its full acquisition of Rolling Wireless at the beginning of 2023. This acquisition was the key driver for its cellular IoT module revenue growth, which increased by more than 40% YoY in Q1 2023. The acquisition also expanded Fibocom’s portfolio scope in the automotive, FWA, and other mobility industry verticals.

3. Telit Cinterion: Established in early 2023 as a result of the merger between Telit and Thales’s IoT module unit, Telit Cinterion holds third position in cellular IoT module shipment and revenue. Since it is a newly formed entity, there are no benchmarks for comparing its growth or decline.

4. Sierra Wireless: Semtech completed its full acquisition of Sierra Wireless at the beginning of 2023. Sierra Wireless secured fourth position, but its cellular IoT revenue declined by 25% YoY due to lower market demand.

5. LG Innotek: As a pure automotive communication module provider, LG Innotek ranks fifth with a 5% share of global cellular IoT revenue. The company’s cellular IoT module revenue declined by 6% quarter-on-quarter due to weaker demand and ongoing tightness in the semiconductor chip supply.

Outlook for the broader cellular IoT market

According to IoT Analytics’ Global Cellular IoT Connectivity Tracker & Forecast (Q2/2023 Update), the cellular IoT market grew 27% in 2022. The market is expected to continue to grow significantly, reaching more than 6 billion connections by 2027. Various sectors, such as intelligent metering, transport, supply chain management, logistics, and automotive telematics, drive this growth.

Technology innovation also plays a key role for market growth.

The following three key technology trends are visible:

1. 5G coming up : 5G and 5G Recap technologies are expanding their footprint in the market. 5G shipments, for example, are expected to account for 12% of global cellular IoT modules by 2027. Fixed Wireless Access (FWA) and Automotive CV2X are major use cases for 5G technology.

2. New LPWA cellular modules threatening incumbents : New LPWA cellular modules from MCU-based companies such as ST Microelectronics and Renesas compete with traditional cellular module players such as Quectel or Fibocom. MCU players promise better scalability, reduced bill of materials (BoM), and accelerated time-to-market while maintaining full control over the supply chain.

3. The rise of 3GPP-based satellite connectivity : The implementation of 3GPP-based satellite connectivity is becoming increasingly popular, with major chipset manufacturers such as Mediatek, Qualcomm, and Sony Semiconductor showcasing their latest developments in this area. Sony Semiconductor already launched ALT1350, the first cellular IoT LPWA chipset to offer satellite connectivity, which opens up new possibilities for IoT devices to communicate beyond traditional network boundaries. This integration of satellite connectivity into LPWA chipsets is expected to drive further innovation and growth in the IoT market.

The post Global cellular IoT module market declined 6% in Q1 2023 appeared first on IoT Business News.

IoT Analytics, today published insights on the enterprise IoT market, including a new market evaluation, spending outlook, and a discussion of common IoT vendor strategies.

KEY QUOTES:
Knud Lasse Lueth, CEO at IoT Analytics, comments:

“The IoT is evolving. Software for example is becoming a more important part of the IoT stack, more specifically IoT applications. AI is also starting to play a bigger role. We are observing that IoT vendors deploy 5 distinct strategies for “winning” in this changing IoT market. The partner ecosystem for example is becoming a crucial element in any IoT vendors’ go-to-market and IoT delivery.”

KEY INSIGHTS:

• IoT enterprise spending reached $201 billion in 2022, significantly lower than many had previously predicted.
• IoT adopters will focus on building the IoT software backbone, developing IoT applications, and infusing AI in the coming five years. 47% of IoT applications are expected to have an AI element by 2027.
• Five things vendors focus on as they evolve their IoT strategies: ecosystem, solutions; AI vision; acquisitions; and open standards.

In 2017, BCG published a much-cited and discussed analysis, asking: “Where are the growth opportunities in enterprise IoT?” The authors discussed the growth opportunities along the IoT tech stack from 2015 to 2020. The conclusion: The top layers of the tech stack (services, applications, and analytics) will grow the fastest between 2015 and 2020 and will see the highest spending.

Today, six years later, we wonder: How accurate was the assessment by various industry analysts back then, and what does it take to win in a changing enterprise IoT market between 2023 and 2027?

Evaluating the IoT market vs. past predictions

According to our January 2023 IoT market update, IoT enterprise spending reached $201 billion in 2022, up from below $100 billion in 2018. For comparison, this represents roughly 5% of the global IT market in 2022. While we had to lower the outlook for the forecast period of 2023–2027 in our January 2023 update, the market is still expected to grow by +19% annually and reach $483 billion in spending by 2027.

The IoT market is expected to reach $483 billion by 2027

The number of global active IoT connections grew by 18% in 2022 to 14.4 billion active IoT endpoints. In 2023, IoT Analytics expects the global number of connected IoT devices to grow another 16% to 16.7 billion. While 2023 growth is forecasted to be slightly lower than it was in 2022, IoT device connections are expected to continue to grow for many years to come.

How accurate were industry predictions in 2017?

We compare our market tracker that is based on actual revenues of 170+ companies in the IoT market to industry predictions of several third-party data providers that were cited by BCG in its 2017 article.

Our verdict: Industry predictions were directionally correct but too bullish on the pace of IoT adoption and on how fast different technology categories would shift.

1. Total market size

• Industry prediction for 2020: $250 billion
• IoT Analytics IoT spending tracker: $136.6 billion. According to our estimates, the IoT market came out 45% lower than estimated. The market grew substantially in the 2015-2020 time frame but did not explode as had been projected by many (some segments, such as services, had been forecasted to grow 40%+ every year).

2. Tech stack changes:

• Industry prediction for 2020: Services, applications, data analytics, and software platforms would substantially outgrow other parts of the tech stack.
• IoT Analytics IoT spending tracker: According to our data, this did happen. However, data analytics, applications, and services captured 39% of the market in 2020 and not 60% as forecasted by some data providers.

3. Segment changes:

• Industry prediction for 2020: Discrete manufacturing, utilities, and logistics would make up the largest share of the market.
• IoT Analytics IoT spending tracker: Our data also show these three segments as being among the largest, but our view is that discrete manufacturing is even bigger than predicted.

Although we believe that general industry predictions (including our own predictions) were too bullish, we do see strong evidence that the market is growing further and now believe that the projected 2020 IoT market size of $250 billion will be surpassed at some point in 2024.

The IoT market in 2023 and beyond

IoT technology in 2023 adds value to organizations in all verticals, from manufacturing (e.g., factories) to retail (e.g., warehouses) and transport (e.g., cars). The IoT market has moved past headlines such as the infamous “3/4 of all IoT projects fail” (Cisco 2017).

87% of all IoT projects meet or exceed expectations

In 2023, 87% of all IoT projects met or exceeded expectations, based on a 2023 survey of 300 IoT decision-makers that will be published in an upcoming IoT Analytics adoption report. Some companies have connected millions of connected IoT devices (e.g., Walmart, Tesla, and Hapag-Lloyd) and are looking to expand with more sophisticated software tools. Despite several key challenges remaining related to interoperability, skills and know-how, and chipset supply, companies do not question if they should do IoT but rather how it will be scaling from here.

IoT technology maturity framework

To understand how the IoT tech stack is changing and where the growth opportunities in IoT are going forward, one needs to consider a typical technology-focused maturity curve an IoT adopter goes through:

Stage 1: Enabling the asset

In the first stage, whether it is a smart washing machine, a heavy asset in a factory, or a ship at sea, companies need to invest in sensors and local controllers/gateways to be able to process IoT data. Despite a renewed edge computing investment cycle that is seeing many companies invest into more powerful and flexible hardware, many companies at this point have passed the first hurdle of ensuring they have basic IoT data to work with. We expect the spending for IoT hardware/devices to be the lowest growth category at 14% until 2027.

Stage 2: Establishing connectivity

In the second stage, enterprise end users establish and simplify the connectivity to their IoT hardware. While some technologies used have been around for decades (e.g., certain field buses), companies in recent years have invested heavily into higher bandwidth connectivity (like ethernet), wireless connections (e.g., 4G/5G and LPWAN), and more modern and lightweight protocols (e.g., OPC-UA and MQTT). Spending on connectivity is expected to grow by 18% until 2027.

Stage 3: Creating the software backbone

Data normalization and analysis are key to the third stage of IoT maturity. Companies invest in the software backbone that allows them to access various IoT data sources and build valuable services, e.g., using cloud storage and platform services, centralized data lakes, containerization, and modern databases. Many companies are currently in a major investment phase in this part of the maturity curve. That is why we expected spending related to IoT Platforms and middleware to grow 30% and 34% for Infrastructure as a Service (IaaS) until 2027.

Stage 4: Building value adding IoT applications

In the fourth stage of IoT maturity, IoT end users build cloud native or edge-based applications that make use of IoT data at scale. The ability to connect to any asset (stage 1) in a standardized fashion (stage 2) and having those data easily accessible (stage 3) enables a number of IoT use cases. Some of the early innovators (e.g., several automotive OEMs) have reached this stage and are building all kinds of internal (e.g., for their factories) and external (e.g., for their cars) IoT applications. We expect more companies to reach this stage of maturity in the coming years, which is why we expect the spending on IoT applications to exhibit a CAGR of 29% until 2027.

Stage 5: AIoT = infusing AI into IoT

Enabling business with AI is the fifth stage of IoT maturity. This is where companies explore ways to augment existing applications and build new applications by embedding AI. Machine vision and predictive maintenance are two of the most common AI-enabled IoT use cases today. Recent breakthroughs in generative AI may add a new dimension and are a driver for companies to rapidly adopt AI further.

The shift toward AIoT: Nearly half of all IoT applications to be AI-infused by 2027

Although some companies are still struggling to enable their assets (stage 1) and establish connectivity (stage 2), the future of IoT is the convergence of AI and IoT, also often referred to as AIoT.

The future of IoT is the convergence of AI and IoT

In 2022, we conducted a survey of 500 senior IT and engineering staff at manufacturing companies. 15% of those companies indicated having fully implemented their AI strategy (results are part of the Industry 4.0 Adoption Report 2022). Two key use cases with an AI component that were cited were machine vision and predictive maintenance, both scoring a consistently high ROI for these companies.

Based on the data we have and the discussions we lead with various organizations, we estimate that approximately 6% of IIoT applications today are AI-based, meaning that AI algorithms play a core role in enabling the use case (i.e., when using machine learning for vision detection in quality control). Another 11% of applications are classified as AI-augmented, meaning that AI does play a role for the use case, but the use case is not dependent on that AI functionality (e.g., AI-augmented AGV/AMR routing instead of using rules decided by operators).

We see a strong push toward embedding AI into IoT applications (e.g., by moving from condition monitoring to predictive maintenance) and expect a strong increase in the next years.

By 2027, we forecast nearly half of all IIoT applications to have some AI element with the share of AI-augmented applications tripling in that time frame (from 11% to 34%). Many software vendors are currently undergoing large internal exercises on how they can augment their existing software offerings with the use of AI. In May 2023, for example, SAP announced 15 new business AI capabilities across the existing ERP product portfolio, including nine new generative AI scenarios.

Not everything is required to be AI-based, however. Many legacy non-AI IoT applications that are already deployed may not be touched. Many rule-based applications will remain sufficient for some clients and uses cases, and not every dashboard will need to be AI-augmented.

The hype around ChatGPT and Generative AI is likely to impact the AI strategy of companies in the coming years. It is still early to tell if and how quickly the implementation of generative AI in IoT will lead to new large-scale use cases. Generative AI models predominantly focus on text and images, with only a few models centered around sensor data at this point.

Ravi Kumar, CEO, Cognizant, 2 February 2023: “We see a strong push now to bring AI into the business landscape, with the expectation that AI will reengineer enterprises as completely as enterprise software did three decades ago.”

Winning in IoT: How vendors are positioning themselves

With users more focused on building the software backbone, developing applications, and infusing AI, the combined IoT software opportunity is expected to amount to $193 billion by 2027. In 2022, no single vendor had more than 3% market share in the $201 billion global IoT market, and no single vendor had more than 9% market share in the IoT software market. (Note: IoT Analytics tracks 170+ vendors and their market share by IoT segment—see the most recent update of the IoT Enterprise Spending Dashboard.)

No single vendor has more than 3% market share in the IoT market

IaaS (top three vendors: 86% market share) and wireless connectivity (top three vendors: 44% market share) are the only IoT tech stack elements that are largely consolidated at this point—the other areas leave plenty of room for innovation and consolidation.

Here are examples of some of the strategies that leading IoT vendors are pursuing as they gear up for the next five to ten years in the IoT market:

Strategy 1: Multiplying the opportunity by building a strong ecosystem of partners

The complexity of IoT has led some of the leading organizations to build an ecosystem of complimentary partner companies to help in their go-to-market and delivery. This strategy is most notable with the leading hyperscalers Microsoft, AWS, and Google.

For example, at Hannover Messe 2023 (the world’s leading industrial fair), we counted 35 partners co-exhibiting with AWS, 25 with Microsoft, and 24 with Google (see our Hannover Fair event report for more details). Although these companies are technically also customers of the hyperscalers, significant time and resources go into developing joint solutions, building architectures together, and marketing the joint offerings. AWS, for example, marketed joint solutions with Element Unify, HighByte, Deloitte, and TensorIoT at the fair.

Strategy 2: Focus on solutions that solve customer problems

A few years ago, many vendors focused on selling a platform that would allow IoT adopters to build applications themselves. However, many IoT adopters, especially SMEs, have found that they do not have the resources to make this happen. Some of the vendors that previously provided an IoT platform have adjusted accordingly and moved on to providing IoT solutions to individual problems and use cases, rather than a universal, hard-to-maintain platform. In some cases, these solutions bundle existing hardware or sensors with access to cloud-based software so that IoT adopters can receive everything they require from one vendor.

For example, in 2022, Swedish sealing and bearing company SKF launched SKF Axios, a wireless predictive maintenance solution geared toward monitoring equipment and improving equipment uptime. The solution leverages several AWS cloud services and provides necessary sensors, gateways, wireless connectivity, and a ready-to-use application so that customers have the entire solution ready to go.

Strategy 3: Embedding a bold AI vision into the strategy

As the IoT enterprise market is starting to look at the fifth stage of maturity (AIoT), some vendors appear to be bolder and more committed to leading the AI race than others.

For example, Japanese industrial automation vendor Yokogawa is building the vision of industrial “autonomous operations” into the company strategy, believing that the future of manufacturing is AI-based. In March 2023, Yokogawa announced the adoption of Yokogawa’s Autonomous Control AI at an ENEOS Materials Chemical Plant. The field test demonstrated that AI could control distillation operations more effectively than existing human-controlled approaches, resulting in stable product quality, high yield, and energy savings.

Strategy 4: Acquiring missing puzzle pieces

Rather than partnering, some companies opt to acquire certain IoT technologies or applications that they consider high value.

In May 2022, for example, Emerson Electric acquired Aspen Technology to create a leading industrial software company. The acquisition, among other things, gives Emerson Electric access to a strong Industrial AI portfolio, including numerous asset intelligence solutions.

In June 2022, Siemens acquired Senseye, a provider of AI-powered solutions for industrial machine performance and reliability.

As part of our recent State of IoT—Spring 2023 report, we looked at the 100 most recent acquisitions in the IoT space. We found that the largest group (26%) of acquired companies was in the applications space—many with a strong AI footprint.

Strategy 5: Betting on open standards

Open standards promise to solve one of the biggest inhibitor to large scale IoT adoption: Missing interoperability and compatibility among various IoT devices and systems.

By aligning their solutions with open standards, vendors hope to significantly improve the customer experience, fostering innovation, flexibility, and scalability in their IoT deployments.

Schneider Electric, for example, is actively promoting the use of IEC 61499, a shared source runtime execution engine, developed by Universal Automation. The standard aims to create hardware-independent applications to bridge the existing gap between IT and OT.

In our Hannover Messe 2023 event report, we highlighted that we noticed several big brands aligning behind the Asset Administration Shell (AAS) framework to develop interoperable digital twins. Among many companies, Microsoft, Siemens, and SAP seem to be three of the most notable supporters.

Conclusion

IoT continues to offer tremendous opportunities, even if the market is not advancing as fast as some had predicted in the past. IoT enterprise spending is expected to increase to $483 billion by 2027. In a maturing IoT market, the biggest growth opportunity lies in the software, especially with (AI) applications.

The biggest IoT growth opportunity lies in software

Nearly half of all applications in 2027 will be AI driven. Leading IoT vendors, such as hyperscalers, industrial automation vendors, and connectivity providers, and also many start-ups position themselves to stay relevant in an AI-first IoT market. With a clear IoT strategy, companies have an opportunity to position themselves in what remains one of the biggest market opportunities of our generation.

The post Winning in IoT: The evolving IoT market appeared first on IoT Business News.

IoT Analytics today published its State of the IoT-Spring 2023 report on the current state of the Internet of Things including market update and forecast, latest trends, and more.

KEY QUOTES:

• Knud Lasse Lueth, CEO at IoT Analytics, comments:
  

  “Despite general economic uncertainty, the state of the IoT market right now remains predominantly positive. Industrial IoT projects and Industry 4.0 in particular stand out as driving forces in the current market environment. On the flipside we have recently seen IoT-related layoffs in the IT industry and we also do see that investment flows into IoT-focused start-ups has declined significantly.”

• Satyajit Sinha, Principal Analyst at IoT Analytics, adds: “As we look towards the future of IoT connectivity, two trends are noteworthy. The first is the convergence of LPWAN technologies, shifting the industry towards a multi-connectivity solution view. This shift will likely lead to new multi-LPWAN connectivity modules, providing end-to-end connectivity in verticals such as logistics and mobility. The second trend is the growing popularity of LEO-based satellite IoT connectivity, which offers extensive coverage, minimal delays, and strong reliability. With satellite IoT connections expected to grow at a CAGR of 25%, integrating satellite connectivity options into LPWA chipsets is expected to drive further innovation and growth in the IoT market.”

IoT connections market update—May 2023

The latest IoT Analytics “State of IoT—Spring 2023” report shows that the number of global IoT connections grew by 18% in 2022 to 14.3 billion active IoT endpoints. In 2023, IoT Analytics expects the global number of connected IoT devices to grow another 16%, to 16 billion active endpoints. While 2023 growth is forecasted to be slightly lower than it was in 2022, IoT device connections are expected to continue to grow for many years to come.

IoT connections forecast

According to our analysis, by 2027, there will likely be more than 29 billion IoT connections. Compared to our last IoT device market update a year ago, we lowered our five-year IoT market outlook for two important reasons:

1. Chipset supply to remain constraint for years to come in the face of surging demand

Chipset supply chains have considerably improved in 2023 as demand has weakened in the face of a slowing economy. Despite the demand slump, current chip lead times remain elevated compared to pre-COVID-19 levels. We believe that once the economy recovers and a new demand wave kicks in, chipset supply will become much more constraint again. While it is true that a lot of chip manufacturing capacity is being planned as we speak, fueled by government initiatives such as the US Chip and Science Act (2022) and the EU Chips Act (2022), it may take many years until supply matches or surpasses demand for the majority of different types of chipsets.

Make no mistake, the investments into new chip manufacturing capacity are enormous. TSMC has increased its capital expenditure from approximately $15 billion in 2019 to $42–$44 billion in 2022. Similarly, in 2023, Samsung announced that it plans to invest $230 billion in South Korea over the next 20 years to build new chip production capacity. However, these investments take time to materialize. Semiconductor plant constructions typically take three to four years to complete, and it can take another three to four years for facilities to reach full capacity.

2. China uncertainties

In the last years, China was the leading country for new IoT device connections, with active cellular IoT connections in China alone surpassing two billion in 2022. However, the high growth years may be coming to an end with the country facing a number of issues, including technological supply shortages on the back of renewed US–China trade tensions, most notably in the semiconductor industry. In October 2022, the US placed an export ban on China, causing significant disruption to these industries. Consequently, chip companies are relocating their facilities outside of China. Some companies, such as Infineon, TSMC, AMAT, and ASML, have announced that they are moving parts of their production out of China.

The leading IoT connectivity technologies: three technologies making up nearly 80% of the market

Global IoT connectivity is dominated by three key technologies: Wi-Fi, Bluetooth, and cellular IoT.

1. Wi-Fi. Wi-Fi makes up 31% of all IoT connections. In 2022, more than half of Wi-Fi-enabled devices shipped worldwide were based on the latest Wi-Fi 6 and Wi-Fi 6E technologies, which promise faster and more reliable wireless connectivity. The adoption of these technologies has made communication between IoT devices more efficient, leading to improved user experiences and overall performance. Wi-Fi technology is leading IoT connectivity in sectors such as smart homes, buildings, and healthcare.

2. Bluetooth. 27% of global IoT connections rely on Bluetooth. Bluetooth Low Energy (BLE), also known as Bluetooth Smart, has been continuously developed to allow IoT devices to maintain reliable connectivity while consuming limited power. As a result, BLE is now the preferred option for battery-powered IoT devices such as smart home sensors and asset tracking devices. Even the industrial sector is starting to show increasing interest in IO-Link Wireless technology, which is based on IEEE 802.15.1 (the technical standard for Bluetooth) and allows for wireless communication between sensors/actuators and an I/O master.

3. Cellular IoT. Cellular IoT (2G, 3G, 4G, 5G, LTE-M, and NB-IoT) now makes up nearly 20% of global IoT connections. According to the Global Cellular IoT Connectivity Tracker & Forecast (Q1/2023 Update) by IoT Analytics, global cellular IoT connections grew 27% YoY in 2022, strongly surpassing the growth rate for global IoT connections. This growth is due to the adoption of newer technologies such as LTE-M, NB-IoT, LTE-Cat 1, and LTE Cat 1 bis, as older technologies such as 2G and 3G are phased out. Although 5G module shipments also grew more than 100% YoY in 2022, the growth rate is still slower than many had expected. In 2023, the top five network operators—China Mobile, China Telecom, China Unicom, Vodafone, and AT&T—managed 84% of all global cellular IoT connections. In terms of IoT revenue, the top five network operators make up 64% of the IoT network operator market, with China Mobile, AT&T, Deutsche Telekom (including T-Mobile), China Unicom, and Verizon leading the market.

The analysis shows a few notable shifts over the years, for example:

I. China Mobile jumped from fifth place in 2012 to first place in 2021 and is expected to remain there in the foreseeable future.
II. AT&T, Verizon, and Deutsche Telekom have consistently ranked in the top five from 2010 to 2022 and are expected to maintain their positions through 2027.
III. China Unicom joined the top five in 2022 and is projected to remain among the leading network operators through 2027.

IoT connectivity trends to look out for

While the general IoT connectivity landscape only changes slowly (e.g., some devices remain connected for a decade or even longer), new IoT connectivity technologies do have an impact on the landscape in the long run. Here are two interesting developments we are monitoring (for more also visit our Embedded World conference 2023 takeaways and our MWC 2023 takeaways):

1. LPWAN technology convergence

In 2022, the LPWAN industry saw two significant events that shifted the focus from competition among LPWAN connectivity technologies to co-existence and convergence of those technologies. UnaBiz‘s acquisition of Sigfox and Semtech’s acquisition of Sierra Wireless paved the way for LPWAN companies to provide multi-connectivity of several LPWAN technologies at the same time. To make this convergence happen and be able to deploy any LPWAN technology, UnaBiz, for example, now collaborates with The Things Industries, Actility, Soracom, LORIOT, and others. This means that UnaBiz has become more than just a technology provider but rather a solution provider that also bundles all different technologies and orchestrates them on their own software platform. UnaBiz is just one example that shows how the industry is shifting from a single LPWAN technology view to a multi-connectivity solution view.

We anticipate that this LPWAN convergence may lead to the emergence of new multi-LPWAN connectivity modules in the future that would provide end-to-end connectivity in verticals such as logistics and mobility.

2. LEO-based satellite IoT connectivity

LEO satellite connectivity for IoT is gaining popularity because it provides extensive coverage, minimal delays, and strong reliability. The technology is especially useful in the agriculture, maritime, and logistics industries. LEO satellites are closer to Earth than traditional satellites, resulting in reduced latency and faster data transmission, which are essential for real-time data processing. This type of connectivity is more resilient and reliable, ensuring consistent communication, even in challenging environments or during natural disasters. Advancements in LEO-based IoT satellite connectivity continue to optimize performance and enhance the user experience.

According to IoT Analytics, satellite IoT connections are expected to grow from six million to 22 million between 2022 to 2027, at a CAGR of 25%. While this growth is expected to have a minor effect on the overall market, the integration of satellite connectivity options into LPWA chipsets by companies like Qualcomm could accelerate adoption. Sony Semiconductor already launched ALT1350, the first cellular IoT LPWA chipset to offer satellite connectivity, which opens up new possibilities for IoT devices to communicate beyond traditional network boundaries. This integration of satellite connectivity into LPWA chipsets is expected to drive further innovation and growth in the IoT market.

Other State of IoT (Spring 2023) research highlights

The 137-page report highlights a number of current developments in the IoT market. Here are three developments that are discussed in more depth in the report:

1. Predominantly positive IoT sentiment going into the second half of 2023

Despite a number of macro uncertainties and some (IoT-related) layoffs, the IoT market remains largely intact going into the second half of 2023. Most market participants have a predominantly positive outlook, with industrial IoT projects and Industry 4.0 initiatives driving the market. Below are some recent representative quotes from chip companies with a focus on IoT:

“We continue to secure major greenfield design wins, even amid macro uncertainty. The IoT market has incredible potential, with thousands of new applications on the horizon.” – Matt Johnson – President & CEO, Silicon Laboratories (1 February 2023)

“The industrial IoT markets are performing better than our expectations.” – Kurt Sievers – President & CEO, NXP Semiconductors (31 January 2023)

2. IoT platforms market is consolidating

Several major companies that were selling IoT platforms recently announced discontinuations, including Google’s IoT Core, Bosch‘s IoT Device Management, IBM’s Watson IoT Platform, and SAP’s IoT services. The reasons for the strategic shift away from IoT vary. The market dominance of Microsoft Azure IoT and AWS IoT in “generic” IoT platforms certainly played a role, in conjunction with the “the lack of profitability” in the offered IoT services. Several of these companies have announced a shift toward creating solutions specific to particular verticals or relying more on a few select partners to continue to support IoT initiatives (e.g., Google–Litmus Automation partnership).

“IoT services themselves don’t make enough money. The services like AWS IoT Core and Azure IoT Hub are expensive to build and maintain and by themselves they are likely not profit-making.” – Former IoT Product Lead, Microsoft

3. IoT-focused start-ups are struggling to secure funding

The amount of money invested in global IoT start-ups decreased significantly in the last 12 months. In the first quarter of 2023, we tracked 52 IoT-related funding rounds totalling $840 million, a 45% reduction in the value of investment in IoT start-ups companies compared to Q1/2022. Some of the larger recent IoT-related funding rounds include a $150 million Series D for US-based chipset manufacturer Astera Labs in November 2022 and a $43 million Series C for China-based connectivity chipset company XINYI Information Technology in March 2023.

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IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, published its IoT Software Adoption Report 2023 based on an extensive survey of 100 software end users in manufacturing, real estate, retail, and other industries.

This article details the IoT software landscape and lists 8 of the leading IoT software companies in 2023 highlighted by survey participants.

Key insights:

• IoT software spending reached $53 billion in 2022 and continues to grow strongly.
• The latest IoT Software Adoption Report 2023 highlights the top 100+ IoT software vendors used today based on an extensive survey of IoT users.
• The most common IoT software companies include Microsoft, AWS, Siemens, IBM, Cisco, Oracle, PTC, and MongoDB.

Key quotes:

Knud Lasse Lueth, CEO at IoT Analytics, comments:

“We have seen quite some shifts in the IoT software landscape during the last five to eight years. Given where the market is now, with some large companies having recently exited the space while others are putting the foot on the gas, I would not be surprised to see several new, smaller players capture a significant portion of this fast-growing market in the coming years.”

The big picture: The IoT software market in 2023

IoT software spending reached $53 billion in 2022 (according to the IoT Analytics Global IoT Enterprise Spending analysis). The market grew a staggering 31% in 2022 because of renewed enterprise focus on IoT after the COVID-19 recovery; strong growth in the number of actively connected IoT devices to 14.4 billion worldwide; and a software technology replacement cycle causing companies to invest in containerized solutions, software-as-a-service, low-code user interfaces, and AI-enhanced software. With the number of active IoT devices projected to reach nearly 30 billion by 2027, IoT software market growth is guaranteed.

6 IoT software architecture choices

Companies pursue dozens of IoT use cases (examples include remote monitoring, predictive maintenance, and machine vision)—see our 2021 IoT use case analysis. Those use cases require software that can be realized in six ways. Companies can

1. Add their IoT devices to existing software (e.g., ERP, MOM, PLM, or SCADA)
2. Build IoT software in-house
3. Hire a third party to build IoT software
4. Use several open-source software components (e.g., Apache Kafka and Eclipse Mosquitto)
5. Buy IoT software components (e.g., platforms and middleware)
6. Buy entire IoT offerings

Option 1, adding to existing software, promises stability, reliability, and security. However, the past few years have shown that this approach has shortcomings, which have given rise to options 4, 5, and 6. For option 5 and 6, there are hundreds of commercial offerings that are specifically designed for IoT device data, do not come with the “baggage” of older enterprise architectures, and bring an element of scalability.

Our analysis focuses exclusively on companies that have chosen options 5 or 6.

The methodology of this analysis
IoT Analytics, in Q4 2022, surveyed 100 senior executives across manufacturing, real estate, retail, and other industries in North America, Europe, and Asia to better understand the IoT software market. All respondents procured and used IoT software. The vendors mentioned by the respondents are the basis for the IoT software companies’ landscape in this article. The accompanying 164-page IoT Software Adoption Report 2023 analyzes these companies’ spending patterns, adoption, decision-making criteria, payment habits, and much more. For more information, request a sample of the report here.

The IoT software stack

For this analysis, we divided the IoT software stack into four main components: applications, middleware/platforms, devices/edge, and security. Within these four components, we highlight 11 types of IoT software (although there could be more, especially in the IoT application layer):

1. Remote asset access software allows an asset to be controlled or monitored remotely on one system while being displayed on a separate client device.
2. Augmented reality or virtual reality software is used to visualize and create AR/VR.
3. Digital twin software is used to create and manage a virtual replication of a real-world entity.
4. IoT platforms are specialized software tools to build and manage IoT solutions.
5. Edge management platforms are used to provision and manage remote devices at the edge.
6. Databases for IoT datasets are used to capture the data produced by IoT devices.
7. Other IoT middleware tools enable one or more kinds of communication or connectivity among several applications or application components in a distributed network.
8. Data ingestion tools for shopfloor/operational assets gather and transfer structured, semi-structured, and unstructured data from the source to the target destinations.
9. Message broker/protocol conversion tools translate a message from the sender’s formal messaging protocol to the receiver’s formal messaging protocol.
10. IoT security software is cybersecurity software that focuses on increasing the security of IoT setups.
11. Operating system for IoT devices/assets is operating system software that manages IoT devices and software resources for connected products or machines in the field and provides common services for computer programs.

The IoT software landscape 2023

Many small companies

IoT Analytics tracks more than 1,000 large and small vendors offering software for IoT scenarios. Although two companies are clearly leading the market, the overall landscape remains fragmented. As verifying which vendor fits into which IoT software type is almost impossible, we decided to present a chart entirely created by IoT end-users from our survey (rather than a secondary research analysis). These are the IoT software companies our survey participants used, and from our point of view, it is a good view of the market even though several vendors are missing. Some vendors may feel they should also feature in another IoT software category.

Recent IoT software divestitures

The recent announcements of IoT software discontinuation by three heavyweights (Google, SAP, and IBM) have rattled the IoT community. Nevertheless, the results of this survey show that a significant number of users are still leveraging these to-be-retired services. Our view is that there is a natural market consolidation in IoT software, and more specifically in IoT platforms, that we started to report on in 2021. We know of more IoT software companies that are exiting the market, as their IoT visions have not materialized.

IoT software companies are doubling down on IoT

However, we are tracking many other thriving IoT software companies that are doubling down on a longer-term IoT vision. The survey results confirm there is no appetite to stop investing in IoT software on the end-user side, although the high growth for the IoT platform segment seems to be over and end-users are putting more money, for example, into individual applications. Due to the recent IoT divestitures, end-users are also becoming more careful about choosing their software vendor partner.

8 leading IoT software companies in 2023

Here is a look at 8 of the top IoT software companies that survey participants highlighted.

1. Microsoft

According to our estimates, Microsoft is the IoT software market share leader, with a 9% share of the market in 2022 (Source: IoT Analytics Global IoT Enterprise Spending dashboard—vendor market share view). Almost 60% of the respondents in this survey use Microsoft software as part of their IoT setups. Microsoft has an offering in all 11 of the analyzed IoT software types. Some of Microsoft’s most prominent IoT software solutions include Azure IoT Hub, Defender for IoT, Azure IoT Edge, and Azure RTOS.

2. Amazon Web Services

AWS is the global market-leading cloud provider and has made several IoT software investments since the launch of its IoT Core service in 2015. Survey respondents use AWS IoT software products in six of the 11 IoT software types. Prominent examples besides AWS IoT Core include AWS IoT Greengrass and Amazon DynamoDB IoT. As a result, we can expect AWS IoT software to continue to grow. The survey results show that users expect to continue to increase IoT software spending with AWS, particularly companies in North America and smaller and medium-sized companies.

3. Siemens

Even though the company has moved away from heavily marketing its Mindsphere IoT platform, Siemens continues to invest in IoT. Two of the main strategic initiatives for Siemens include the Siemens Xcelerator portfolio of modern cloud-based SaaS-based software offerings (including industrial IoT applications) and the new Industrial Edge offering (including several IoT applications). Like Microsoft and AWS, Siemens received a high customer satisfaction rating in this survey, consistent with previous IoT Analytics surveys on IoT and IoT-centric topics.

4. IBM

Despite the deprecation of the IBM Watson IoT platform announced in November 2022, IBM remains one of the leading IoT software vendors (for now). Due to the company’s strong penetration rate in enterprises, many companies have used IBM’s tools for their IoT setups. It will be interesting to see how the picture changes in 2024, as customers must move their IoT deployments off IBM Watson IoT by 1 December 2023.

5. Cisco

Cisco has been a player in the IoT software landscape for years. Some prominent IoT offerings include the Cisco Edge Intelligence platform and the company’s IoT security products (e.g., Cisco ISE).

6. Oracle

Oracle is an enterprise software powerhouse and a cloud hyperscaler (although much smaller than the market leaders). Oracle’s IoT setups include the Oracle IoT Cloud Service and Oracle databases (e.g., Oracle Database).

7. PTC

PTC has been executing its IoT vision since the acquisition of Thingworx in 2013. To date, ThingWorx remains one of the leading IoT platforms, but it is not the only IoT tool PTC has to offer. Other prominent PTC tools for IoT scenarios include Kepware (message broker/protocol conversion tool) and Vuforia (AR/VR).

8. MongoDB

MongoDB has established itself as the commercial IoT database of choice for many IoT setups. Moreover, the company is on an impressive growth path in the wake of general workload movements to the cloud: the company’s top line more than tripled during the last three years to more than $ 1 billion per year (IoT is a portion of that). In addition, our survey participants gave MongoDB a high satisfaction rating for their IoT offering.

Looking ahead

These are just 8 of the 100+ IoT software companies we analyzed as part of the research. Although some parts of the IoT software landscape are consolidating (as highlighted above), the landscape remains dispersed. Smaller vendors still have room to fill the gaps and find their niches. The technological shifts happening right now (e.g., more powerful edge computing, new protocols, cloud-native software development, and containers) provide tremendous opportunities for any company to jump in and offer a more modern and native software experience. We have seen quite some shifts in the software landscape during the last five to eight years, and given where the market is now, it will not be surprising to see several new, smaller players capture a significant portion of this fast-growing market in the coming years.

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IoT Analytics conducted a keyword analysis based on a database of ~56,000 earnings calls of US-listed firms. 3 themes of interest stood out in Q1/2023 that are likely to influence the strategic agenda going forward.

Key insights:

• According to the latest “What CEOs talked about” report, three themes noticeably gained traction in earnings calls in Q1/2023: 1. AI & ChatGPT, 2. the labor market, and 3. Industry 4.0. Discussions around (supply) shortages and the metaverse lost traction.
• Economic uncertainty (inflation, recession, and interest rates) remains the most important topic cluster overall.

Key quotes:
Philipp Wegner, Principal Analyst at IoT Analytics, comments:

“In Q1/2023, economic uncertainty was still the elephant in the room but the hype around ChatGPT also reached boardrooms. It really sparked discussions about future applications of AI across many industries. At the same time, various topics around Industry 4.0 gained momentum such as industrial automation, predictive maintenance or machine vision.”

The big picture

In Q1 2023, economic uncertainty was at the forefront of CEOs’ minds globally and across the board. In 2023, 61% of all earnings calls discussed inflation, 23% talked about recession, and 38% mentioned interest rates. Even though inflation (-6% decline in mentions compared to Q4/2022) and recession (-25%) were less prevalent than in the last quarter of 2022, economic uncertainty was still the elephant in the room.

Key upcoming themes

AI: AI was discussed by 17% of CEOs (+ 41%). The interest in AI and machine learning was sparked by the release of ChatGPT and the discussions around potential use cases. ChatGPT was mentioned by 2.7% of companies in earnings calls in Q1/2023 (compared to no mentions in the previous quarter).

The labor market: The labor market continues to rise in importance on CEOs’ list of topics. Layoffs were discussed in 6% of all earnings calls (+84% compared to Q4/2022), and 18% discussed wages (+8% from Q4/2022).

Industry 4.0: Another key upcoming theme in Q1/2023 is Industry 4.0 and related topics. Industrial automation was discussed in 0.6% of all earnings calls(+57% compared to Q4/2022). However, the strongest increase in this group was registered for the keyword predictive maintenance, which increased by +136%.

Declining themes

Supply shortages: With supply chains slowly improving and supply shortages easing, discussions around shortages in general (-21%) and chip shortages (-35%) more specifically decreased strongly in Q1/2023.

The Metaverse: Another theme that reduced in importance in Q1/2023 was the metaverse. The metaverse as a keyword declined by -64% in Q1/2023. Related technologies, such as virtual reality (-24%) and augmented reality (-12%), also declined.

Q1/2023 deep dives

Three technological themes of interest in Q1/2023 are highlighted in this article in greater depth: AI & ChatGPT, Industry 4.0, and the metaverse.

#1 AI & ChatGPT

ChatGPT was released on 30 November 2022. The chatbot, which is built on a large language model by OpenAI, went viral and set records as the fastest-growing consumer application in history, reaching 100 million active users within two months of its launch. ChatGPT sparked discussions around potential use cases of AI in general. 17% of all earnings calls mentioned AI, which constitutes a strong increase of +41% in Q1/2023. More specifically, generative AI was discussed by 2.7% of all earnings calls (an increase of nearly 1,600%) and conversational AI was mentioned in 0.5% of earnings calls.

ChatGPT was mentioned in 2.7% of all earnings calls, up from zero mentions in the last quarter. The CEO of IBM highlights the release of ChatGPT as one of the three key moments for AI in the last decade (after IBM Watson winning Jeopardy and DeepMind winning GO competitions). So far, most discussions that mention ChatGPT occur within earnings calls of technology companies that talk about how they want to market the new technology. Most applications have not reached large-scale adoption by enterprise end-users. But the potential is tremendous, including use cases of generative AI for IoT.

Key CEO quotes on AI and ChatGPT

Microsoft: “We’re excited about ChatGPT being built on Azure and having the traction it has. So, we look to both. There is an investment part to it and there is a commercial partnership. But fundamentally, it’s going to be something that’s going to drive, I think, innovation and competitive differentiation in every one of the Microsoft solutions by leading in AI.” – Satya Nadella, CEO, Microsoft, 24 January 2023

IBM: “AI has become a big topic of conversation this year […] If I think about it, over the last decade, I think there were three moments you can talk about, […] One, when IBM won Jeopardy with Watson, […] Second, when deep mind from Google or Alphabet started winning competitions around, for example, GO […] and now with OpenAI and ChatGPT.” – Arvind Krishna, CEO, IBM, 25 January 2023

Meta: “Generative AI is an extremely exciting new area with so many applications, and one of my goals for Meta is to build on our research to become a leader in generative AI in addition to our leading work in recommendation AI.” – Mark Zuckerberg, CEO, Meta, 1 February 2023

Seagate Technologies: “If you think about it, early days of AI or training models and things like that, that needed access to big data sets. But I think as time goes on, big data sets have to be very real time to make decisions that are relevant in the moment.”
“And sometimes, they need to be kept at the edge because you have a lot of video data, for example, at the edge, to make good decisions on consumer behavior or inventory, […] all these new applications that are coming.” – Dave Mosley, CEO Seagate Technologies, 25 January 2023

#2 Industry 4.0

As this analysis clearly shows, many companies discuss how to fight rising inflation, labor costs, and general cost pressure. Many business leaders come to the result that more, not less, investment into digitization is the solution. Therefore, even during times of economic uncertainty, spending on enterprise IoT is expected to stay strong prior to 2027.

This expectation is also reflected in boardroom discussions: predictive maintenance (+136%), remote monitoring (+62%), and industrial automation (+57%) were discussed much more than in Q4 2022. Vendors and end users emphasize cost cutting through IoT-connected solutions. For example, machine vision enables many Industry 4.0-related use cases, such as flaw detection and operation optimization.
Note: The IoT Analytics team will be at the world’s largest industrial fair, Hannover Messe 2023, in mid-April 2023 to discuss industrial transformation and Industry 4.0. Make sure to reach out!

Key CEO quotes on Industry 4.0

Cognex: “The market is still in the early stages of adopting machine vision. Most companies are still highly reliant on labor, and very few warehouses globally are realizing the full potential of automation.” – Rob Willett, President and CEO, Cognex, 17 February 2023

Liberty Energy: “[…] We saw that in our cost of maintenance last year, our ability to run our equipment at, well, really flat maintenance costs in the face of very, very strong inflationary pressure. So that’s a credit to that team and the work they’ve done from a predictive maintenance standpoint.” – Ron Gusek, President, Liberty Energy, 26 January 2023

Acorn Energy: “I’ve talked about how inflation has an impact on our cost, but conversely, it can also have a benefit in terms of our business and our value proposition. This is because our monitoring solutions reduce the personnel costs, travel time, emissions, and overall environmental impact required to maintain industrial equipment and critical systems. Therefore, as our customers’ costs increase, the return on investment of our services to them also improves. […] Remote monitoring will always be a significantly less expensive alternative than physical inspection, particularly with higher personnel and fuel costs.” – Jan Loeb, CEO, Acorn Energy, 16 March 2023

#3 The Metaverse

Mentions of the metaverse decreased by 64%. The keyword was mentioned in 0.4% of all earnings calls in Q1 2023. That constitutes a steep decline since its peak in Q1/2022 when a couple of companies jumped on the hype train and announced their own (industrial) metaverse projects, including Microsoft, Siemens, Disney, Nvidia, and Meta. In Q1/2022, about 2% of all earnings calls discussed the metaverse. However, in the last quarter, a lot of related layoffs and announcements show that the trend might be over for now. Microsoft laid off its Metaverse core team of roughly 100 employees in February 2023, and Google announced the end of its Google Glass Enterprise Edition.
Some consumer-focused companies, such as Disney, have ended their metaverse projects for now.
While the keyword “metaverse” might lose steam, related technologies are likely to stick around. The CEO of T-Mobile, Mike Sievert, said the following during an earnings call in October 2022: “No matter what you believe about how the metaverse might or might not unfold, clearly more immersive 3D experiences are on their way.”

Expected key product announcements from some leading tech companies are likely to set the tone for the market in the coming years and will play a role in whether the industrial metaverse becomes a reality. For example, in late March 2023, Nvidia and Microsoft announced a partnership to bring industrial metaverse applications to the cloud.

Key CEO quotes on the metaverse

Ralph Lauren: “And as we continue to lead in gaming and the metaverse, we launched an innovative collaboration with Fortnite, targeted to next-gen consumers with additional exciting partnerships to come for spring and fall ‘23.” – Patrice Louvet, CEO, Ralph Lauren, 9 February 2023

Himax Technologies: “Metaverse-related developments are early in the lifecycle but overall remain an attractive opportunity for us potentially.” – Jordan Wu, CEO, Himax Technologies, 9 February 2023

The post What CEOs talked about in Q1/2023 appeared first on IoT Business News.

IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, released an update for its IoT Enterprise Spending Dashboard and Tracker, which comprises the end-user spending of IoT markets.

This article highlights the IoT market growth in 2022, forecasts until 2027, and macro trends influencing the forecast.

Key insights:

• Overall enterprise IoT spending grew 21.5% in 2022 to $201 billion. IoT Analytics lowered the growth outlook for 2023 to 18.5% (from 24% previously).
• Macro trends largely dominate the growth expectancy for an otherwise robust digital transformation phase for enterprises.
• Lower-than-expected economic growth and general insecurity in 2022 and 2023 lead to cautious spending on digital transformation and IoT.
• Tech layoffs largely spared IoT-focused companies.

Key quote:

Philipp Wegner, Principal Analyst at IoT Analytics, says:

“We lowered our forecast for 2023 but the enterprise IoT market is surprisingly resilient. The number of layoffs of IoT companies is comparably small and healthy order backlogs show sustainable demand.”

IoT Market Update Q1/2023

The enterprise IoT market grew 21.5% to $201 billion in 2022, according to the January 2023 update of IoT Analytics’ Global IoT Enterprise Spending Dashboard. The market grew slightly slower than the 23% forecasted for last year and is expected to grow even slower in 2023. At our last forecast, we expected a faster recovery of the world economy, stronger supply chains, and sustained investment into new technologies to mitigate labor shortage. We ended up with estimated spending growth of 24% for 2023. However, nine months on from our last update, we must lower our forecast for 2023 to only 19%. At this point, IoT Analytics forecasts the IoT market size to grow at a CAGR of 19.4% to $483 billion from 2022 until 2027. Thereby, APAC is expected to outgrow other parts of the world with a CAGR of 22% between 2022 and 2027. North America (20% CAGR) is expected to grow slower than APAC but significantly faster than Europe (16% CAGR) until 2027.

Reasons for a lowered forecast

There are several reasons for the lower-than-expected growth of IoT enterprise spending. In our view, the three primary reasons are:

• Lower GDP growth
• Sustained inflation
• High interest rates

1. Lower GDP growth

One key reason for lower-than-anticipated growth of IoT enterprise spending in 2023 is the environment of low economic growth. In its latest world economic outlook growth projection in January 2023, the IMF expects a real GDP growth of 2.9% in 2023, down from 3.4% in 2022. To put this into context, at the end of January 2022, the IMF expected real GDP to grow by 4.4% in 2022 and 3.8% in 2023.

According to the IMF, the growth of real GPD is going to be lower in 2023 than in 2022 for nearly all major world economies:

APAC: India (+6.1% GDP growth expected for 2023) and China (+5.2%) are the major economies that grow the fastest. China will even grow much faster than in 2022 (+3.0%), being the exception after the end of lockdowns.

Europe: The Euro area (including Germany, France, and Italy) is expected to grow by only 0.7%, while the economy of the United Kingdom is likely to decline by -0.6%.

North America: The United States is expected to grow slower in 2023 (+1.4%) than 2022 (2.0%), and growth is likely to be even slower in 2024 (+1.0%).

2. Sustained inflation

In January 2023, inflation has finally shown a downward trend. However, in most developed economies, inflation is still higher than in the last decade(s). Tech firms, like many businesses, will encounter a workforce seeking higher salaries to cope with the rising cost of living and customers struggling to control expenses. Additionally, operating expenses will escalate with more office staff, travel, and on-site events, resulting in profit stress.

3. High interest rates

In the last year, central banks increased interest rates to fight inflation. The US Federal Reserve increased the federal funds’ target rate from 0.125% at the beginning of 2022 to 4.375% by the end of 2022. To fight inflation, other central banks followed suit (e.g., the European Central Bank [0%–2%] and the Bank of England [0.1%–3.5%]). Higher interest rates have multiple effects as they increase the cost of borrowing capital and put pressure on company margins. Higher interest rates make borrowing more expensive for companies, which can reduce their ability to invest in new projects or technologies.

Spending on digital transformation and new technologies is sidelined amid economic uncertainty

Ultimately, the increased uncertainty trickles down to enterprise investment and into digital transformation and IoT. In their most recent earnings calls, for example, the CEOs of Microsoft and PTC report customers being more cautious with spending on technology. They report most customers stretching the spending rather than cutting it altogether. However, while overall IT spending fell in 2022 and is expected to grow slowly in 2023, spending on enterprise IoT is still expected to grow by 19% in 2023 (according to the January 2023 update of IoT Analytics’ Global IoT Enterprise Spending Dashboard). Large backlogs of automation vendors such as ABB and Rockwell Automation emphasize the healthy demand for digital transformation and enterprise IoT solutions in the long run.

“What happens is typically you’ve got a purchase order, and it needs some level of approval. Maybe last quarter, it needed a higher level of approval, another signature, [and] maybe somebody sat on that signature because they’re saying, ‘Couldn’t we do this next quarter? Couldn’t we start this project a little later?’ […] And generally, it’s not being canceled because companies do need this technology. They’re just delaying a little bit.” – Jim Heppelmann, CEO, PTC, 1 February 2023

“Just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend. Also, organizations are exercising caution given the macroeconomic uncertainty.” – Satya Nadella, CEO, Microsoft, 24 January 2023

“Many clients say that business is slowing and that they are looking to cut costs. Anyone who’s not nervous isn’t paying attention. Customers are saying [that] these are tough times.” – Matthew Prince, CEO, Cloudflare Inc., January 2023 at Davos

Tech layoffs could speed up digital transformation

Many technology companies announced layoffs in recent weeks and months. Microsoft, Amazon, Meta, Cisco, IBM, and SAP are only the most prominent examples. Layoffs.fyi, a tech layoff tracker, registered more than 300 layoff announcements of tech companies, with more than 95,000 employees affected as of early February 2023. However, so far, IoT-related job roles are seldom affected by the layoffs. On the contrary, companies like Schneider Electric and Boeing emphasize the upside as the tech shake-off allows them to hire highly talented and experienced employees. This eases the labor shortage and could speed up digital transformation initiatives.

“A slowdown in hiring in tech has made it easier for other companies to woo workers.” – Annette Clayton, CEO of North American operations, SchneiderElectric SE

“I think it’s going to take probably all of next year before things really do begin to stabilize because we begin to see layoffs in other industries. We definitely feel that in the software world, we’re not having any kind of trouble bringing in the engineering resources that we need, particularly as it relates to software development, because the rest of the industry that competes with us is beginning to soften considerably.” – Dave Calhoun, CEO, Boeing, 26 October 2022

There is also a flipside to tech layoffs in the US: Tech workers that are in the United States with a work visa often only have 60 days to find a new job or have to leave. Tens of thousands of highly skilled and experienced software engineers returning to their home country could potentially lead to faster digital transformation in those countries. So, while layoffs lead to short-term disruption, they might very well be the starting point for a healthy reshuffling in the tech market.

The light at the end of the tunnel: IoT companies are doing well

As discussed above, the global GDP outlook is lowered, and the overall macroeconomic outlook is uncertain. However, IoT enterprise spending is still estimated to grow by 19% in 2023. That is lower than IoT Analytics forecasted before. Despite this, most enterprise IoT-focused companies are staying tight and show a healthy outlook. Not only do they not lay off people on a massive scale, but they are also looking positively into the future. Industrial software company PTC and automation vendor Rockwell raised guidance for 2023 at the beginning of February 2023. During the earnings call on 2 February, Qualcomm CEO Cristiano Amon emphasized the huge potential of industrial IoT for his company: “In industrial IoT, digital transformation is still in the early phases, and the scale of the opportunity for Qualcomm in the long term across many verticals is significant.” The raised guidance and optimistic outlook are spotlights of an overall healthy IoT enterprise market.

Conclusion

IoT Analytics had to lower the IoT enterprise spending outlook for 2023 by five percentage points to 19% amid economic uncertainty and cautious spending on technology and digital transformation. However, going into 2023, it seems like most projects are delayed and not canceled. That is also emphasized by some healthy results of IoT-focused companies. Moreover, many IoT projects could get a boost by the influx of highly skilled (software) engineers that are victims of start-up and tech layoffs. The long-term growth potential of the IoT enterprise market is resilient and expected to reach $484 billion in 2027.

The post Global IoT market size to grow 19% in 2023 appeared first on IoT Business News.

IoT Analytics conducted a keyword analysis based on the earnings calls of ~4,200 US-listed companies and found three themes of interest in Q4/2022 that are likely to influence the strategic agenda going forward.

Key insights:

• In Q4/2022, three themes noticeably gained traction (i.e., interest rates, the labor market, and reshoring). Some of the smaller technology topics that are rising in importance include open source and no-code.
• References to chip shortages, supply chain disruptions, and energy prices decreased in the last quarter.

Key quote:

Philipp Wegner, Principal Analyst at IoT Analytics, comments:

“In Q4/2022, CEOs shifted their focus from inflation to interest rates, while supply chain disruptions and the chip shortage became less of a concern. At the same time, various smaller technology-related topics such as no-code and open source gained momentum, making it interesting to observe their growth in the upcoming quarters.”

Overview

Key upcoming themes

In their earnings calls in Q4/2022, 36% of CEOs focused on interest rates, as central banks around the globe tried to curb inflation (+24% growth in keyword mentions compared to Q3/2022). The labor market was another priority issue that CEOs discussed (3.2% discussed layoffs [+35% compared to Q3/2022] and 4.8% discussed salary [+10% from Q3/2022]). Moreover, reshoring discussions grew by 122% in Q4/2022, as many enterprises plan to shift production to their home countries or closer regions.

Three other topics that gained increased attention in Q4/2022 (vs. Q3/2022) included FTX, the World Cup, and the U.S. midterm elections.

For the first time since IoT Analytics started tracking Q4/2020 earnings calls, there have not been notable global breakout topics, such as the vaccination effort in Q1/2021, the Russian invasion of Ukraine in Q2/2022, and inflation in Q3/2021. Conversely, changes in Q4/2022 were more gradual.

Declining themes

As supply chains slowly improved and supply shortages eased, the discussions around chip shortages and supply chain disruptions decreased strongly in Q4/2022 (mentions of both keywords fell 24% compared to Q3). Energy prices (e.g., the keywords oil and gas) also declined in importance. Unfortunately, besides major weather events in the last quarter, the keywords sustainability and climate also lessened.

| About the analysis

The analysis highlighted in this article, presents the results of IoT Analytics’ research involving the Q4/2022 earnings calls of ~3,000 US-listed companies. The resulting visualization is an indication of the digital and digital-related topics that CEOs prioritized in Q4/2022. The chart visualizes keyword importance and growth.

Three themes of interest are highlighted in this article in greater depth: Interest rates, the labor market, and reshoring.

#1 Interest rates

In Q4/2022, 36% of CEOs discussed interest rates and their resulting effects on business, which constitutes an increase of 24% compared to Q3/2022.

Two years ago, in Q2/2020, only 6.5% of companies discussed the keyword inflation. However, in 2022, when inflation rates reached heights not seen in decades, the topic became a centerpiece of discussion. Policy reaction followed quickly. Many central banks kept increasing interest rates to fight inflation in the last months. The US Federal Reserve increased the federal funds’ target rate from 0.125% at the beginning of 2022 to 4.375% by the end of 2022. To fight inflation, other central banks followed suit (e.g., the European Central Bank [0%–2%) and the Bank of England [0.1%–3.5%]).

Higher interest rates have multiple effects, as they increase the cost of borrowing capital and company margins and put pressure on future cash flow, which leads to pressure on stock markets, Of course, housing loans grow more expensive. Therefore, many CEOs are discussing potential side effects. However, some companies benefit unexpectedly. For example, platforms like eBay and Expedia, where consumers can monetize unused assets to gain extra income, realize upside potential.

Key CEO quotes on interest rates

Ebay: “As consumers in our major markets face persistent inflation, higher interest rates and rising home energy costs, they are increasingly turning to eBay for better value. This is leading to growth in GMV of used and refurbished goods.” – Jamie Iannone, CEO, Ebay 3 November 2022

Expedia: “I wish we had a quick enough twitch muscle to tell you that interest rates are driving homeowners to us. […] So, I think we’re in a great place for homeowners who want to monetize their assets to come, assuming it’s in places that are interesting to us and where we can drive business. […] And presumably, people are maybe a little less flush with the cost of capital and may want to monetize that.” – Peter Kern, CEO, Expedia, 4 November 2022

Palo Alto Networks: “The impact is not uniform across all sectors, but those feeling the impact of interest rate increases are more likely to scrutinize their budgets than those prospering in the high interest rate environment. Technology, CPG and some parts of retail are feeling an impact, while utilities, oil and gas, defense and public sector verticals continue to be on course of their plans. […] I think 50% market is not feeling any pain with the interest rate increases.” – Nikesh Arora, CEO, Palo Alto Networks, 18 November 2022

“Now with the Fed increasing interest rates, I’ll tell you, one of the easiest decisions for our customers to make is to sweat their assets a little longer. Because it’s not like these firewalls suddenly blow up at the end of life. They can be extended.” – Nikesh Arora, CEO, Palo Alto Networks, 18 November 2022

Tesla: “North America is in a pretty good health, although the Fed is raising interest rates more than they should, but I think they’ll eventually realize that and bring back down again.” – Elon Musk, CEO, Tesla, 20 October 2022

#2 Labor market

In Q4 2022, 3.2% of all earnings calls discussed layoffs (an increase of +35% compared to Q3/2022), 4.8% discussed salaries (+10%), and 7% discussed attrition (+9%).

The labor markets of many economies are currently in an awkward position. The markets are looking strong, as many positions cannot be filled, salaries are still increasing, and unemployment is at all-time lows. However, companies report mass layoffs and voluntary attrition is still high. Many large and small tech companies have announced layoffs in recent months. To highlight a few Q4/2022 layoffs:

• Meta announced the layoff of 11,000 employees in November 2022
• Amazon announced the layoff of up to 20,000 employees in early December
• Cisco will let go 4,000 employees
• Salesforce announced to kick out 8,000 employees.

However, there are also some beneficiaries of the labor market changes. Boeing reports that it has become increasingly easy to find software developers and Fiverr expects the supply of freelancers to increase due to the layoffs.

Key CEO quotes on the changing labor market

Boeing: “I think it’s going to take probably all of next year before things really do begin to stabilize because we begin to see layoffs in other industries. We definitely feel that in the software world, we’re not having any kind of trouble bringing in the engineering resources that we need, particularly as it relates to software development because the rest of the industry that competes with us is beginning to soften considerably.” – Dave Calhoun, CEO, Boeing, 26 October 2022

Fiverr: “So usually, supply comes first. That is a result of both the layoffs, which I think is just going to drive our supply much more meaningfully in the next few quarters if the current layoffs continue to happen, because a lot of the people that were laid off unlike before are facing with other companies that are in freeze, which means that some people are going to find themselves without option. And I think that Fiverr is a very viable and a great option for them.” – Micha Kaufman, CEO, Fiverr, 9 November 2022

C3.ai: “There is no question that there is pervasive economic uncertainty in the global business community that continues to provide bookings headwinds. This has been especially significant in the tech markets that are experiencing a blood bath in equity prices, with significant layoffs at companies, including Amazon, Meta, Salesforce, Google, Snap and many others. I believe this is just the start of what will be a significant tech market correction. Layoffs of established companies will accelerate. The many Series A, B, C and D companies that are hemorrhaging cash will simply not survive.” – Tom Siebel, CEO, C3.ai, 8 December 2022

Gitlab: “Some of the things that we are seeing is, as I mentioned, some of the watch points is we’re seeing a slight uptick in contraction. And so maybe some of those companies who did a layoff where we were more fully penetrated, they’ve cut back in a couple of licenses.” – Brian Robbins, CFO, Gitlab 6 December 2022

Wipro: “Why has the margin been impacted? Because of the evolution of the cost of employees. Why the cost of the employees have gone up? Because in a high demand market, attrition has gone up. And attrition, we need to be backfilled, and backfill was with more expensive resources. I think it’s what anybody in our industry has experienced, but also our clients have experienced in the last 12 months.” – Thierry Delaporte, CEO, Wipro, 12 October 2022

#3 Reshoring

Compared to Q3/2022, 1.2% of earnings calls discussed reshoring: an increase of 122%. Reshoring is the process of returning manufacturing processes or other business operations to a company’s home country. Reshoring is not necessarily new. In 2021, a survey showed that 83% of North American manufacturers were likely to reshore. The trend gained additional importance due to strained supply chains, trade wars, and international tensions. However, the reshoring trend is not limited to North America but present in many countries with a major manufacturing footprint. For example, in Europe, France is expected to announce a package to boost reshoring. Furthermore, in 2022, reshoring investments of South Korea-based companies increased by 43%, while their offshore investments decreased in the same period.

Key CEO quotes on reshoring

Rockwell Automation: “I like talking about shoring rather than reshoring because it’s really more about the U.S. being an outsized beneficiary of new CapEx as opposed to shuttering plants in China and other parts of Asia and bringing it back to the U.S. It’s really about new lines of business, new capacity, filling out a little more of a local-for-local strategy, got a lot of manufacturers are providing, and I don’t see anything with the current economic headwinds that would cause people to say just kidding.” – Blake Moret, CEO, Rockwell Automation 2 November 2022

Applied Industrial: “The underlying fundamental backdrop is further supported by increasing evidence of reshoring and localizing production back to North America. This is evident when considering U.S. manufacturing capacity utilization was at a 22-year high in September. At the same time, U.S. manufacturing infrastructure is aged and our customers’ technical service and support requirements are increasing.” – Neil Schrimsher, CEO, Applied Industrial, 30 October 2022

Trending keywords per sector in Q4/2022

While some topics like interest rates or the labor market are discussed across sectors, others are specific to certain industries. The following examines some notable increases.

Tech sector

In Q4/2022, 5.3% of all tech companies mentioned marketplaces (an increase of 22% compared to Q3/2022). For many software vendors, cloud marketplaces, such as Azure, AWS, and GCP, gained importance in the last year. Steffan Tomlinson (CEO of Confluent) emphasized the positive impact marketplaces had on business.

Industrial sector

In Q4/2022, 14.5% of all industrial companies mentioned India in their earnings calls, which constitutes an increase of 17% compared to Q3/2022. Industrial companies like ABB are increasingly citing the country’s growth and potential for manufacturers. Which makes sense, as in 2023 India is expected to be the second fastest-growing economy in the G20.

Consumer cyclical sector

Of consumer cyclical companies, 3.1% discussed the use of data science and AI to better understand their customers and decrease costs (an increase of 80% compared to Q3/2022). The Americana Group (a leading quick service restaurant operator and food company in the Middle East region), for example, lowered spending on administrative work by 80% since improving visibility and enabling data- driven decision making in various business functions.

Energy sector

Of energy providers, 33% mentioned the weather in Q4/2022 earnings calls (+41%). Climate change is expected to lead to more extreme weather events and make it harder for energy companies and utility providers to forecast demand and supply. For example, the mild winter in Europe reduced heating demand and led to lower gas prices despite less supply due to the war in Ukraine.

The post What CEOs talked about in Q4/2022 appeared first on IoT Business News.

IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, published a report titled “IoT Sensors Market Report 2022-2027”.

The report details the market for sensors, with a specific focus on IoT sensors, incl. Sensor vs. IoT sensor definitions and market shares, industry deep dives, competitive landscape, and company profiles. The following article highlights the current IoT sensor market and 5 trending technologies.

Key insights:

• IoT sensors represented one-third of all sensors shipped in 2022, according to new research on the topic. The average IoT device now comes with four sensors.
• 5 sensor technologies are set to change the IoT sensor landscape in the coming years, i.e., 1. smarter sensors; 2. more power-efficient sensors; 3. soft and virtual sensors; 4. sensor fusion; 5. biosensors.

Key quotes:

Knud Lasse Lueth, CEO at IoT Analytics, says: “2022 was a challenging year for many reasons. IoT markets held up surprisingly well, although IoT company valuations decreased sharply, the number of startup deals declined, and tech companies started to layoff staff. With the IoT stack maturing quickly, both in the cloud and at the edge, we are positioned for a prolonged IoT boom once the economic sentiment improves – most likely after 2023.”

Satyajit Sinha, Principal Analyst at IoT Analytics, adds:

“The rise of the Internet of Things in recent years has gone hand-in-hand with the rise of sensors. On average, four new sensors are connected with every new IoT device that comes online. With approximately 14 billion current IoT connections, this means more than 50 billion connected sensors have been deployed.”

5 IoT Sensor technologies to watch

50 billion IoT sensors and counting

The rise of the Internet of Things in recent years has gone hand-in-hand with the rise of sensors. On average, four new sensors are connected with every new IoT device that comes online. With approximately 14 billion current IoT connections, this means more than 50 billion connected sensors have been deployed. IoT sensor technology plays a crucial role in the IoT tech stack because these sensors collect data from the physical world and convert it into digital signals.

One-third of all sensors shipped in 2022 were IoT sensors, meaning they were part of an IoT-connected device. According to the 136-page IoT Sensor Market Report 2022–2027, the market for IoT sensors reached $10.9B in 2022 and is predicted to grow at a compound annual growth rate of 16% in the next five years.

The market for MEMS-based IoT sensors is particularly strong and accounted for 50% of global sensor revenue in 2022. The leading companies in this market segment are Bosch Sensortec and ST Microelectronics.

The market for image sensors is also particularly important for the IoT because three of the most important IoT use cases drive its adoption, i.e., machine vision, connected surveillance cameras, and advanced driver-assistance systems for cars. Leading sensor vendors in this segment include Sony and AMS AG.

5 trending sensor technologies

There are several exciting technological innovations in the IoT sensor market. In this article, we highlight five IoT sensor technology trends that are set to change the IoT sensor landscape in the coming years.

1. Sensors are becoming smarter and can act as edge devices

Sensors are becoming increasingly advanced. Key IoT sensor technology innovations include a much higher computing capacity and the ability to detect signals from multiple discrete sensing elements. The industry refers to these more advanced devices as “smart sensors.” Instead of simply passing on the sensor signals to the next level in the value chain, smart sensors can process signals directly (e.g., validating and interpreting the data, displaying the results, or running specific analytics applications); in this way, sensors become edge devices.

The most advanced smart sensors are now also incorporating AI into their design. These sensors are designed for AI inference, which has numerous advantages, e.g., decisions can be made immediately, and sensitive data can be processed without sending it elsewhere and creating the risk of data theft.

Example: In January 2022, Amazon unveiled its Ring home security glass-break sensors, which utilizes AI technology and a Syntiant NDR101BQQF neural processor for detecting glass breaking directly on the sensor. The sensor accurately detects glass-break events, such as windows being smashed or cracked, up to 25 feet away and sounds an alarm on the spot.

2. Sensors become more power-efficient (e.g., for energy harvesting)

Ever more sensors use renewable energy sources to power themselves, such as solar or kinetic energy, thereby eliminating the need for battery replacement or another power source. This innovation improves the reliability and longevity of IoT devices, particularly those deployed in remote or inaccessible locations. These devices are self-sustainable and contribute to a reduction in the environmental impact of the entire system setup.

The use of energy harvesting is leading to changes in sensor design, making the sensors more power-efficient via the following changes:

• Reducing the form factor. Using small ultra-low-powered microcontrollers (such as the STMico STM8L) sensors do not consume too much energy.
• Improving the signal-to-noise ratio. To save energy, sensors can include a signal processing component that filters out noise or interferences so that they use their power in a targeted way that detects and measures the actual signal.

Example: Eco is a temperature and humidity sensor designed for use in indoor environments. It is powered by an indoor solar cell, which allows it to operate inside buildings without batteries or external power sources. The device can last up to 30 days in the dark due to its energy-efficient design and the use of a solar cell. The device is connected via LoRaWAN technology, which allows it to transmit data wirelessly over long distances using minimal power. This makes it ideal for use in various indoor environments, such as offices, warehouses, or factories.

3. Soft & virtual sensors increasingly complement physical sensors

In some cases, it is impractical or costly to install a physical sensor (e.g., in complex or hazardous environments). Upcoming alternative solutions include soft and virtual sensors.

A soft sensor is a computational algorithm that estimates the value of a difficult-to-measure quantity, based on other existing physical sensors and algorithms/computational models that infer the value of the measured quantity.

A virtual sensor is similar to a soft sensor, the difference being that its values are not based on existing physical sensors but purely on algorithms/computational models.

Example of a soft sensor: Rockwell Automation’s Predictive Quality software application creates predictive models that use real-time data from instruments and laboratory analyses to estimate process and product conditions. These models are based on historical plant data and act as inferential sensors to predict quality parameters (as an alternative to additional physical sensors) (Link).

Example of a virtual sensor: In 2021, Siemens developed a pocket-sized edge computer that can be attached to an asset (e.g., a motor) and help to calculate virtual sensor values. For example, the temperature can be calculated in real-time by feeding the latest operational motor data into the digital model. This operation needs neither an on-site thermometer nor any other actual sensor reading, as it relies on machine status parameters and a virtual model of the motor.

4. Innovations around sensor fusion (particularly for autonomous driving)

Sensors are an essential component of autonomous vehicles, as they provide it with information about its surroundings. The vehicle’s onboard computer uses this information to navigate and make decisions. Three key sensors for autonomous driving include LiDAR, radar, and 3D cameras (image sensors). Major car OEMs, such as Mercedes, BMW, Volvo, and General Motors, have opted for LiDAR as a sensor for autonomous driving. Previously (prior to 2021), Tesla mostly relied on radar technology. Recently, however, the company began the transition to Tesla Vision (a camera-based system) by removing radar from the Model 3 and Model Y in 2021, followed by Model S and Model X in 2022.

Companies, including Sony, Mobileye, and Waymo, are currently focusing on IoT sensor technology innovation by combining cameras with other sensing technologies like LiDAR and radar to improve the image analysis of their autonomous driving solutions. As cameras, radars, and LiDARs sense different features of the environment, the idea behind this combination (also referred to as “sensor fusion” or “redundancy”) is to provide systems with a richer single-world model to decide a course of action or calculate an output. Overall, the sensors in an autonomous vehicle work together to provide a complete picture of the vehicle’s surroundings, enabling it to make safe and efficient driving decisions.

Example: Sony is relying on the benefits of using cameras with either LiDAR or radar for object recognition tasks in autonomous driving applications. For example, the company is currently working on a solution that combines camera and radar. This combination may be beneficial for recognizing people and vehicles at night. The camera and LiDAR combination is beneficial for parking assistance functions, which require highly accurate distance measurements (Link).

“Autonomous vehicles will only succeed when all of the technological pieces are built as a single integrated system, enabling synergies among all of its parts. It is a formidable task to build the full stack from silicon up to the full self-driving system–this is what Mobileye has set out to do.” – Prof. Amnon Shashua, CEO and Founder of Mobileye

5. Biosensors are becoming more mature (mostly for healthcare applications)

Biosensor and disposable sensor technology have matured in recent years and have been adopted in the healthcare industry. Recent breakthroughs in biosensor research suggest that this technology is also nearly market-ready in other sectors. The term “biosensor” is short for “biological sensor.” The bio element interacts with the tested analyte, and the transducer converts the biological response into an electrical signal. Depending on their application, biosensors are also known as immunosensors, optrodes, resonant mirrors, chemical canaries, biochips, glucometers, or biocomputers.

Example of a biosensor: Abbott FreeSTyle Libre is one of the most commercialized biosensor solutions for glucose monitoring. The FreeStyle Libre system currently has more than 3 million users globally. In Q2 of 2022, Abbot reported more than 25% organic growth in sales of FreeStyle Libre systems.

The post IoT Analytics: 5 IoT sensor technologies to watch appeared first on IoT Business News.

IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, published an article highlighting the 10 most relevant developments of 2022.

The IoT Analytics team has evaluated past year’s main IoT developments in the global “Internet of Things” arena.

Key quotes:

Knud Lasse Lueth, CEO at IoT Analytics, says:

“2022 was a challenging year for many reasons. IoT markets held up surprisingly well, although IoT company valuations decreased sharply, the number of startup deals declined, and tech companies started to layoff staff. With the IoT stack maturing quickly, both in the cloud and at the edge, we are positioned for a prolonged IoT boom once the economic sentiment improves – most likely after 2023.”

Anand Taparia, Principal Analyst at IoT Analytics, adds: “The consolidation in the cloud platform space in 2022 was noteworthy, with a giant like Google bowing out and other equally notable announcements. This trend will likely accelerate in 2023. Do we risk being left with only two options in the medium to long term, i.e. Azure and AWS. Likely. It was also very satisfying to see the past investments in security yield benefits, as demonstrated by the reduced number of security incidents in 2022.”

IoT 2022 in review: The 10 Most Relevant IoT Developments of the Year

As we start 2023, the IoT Analytics team has again evaluated the past year’s main IoT developments in the global “Internet of Things” arena. This article highlights some general observations and our top 10 IoT stories from 2022, a year characterized by a skyrocketing inflation rate, ongoing supply disruptions, and a looming recession.

General IoT 2022 market

2022 was a year of uncertainties and a number of (mostly negative) macroeconomic surprises. The 4.4% global growth forecast for the year (from January 2022) was almost certainly not reached, and the outlook for 2023 has been lowered to a meager 2.7% (as of Oct 2022). The Nasdaq Composite, one of the key indices for technology companies, fell 33.1% in 2022.

Against this backdrop, IoT 2022 markets held up somewhat steadily, with the number of connected IoT devices growing to approximately 14.4 billion (exact update coming in a few weeks) with roughly $202 billion in IoT enterprise spending (IoT Analytics will publish the 2022 IoT spending actuals shortly).

The public relevance of the term “IoT”, which had been on the decline since October 2018, climbed back up by more than 30% to reach its all-time high levels in Q1 2022. (See Google trend graph in the lead image of this article).

For us at IoT Analytics, the increased public search interest for IoT reaffirms some of the developments we have witnessed over the past 2–3 years:

• A maturing IoT stack both in the cloud and now more and more at the edge
• A number of Fortune 500 companies making large investments in IoT projects
• The vast majority of end-users reporting faster project roll-out and faster investment payback times for their IoT projects (We will publish more data on that in April 2023).

Top 10 IoT 2022 stories

Throughout 2022, we monitored significant developments regarding IoT technology. In our opinion, these are the top 10 stories of IoT 2022 (in chronological order):

1. Most accelerated IoT vertical: Supply chain

In the aftermath of the global pandemic and war in Ukraine, reports of congested ports, suppliers halting production, or critical cargo going missing became normal news in 2022. Supply chain disruptions dominated CEO discussions well into the second half of 2022 (for example, see our quarterly trend report: What CEOs talked about in Q3/2022).

The lack of supply chain visibility resulted in a sharp increase in interest in a number of supply chain technologies, such as visibility software, intralogistics robots, or IoT track-and-trace devices (see here for a list of five other trending supply chain technologies).

Although supply disruptions eased significantly throughout 2022 (The Global Supply Chain Pressure Index peaked in Dec 2021—see below), several large companies made major digital supply chain initiatives public.

In April 2022, the German company Hapag-Lloyd, a market leader in ocean shipping, announced one of the biggest IoT adoption initiatives in the logistics/supply chain vertical. The company plans to equip its entire global fleet of dry containers (approximately 1.6 million containers) with track-and-trace devices (supplied by Swiss vendor Nexxiot and U.S.-based vendor Orbcomm). The company hopes to provide its customers with much-improved information about the whereabouts and the status of their goods and a more accurate estimated arrival time.

In June 2022, the world’s largest retailer, Walmart, announced a number of new state-of-the-art and highly automated fulfillment centers (supplied by intralogistics robot vendors Knapp, Symbotics, and Witron). The new fulfillment centers, which are all located in North America, are designed to set the pace of automation for Walmart’s 4,700 stores and 210 distribution centers globally.

In April 2022, the world’s largest e-commerce company, Amazon, announced the creation of a $1 billion venture investment program to fund companies that help automate and digitize Amazon’s fulfillment operations.

2. IoT Security Breach of the year: none

We highlighted major IoT security breaches in many of our “IoT year in review” analyses of previous years. In IoT 2022 we did not witness a major IoT security incident so big that it can be singled out. We interpret this as a positive sign and a direct result of the investment that has gone into security research and solutions in the last years.

We would still want to highlight that this does not mean that vulnerabilities in IoT systems do not exist. In contrast, several critical vulnerabilities were discovered in 2022, and their corresponding advisories were issued.

The Nozomi August 2022 OT/IoT Security Report found that 303 Common Vulnerabilities and Exposures were released in the first half of 2022. Of these, 109 affected critical manufacturing systems directly. Interestingly, the SQL Injection technique tops the chart with the highest number of associated vulnerabilities for the Industrial Control System (ICS) in 2022. Other common critical weaknesses included misused authentications, improper access controls, and integer overflow vulnerabilities. Microsoft’s Cyber Signals December 2022 report identified unpatched, high-severity vulnerabilities in 75% of the most common industrial controllers. The same report also mentioned a “78% increase in disclosures of high-severity vulnerabilities from 2020 to 2022 in industrial control equipment produced by popular vendors.”

The INCONTROLLER vulnerability, discovered in April 2022, stood out to us at IoT Analytics due to its great potential harm. Below is a list of five vulnerabilities that caught our attention in 2022:

1. INCONTROLLER vulnerability. In April 2022, Mandiant and Schneider Electric jointly revealed an ICS attack tool/framework named INCONTROLLER (also called PIPEDREAM), which has the ability to gain complete access to SCADA systems and various Schneider Electric and Omron PLCs. INCONTROLLER was rated rare and dangerous, comparable to the likes of TRITON (2017), INDUSTROYER (2016), and STUXNET (2010). Luckily, INCONTROLLER was discovered before any incidents.
2. Industroyer2. In April 2022, we also saw the emergence of Industroyer2. It is a variant of the Industroyer malware that was used to attack Ukraine’s power grid in 2016 and cut power to 20% of Kyiv for approximately an hour. The malware targets IEDs in electric substations that communicate over IEC-104 (IEC 60870-5-104) protocol.
3. Mitsubishi PLC vulnerabilities. In August 2022, Nozomi researchers identified three security holes (CVE-2022-29831, CVE-2022-29832, and CVE-2022-29833) that could allow an attacker to obtain information from Mitsubishi GX Works3 (configuration and programming software for certain Mitsubishi PLCs)project files to compromise connected safety CPU modules.
4. Lanner controller vulnerabilities. Approximately a dozen new Baseboard Management Controller firmware flaws in Lanner controllers were discovered in November 2022, potentially exposing OT/IoT networks to remote attacks.
5. PTC Axeda remote access vulnerabilities. In March 2022, Researchers from CyberMDX, a healthcare security firm, found seven easily exploited vulnerabilities (called Access:7) in the PTC Axeda remote access tool. Such vulnerabilities could potentially allow the extraction of data from medical equipment, the tampering of lab results, or the making of critical devices unavailable. The researchers estimated that the Access:7 vulnerabilities could compromise thousands of devices out in the field.

3. Biggest 2022 funding round: Envision Digital

2022 was a tough year for start-up funding. An analysis by Pitchbook shows that the number of funding rounds and the average deal size declined across almost all start-up sectors. Edtech start-ups suffered the most, with total deal value dropping by 60% compared to 2021. The biggest IoT 2022 funding round was a $210 million Series A funding round of Envision Digital in June 2022. The company operates in the “climate technologies” sector, which stood out from the other sectors with a 41% median valuation increase in 2022.

Envision Digital sells an AIoT platform called EnOS, which helps organizations manage the production of renewable energy and orchestrate efficient consumption to achieve net zero carbon emissions. The company markets pre-built decarbonization and digitalization applications for energy, manufacturing, transportation, and utility industries. The Shanghai-based company, founded in 2017, claims to manage more than 220 million smart devices and 568 gigawatts of energy assets globally.

Other notable funding rounds for IoT and sustainability-related companies in 2022 included Morse Micro. This fabless semiconductor company is reinventing Wi-Fi for IoT by building chips and modules based on the new Wi-Fi HaLow standard, which consumes less energy. The company raised approximately $94 million in funding via two funding rounds. Span.IO, a renewable energy start-up, received $90 million in funding. It offers a smart electrical panel that allows homeowners to use an app to monitor and optimize power consumption, thus giving them more control over how their cars and homes are powered. Canada-based Validere, which offers an all-in-one commodity management platform for the energy industry, raised $43 million. The platform enables companies to improve their operations and make better emissions decisions.

The second-highest IoT funding round in 2022 was a Series D of U.S.-based Verkada. We covered the company in our 2021 year in review due to a major security breach in which hackers had compromised the security feeds of thousands of IoT security cameras.

Germany-based Kinexon is another notable start-up, occupying fourth place. The company, which offers real-time location data and an analytics platform in both the manufacturing and sports verticals, not only made headlines in 2022 for its $130M Series A but also for the use of its Connected Ball Technology in the recently concluded 2022 FIFA World Cup. This very technology denied Cristiano Ronaldo a goal by confirming that he had not made contact with the ball in the Portugal vs. Uruguay game.

4. Most talked about merger/acquisition: Semtech and Sierra Wireless

In August 2022, semiconductor company Semtech announced its intention to acquire IoT module and wireless communications equipment manufacturer Sierra Wireless in an all-cash deal valued at $1.2 billion. The deal is set to integrate Semtech’s LoRa wireless modulation technology into Sierra Wireless’ cellular modules, which use technologies such as NB-IoT and LTE-M and combine the two companies’ cloud services platforms. The deal is expected to close soon, pending approval by regulatory bodies. In October, each company received a request for additional information and documentary material (commonly known as a “second request”) from the U.S. Department of Justice.

In another significant IoT 2022 deal, Siemens Infrastructure acquired Brightly Software for $1.6 billion in June. U.S.-based Brightly Software provides asset and maintenance management SaaS solutions to schools, governments, hospitals, and manufacturers globally. The deal is expected to boost Siemens’ smart cities and sustainable business significantly while increasing its visibility in the US. Siemens president Roland Busch called the deal “another important step in the company’s stated strategy to become a focused technology company.” The acquisition solidifies Siemens as a leader in the software market for buildings and built infrastructure.

Another interesting IoT acquisition is Pelion by Izuma Networks, an edge computing services provider founded in April 2022. In October 2022, the company announced that it had received a strategic investment from Softbank to acquire Softbank’s Pelion edge software business once again. In 2020, ARM spun off Pelion as an independent SoftBank business unit, and it was originally the device management business of ARM. Izuma is planning to use the investment from Softbank to hire new talent, improve IoT services, and integrate edge and IoT services under one umbrella. Izuma Edge is an open-source software stack that securely deploys and manages applications at the edge using Docker and Kubernetes orchestration technologies.

In another high-stakes acquisition, SigFox was acquired by UnaBiz in April 2022 from a group of nine bidders. Until recently, Sigfox was a celebrated player in the IoT connectivity space with its proprietary narrowband (LPWA) technology positioned as an alternative to 2G/3G. However, it went into insolvency in January 2022. While UnaBiz will save Sigfox from insolvency, the question regarding the acceptance of the technology in the market remains.

Schneider Electric, which already owned nearly 60% of Aveva, took over Aveva for an increased valuation of $11.6 billion. The deal of the Cambridge-listed Aveva was cleared by the U.K. government on December 7, 2022. This is the third time lucky for Schneider Electric after two initial unsuccessful attempts to acquire Aveva. The deal enables Schneider Electric to provide powerful digital transformation solutions on top of its EcoStruxure platform. In 2021 Aveva acquired OSIsoft, the maker of the popular PI System, the leading data management platform for industrial operations.

5. Biggest impact on the IoT job market: Tech layoffs

Layoffs and hiring freezes marked headlines throughout the second half of 2022. Fears of an economic slowdown saw a host of leading tech companies, such as Meta, Twitter, Salesforce, Microsoft, HP, Tesla, Cisco, and others, shed some portion of their workforce. In July/August 2022, Google executives conveyed a stark message to their sales teams: “There will be blood on the streets!” Although Google has since not announced any layoffs, others have. The first reports of looming layoffs at Intel started circulating in October, and Meta announced the layoff of 11,000 employees in November 2022. The same month, Cisco announced its plan to cut 5% of its workforce, approximately 4,100 employees, as part of a company-wide $600 million restructuring plan.

What is noticeable is that many vendors offering IoT solutions seem only somewhat affected. In July 2022, Microsoft removed open job listings for its Azure Cloud and security groups. In late October 2022, Amazon froze hiring in AWS. Based on publicly available information, none of the major industrial automation giants, including Siemens, Schneider Electric, Emerson, Rockwell, and others, announced any layoffs.

The layoffs, though always painful, could be a blessing in disguise for the talent-hungry IoT companies that seemingly keep hiring and have been dipping into the same talent pool with the likes of Meta, Twitter, and others (and often on the poor side of the bargain).

6. Most surprising IoT divestiture: Google

In August 2022, Google made the surprising announcement that it would discontinue its IoT core service on August 16, 2023 (one year from the announcement date), when access to its IoT Core Device Manager APIs will no longer be available. The news rocked the IoT world, as some large corporations decided to base their IoT initiatives on Google Cloud. Those corporations suddenly found themselves having to re-architect their solutions, a process that can take weeks or even months.

We at IoT Analytics predicted an unfolding market consolidation in November 2021. Although we did point out that Google was falling way behind AWS and Microsoft Azure for IoT services in an analysis in February 2022, we did not see this move coming.

In November 2022, three months after Google, in a nearly equally important announcement, IBM announced that it would also be retiring its Watson IoT Platform, effective December 1st, 2023. This means new IoT devices will not be able to connect to the MQTT and HTTP endpoints of Watson, and existing connections will be shut down. The announcement followed news from earlier in the year that IBM had sold off Watson Health and was deprecating its IBM Cloud Foundry (an open-source PaaS on IBM Cloud that enables customers to deploy and scale applications).

In July 2022, another IT giant, SAP, started to retire its IoT services (and all its predecessor services). A host of other SAP IoT services, such as SAP IoT Edge, have also been put on the deprecation list.

In December 2022, Ericsson announced that it was selling its IoT Accelerator and Connected Vehicle Cloud businesses to Aeris Communications. The IoT Accelerator from Ericsson is a platform that enables enterprises to deploy, manage, scale, and control IoT devices throughout their lifecycle.

In our view, all of the above IoT divestitures are from companies whose IoT divisions failed to meet the targets set by management. In the case of Google, IBM, and SAP, the companies failed to gain significant traction and started to fall behind their competitors (e.g., AWS and Microsoft). The case of Google is especially curious, as IoT continues to be a growing market that is still far from being very mature. With Google having a strategic focus on “industry value propositions,” it is unclear why the company relies on third parties to connect IoT devices.

7. Most important government initiative: E.U. Cyber Resilience Act

In September 2022, the European Commission published the Cyber Resilience Act (CRA), aiming to set cybersecurity standards for secure hardware and software products placed on the market across the E.U. The act aims to plug the holes in the existing E.U. legislation related to cybersecurity that does not directly cover mandatory requirements for the security of products with digital elements.

The CRA defines “products with digital elements” as any software or hardware product and its remote data processing solutions, including software or hardware components that are sold in the market separately.

The act establishes guidelines for developing products such that fewer vulnerabilities exist in released products and throughout their life cycles. It also aims to create conditions whereby users can take cybersecurity into account when selecting and using products with digital elements. Product manufacturers will need to perform risk assessments and produce technical documentation to demonstrate that their products meet the essential requirements.The CRA also distinguishes based on product criticality to account for the different levels of cybersecurity risk associated with the product types.

Four specific objectives were set out as part of the CRA:

1. Ensure that manufacturers improve the security of products with digital elements from the design and development phase and throughout the whole life cycle.
2. Ensure a coherent cybersecurity framework, facilitating compliance for hardware and software producers.
3. Enhance the transparency of security properties of products with digital elements.
4. Enable businesses and consumers to use products with digital elements securely.

8. Upcoming IoT connectivity standard: Matter

After its initiation in December 2019 as Project Connected Home over IP (CHIP) and then several missed deadlines, the much-anticipated home automation standard Matter was officially released on October 4, 2022, by the Connectivity Standards Alliance (CSA, formerly the Zigbee Alliance). Matter is a royalty-free connectivity standard that enables communications among a wide range of smart home devices.

Matter uses IP technologies such as Ethernet, Wi-Fi, Thread (low-power mesh networking protocol), and Bluetooth Low Energy (BLE) for configuration. It seems that Matter has an affinity towards Thread as the IP protocol of choice to form the backbone of a connected home in the long term.

The first version of Matter supports devices, including door locks, HVAC controls, lighting and electrical, media devices, safety and security sensors, and window coverings and shades. In subsequent versions, additional device types such as cameras, home appliances, robot vacuums, EV charging, and energy managers will likely be supported. Matter devices can also connect with devices supporting other protocols, like Zigbee, using bridges. To simplify device setup during commissioning, Matter uses QR codes and BLE. A Matter device can also be updated over the air (OTA).

CSA has taken care of various security best practices when developing Matter. For example, each Matter device includes a unique identity to ensure that only authentic and certified devices can join the network. Data is encrypted, and fine-grained access control policies have been implemented. Matter also supports Distributed Compliance Ledger (DCL), a cryptographically secure, distributed storage network based on blockchain. It allows IoT device manufacturers and vendors, official test houses, and Certification Centers to publish public information about a device or class of devices, hence providing a reliable source of information about the device.

Will Matter matter? We do not know that yet. However, it is likely that Matter will matter as the list of CSA member companies that support the standard includes almost all the major smart home device vendors, including Apple, Google, Amazon, IKEA, Huawei, Samsung, Schneider Electric, Bosch, Verizon, and hundreds more. Many have announced the release of Matter-supported devices in 2023 (see list of announcements).

9. Biggest IPO: Mobileye

2022 was generally a bad year for tech IPOs. According to an Ernst&Young report, global IPO proceeds were down 61% compared to 2021.

From an IoT point of view, the Israeli company Mobileye stood out with its IPO (for the second time) on October 26, 2022, at a valuation of $17 billion. The valuation was considerably below the once-expected valuation of $50 billion by its parent Intel, a sign of readjusted valuations of tech companies because of the higher interest rates rise and a jittery economy.

Founded in 1992, Mobileye is a market leader in Advanced Driver Assistance Systems in the autonomous vehicle space. Intel first acquired the company for $15.3 billion in 2017. After the 2022 spinoff, Intel will continue to retain a majority stake in the company. Mobileye’s chip-based camera systems are known for powering semi-automated driving features with its tools installed in over 100 million cars. Intel intends to use some of the funds from the IPO to build more chip factories.

One of the earliest tech IPOs of 2022, and which surprisingly remains one of the only seven IPOs of companies from the bay area in 2022, is that of Credo Technology. Credo Technology is a fabless company founded by ex-Marvell executives in 2008. Its IPO is particularly interesting given that semiconductor company IPOs are rare. The valuation of Credo on IPO day was $1.4 billion. Credo makes chips and components for hyperscalers and 5G wireless network operators to transport huge volumes of data at high speed while consuming less power. Credo’s IP that differentiates it from its competitors is its patented Serialize/Deserialize (“SerDes”) chiplet, which allows cheaper manufacturing, smaller chip size, and better power efficiency.

Another company that almost went public in 2022 but did not is Databricks. The Databricks IPO, which is expected in 2023, likely got postponed due to poor market conditions. Databricks, currently valued at $38 billion (as of August 31, 2022), was founded by the creators of Apache Spark, Delta Lake, and MLflow. It focuses on AI-based data analytics, engineering, data warehousing, and business analytics. Co-founders Ion Stoica and Matei Zaharia stand to become among the richest people in their home country of Romania when the IPO goes through next year (Ali Ghodsi and Reynold Xin are the other co-founders).

Yet another IPO that was rumored for 2022 was that of ARM, the chip designer powering almost all the smartphones and tablets in the world. The IPO route for ARM had opened after its acquisition by NVIDIA failed in February 2022 due to stiff resistance from regulators in the U.S., Europe, and China. ARM, which was set to be acquired by NVIDIA for $40 billion, has now been put on the IPO wait list for 2023 by its parent SoftBank.

It is also worth looking at the stock performance of IoT companies that went public in the past few years. Many of them underperformed in the broader tech market in 2022. Here are some of them:

• Sonos (IPO 2018): −43.7% in 2022
• Samsara (IPO 2021): −53.2% in 2022
• C3.ai (IPO 2020): −65.7% in 2022
• Tuya (IPO 2021): −68.7% in 2022

10 . Most notable new IoT projects: 11 lighthouse smart factories

Ever since the World Economic Forum (in collaboration with McKinsey&Co) announced the first set of 16 global lighthouse manufacturing sites in 2019, the world has taken a closer look at the factories that made the list. In October 2022, the WEF announced the inclusion of 11 new lighthouses to take the existing count to 114 lighthouses globally, spanning various industries, including healthcare, electronics, pharmaceuticals, and automotive. Interestingly, 11 of the new lighthouses are based in Asia, acknowledging that Asian sites are quickly catching up with European and North American sites, which are generally regarded as being more digitally mature. For example, Agilent Technologies in Singapore deployed IIoT-powered digital twins, AI, and Robotic Automation solutions to increase output by 80%, improve productivity by 60%, improve cycle time by 30%, and quality cost by 20%, according to the report.

The 11 new lighthouses are:

1. Agilent Technologies, Singapore
2. CATL, Yibin/China
3. Cipla, Indore/India
4. Danone, Opole/Poland
5. Dr. Reddy’s Laboratories, Hyderabad/India
6. Flex, Sorocaba/Brazil
7. Haier, Qingdao/ China
8. Midea, Shunde/China
9. Mondelēz, Sri City/India
10. Sany Heavy Industry, Changsha/China
11. Western Digital, Shanghai/China

Four sites were also designated as Sustainability Lighthouses in 2022. A Sustainability Lighthouse is a site that is committed to environmental stewardship by reducing consumption, resource waste, and emissions

The four Sustainability Lighthouses are:

1. Arçelik, Ulmi/Romania
2. Micron, Singapore
3. Unilever, Dapada/India
4. Western Digital, Shanghai/China

For example, Arçelik, powered by 100% green electricity, deployed sustainability use cases, such as digital twins for energy management and closed-loop water management systems integrated into advanced water treatment plants. It reduced water consumption by 25%, energy consumption by 17%, and GHG emission by 22% per unit manufactured.

Advanced factories are of particular interest from an IoT point of view. According to our own data, manufacturing is the largest IoT vertical, and factories are the biggest segment within that vertical for IoT. Factories have huge bases with millions of sensors, field instruments, controllers, and other hardware/software systems,

For those interested in more data on IoT and manufacturing, IoT Analytics, together with Microsoft and Intel, published the 59-page IoT Signals – Manufacturing Spotlight in August 2022, in which we surveyed 500 decision-makers in discrete, hybrid, and process industries to understand the status quo and future outlook for IoT in manufacturing. A sneak peek of the data for the most important smart manufacturing KPIs can also be found here in our own blog.

The post IoT Analytics: The IoT year 2022 in review appeared first on IoT Business News.

IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, today published a 252-page market report detailing the market for digital supply chains.

This research includes market projections for nine key market segments, estimated market share of key vendors per segment and sub-segment, an analysis of macro factors influencing the market, a number of digital supply chain implementation examples, and some of the most important trends & challenges.

Key insights:

• The Digital Supply Chain market is starting to accelerate according to new research by IoT Analytics.
• Eight supply chain technology innovations are helping to make global supply chains more robust, including AS/RS technology, intralogistics robots, IoT track and trace, AIenabled software, and supply chain digital twins.

Key quotes:

Knud Lasse Lueth, CEO at IoT Analytics, says:

“With supply disruptions now going into its third year, companies realize that they need a better handle on where their goods are, what their suppliers are doing, and how to expedite delivery to customers. Cloud, AI, IoT and robotics innovations are making inroads into this segment that a few years ago was frowned upon because it was seen as not very strategic to most companies.”

Matthieu Kulezak, Senior Analyst at IoT Analytics, adds: “There is now more attention on digital supply chain technologies than there was before the pandemic. We see a number of large Fortune 500 companies like Nike or The Kraft Heinz Company making major investments into wide-scale supply chain digitization to make their supply chains more resilient.”

8 key technologies transforming the future of global supply chains

The current state of supply chain disruptions

26 weeks (or half a year)—that is how long companies have to wait on their semiconductor orders right now, on average. In some cases, much longer.

Prior to the current supply shortage, the average had been approximately 14 weeks—significantly shorter.

Nonetheless, in general, global supply chain disruptions are easing. The Global Supply Chain Pressure Index (GSCPI) peaked in December 2021 and has since fallen with the latest reading of 1.0, indicating a much-improved situation, but still above the long-term average of 0.

Some companies are managing supply disruptions better than others

When ports are congested, suppliers halt their production, or containers are missing, there are only limited things a company can do to ensure supply chain operations are smooth.

The last two years have shown that one of the most effective measures a company has at its disposal is investing in a connected, digital supply chain. It helps to gain supply chain visibility, improve planning, and improve execution—all with the goal of ensuring that customers receive the right products on time.

Consider the example of US-based fashion manufacturer and retailer Nike: The company invested in state-of-the-art supply chain technology shortly before pandemic-related disruptions started. Nike ended up navigating the pandemic better than some of its competitors whose supply chains were not as digitized. One of Nike’s investments was the acquisition of Sales and Operations planning software vendor Celect in August 2019. The software tool, which provides advanced demand predictions and inventory reallocation, helped Nike anticipate the drop in sales in physical shops during the 2020 global pandemic and rebalance its inventory to warehouses dedicated to online shopping.

As a result, Nike managed to adapt its supply chain to the shift in consumer behaviors linked to the global pandemic.

“With the Celect acquisition, where we’re able to forward deploy inventory to where we were able to predict demand reliably enough, so that it’s within one to two day ground shipping to a large number of consumers across the country.” – John J. Donahoe, CEO at Nike (Q1 2021)

The Nike digital supply chain contributed to the company’s success in recent years. In both 2020 and 2021, Nike outgrew its core competitor, Adidas, by a wide margin (8 percentage points difference in 2020 and 10 percentage points difference in 2021).

The Digital Supply Chain Market 2022

With supply chain disruptions having dominated CEO discussions for the last one and half years (see for example: What CEOs talked about in Q3/2022), many enterprises are following the example of Nike and are making supply chain technology investments a priority in 2022 and going into 2023.

IoT Analytics latest 252-page market research report titled Digital Supply Chain Market Report 2022–2027 takes an in-depth look at the investments companies are making across a wide variety of supply chain technologies, including topics such as sourcing software, supply chain visibility software, IoT-based track and trace, and warehouse automation technologies. The market is expected to enter a multi-year investment cycle, growing from $135B in 2021 to $217B in 2027 at an annual growth rate of 8.1%—this compares to a growth rate of 4.5% for the four years preceding 2021.

In this article, we highlight eight upcoming technologies we came across during our research that will define the next era of digital supply chain as companies try to ensure their supply chains become more resilient, automated, and predictable:

8 upcoming supply chain technologies

1. Automatic sorting and retrieval systems (AS/RS)

A. Technology overview: AS/RS is a relatively novel type of intralogistics machinery. It replaces conveyors, forklifts, and racks, which are traditionally used to move items around a warehouse into a single, cubic system. This system puts away, stores, and retrieves items automatically.

B. How it improves supply chains: A traditional warehouse setup requires hoisting, conveying, picking, and placing machinery and racks to put away, store, pick, and place items. An AS/RS combines these functions within a single system, allowing warehouse managers to automate their facilities in a much leaner way than with traditional machinery.

C. Adoption success story: In 2019, Siemens purchased an AS/RS for its production and distribution warehouse in Chemnitz, Germany. The company says it has realized a 60% decrease in warehouse space required for the same inventory level as before installing the system and has decreased its staffing cost by 40%.

D. Selected market statistic: Autostore, one of the top three AS/RS vendors, grew at a stunning rate of +80% from 2020 to 2021 (from $182M to $327M). The company currently has supply constraints due to high demand.

2. Sourcing software with market intelligence

A. Technology overview: Sourcing & supplier management software helps companies find suppliers to ensure they have the right components available in the right quantity to maintain their activities. The latest innovation in this segment is the addition of market intelligence that allows the procurement team to act more strategically.

B. How it improves supply chains: Market intelligence for sourcing helps purchasing managers make better decisions with a frequently updated insight on market dynamics, pricing, lead times, and regional and raw material trends. For example, procurement can now have a live view of the network of potential suppliers based on the current supply capabilities. This information can be used in supplier negotiations or for ensuring companies do not run out of stock of key components.

C. Adoption success story: Molex, a US-based provider of electronic connectors, announced in November 2022 that it will work with Siemens SupplyFrame CQI market intelligence software to accelerate their sourcing processes with dynamic bills of materials based on real-time supplier analysis capabilities throughout its entire procurement team.

D. Selected market statistic: IoT Analytics expects sourcing and supplier management software to grow at a +10% CAGR from 2021 to 2027, driven by companies re-assessing their sourcing strategy (mostly towards multi-supplier sourcing) and by new technology innovations, such as market intelligence tools.

3. IoT track and trace devices

A. Technology overview: IoT-based track and trace devices allow a (near) real-time view on goods in the supply chain (e.g., goods on a pallet or inside a container). The devices are equipped with data collection (sensing) and connectivity modules (often using cellular or satellite technology).

B. How it improves supply chains: By using track and trace, companies get a whole new level of visibility on their supply chain. Not only can companies track the exact whereabouts of their goods in the supply chain, it also allows them to calculate estimated times of arrival and in some cases the physical conditions (e.g., temperature) of the goods. The data from the devices also allows companies to identify weaknesses in the supply networks by analyzing where bottlenecks occur or at what points along the journey cargo is frequently damaged.

C. Adoption success story: In April 2022, shipping company Hapag Lloyd announced a new track and trace project for their dry container fleet. The company aims to install tracking devices to connect most of its dry container fleet (approximately 1.6M containers) on a single platform by 2023. Hapag-Lloyd works with two vendors on this project: Orbcomm and Nexxiot.

D. Selected market statistic: As part of its research, IoT Analytics identified more than 130 vendors offering IoT-based track and trace devices and related software.

4. Supply chain digital twins

A. Technology overview: A supply chain digital twin is a digital replication/model of the supply chain (with corresponding data synchronization properties). It allows the user to determine the impact of a change in physical reality by first testing the changes in the digital model and then simulating/predicting the outcome accordingly.

B. How it improves supply chains: With supply chain digital twins, companies can optimize their supply chain planning and design. Companies can test the impact of different supply chain scenarios (such as the potential effect of a manufacturing facility closure). They can then see what the potential effect on key supply chain KPIs is (e.g., how lead times and inventory levels will be affected).

C. Adoption success story: The Renault Group was one of the first customers of Google’s supply chain digital twin software and started to adopt the technology in September 2021. Since then, the Renault Group shared that it had managed to replicate 90% of its supply chain flows in a supply chain digital twin.

D. Selected market statistic: In the digital supply chain 2022‒2027 market report, the supply chain digital twin subcategory is included as part of the Supply Chain Planning and Design Software category, which grew at a +15% rate in 2022.

5. Intralogistics robots

A. Technology overview: The purchase of intralogistics robotics vendor Kiva System by Amazon Robotics for $0.7 billion in 2018 enabled Amazon to make next-day and second-day delivery a reality. Competitors were shocked. The likes of Walmart only matched Amazon’s efficiency level a year later, but only in select countries, and also refused to disclose the cost of the investments it took. Intralogistics robots are machines that are automatically controlled, reprogrammable, multi-purposed (capable of being adapted to a different application with physical alteration), and programmable in three or more axes. They are specifically designed for intralogistics picking and placing because they can operate on limited floor space and reach into shelves, palletizing machines, or conveyors to load and unload parts.

B. How it improves supply chains: Intralogistics robots improve warehouse ai havutomation and efficiency significantly, leading to faster operations and the ability to handle demand peaks much better.

C. Adoption success story: DHL announced in January 2022 that it would invest $15 million to equip its warehouses in North America, including facilities at O’Hare International Airport and the Cincinnati/Northern Kentucky Airport with Boston Dynamics’ Stretch Robot. DHL mentioned that the robots would play a significant role in improving the efficiency of their warehouses in North America (where labor cost are high).

D. Selected market statistic: According to the International Federation of Robotics (IFR), new smaller intralogistics robots are gaining popularity. 49.5 thousand units were shipped in 2021 (+45% year to year growth vs. 2020).

6. AI-enabled inventory optimization software

A. Technology overview: Modern inventory planning is a very data-heavy task with companies compiling millions of data points. AI-enabled inventory optimization software is helping companies crunch these numbers much faster than before. It automates, streamlines, and controls the in- and outbound inventory flows and improves the process with AI capabilities.

B. How it improves supply chains: AI-enabled inventory optimization software applies AI to continuously search for strategies to minimize inventory while maintaining confidence that the company will have sufficient inventory available to meet customer’s needs. This innovation helps companies to find better ways to assess optimal safety stock levels.

C. Adoption success story: A fortune 500 electronic manufacturer implemented C3.AI’s inventory optimization software and realized a $42 million working capital reduction by implementing 74% of the software’s inventory optimization suggestions, such as gradually minimizing safety stocks on inventory items that aren’t used.

D. Selected market statistic: As part of research on industry 4.0, IoT Analytics identified that more than 56% of manufacturers in the APAC region have an AI strategy. The region’s manufacturers are ahead of North America (53%) and Europe (52%).

7. IoT-based proactive field service

A. Technology overview: IoT-based proactive field service software provides a step up from traditional field service of assets running in the field. While traditional field service software mostly works reactively by allocating field service technicians to a site after a failure has been reported, proactive field service uses IoT and predictive maintenance to send field service technicians to a remote site before the asset fails.

B. How it improves supply chains: Proactively performing field service operations on assets ensures that such assets won’t fail. Not only does this lead to higher asset uptime, but it also leads to earlier spare part ordering which ensures these orders do not need to be rushed through the supply chain with the highest priority. IoT-based proactive field service maintenance software also ensures that field service workers are as productive as possible while using minimum spare parts.

C. Adoption success story: 3D Systems, a US-based additive manufacturing solution company, implemented an IoT-based proactive field service software and reduced its spare parts usage by 62%.

D. Selected Market Statistic: Field service vendor ServiceMax (recently acquired by PTC) performs annual customer surveys and identified that its customers increased their field service worker productivity by 23% on average when using proactive field service software.

8. Supply chain visibility software

A. Technology overview: Supply chain visibility is key to creating supply chain networks that will survive disruptions like the global COVID-19 pandemic. Companies ask questions such as: “What backup supplier can help us avoid stopping production?” or “When will my shipment finally arrive?” With supply chain visibility software, companies can get a simple, quick overview of all the important supply chain-related metrics that are key to running smooth operations, such as average lead times or inventory levels.

B. How it improves supply chains: By using supply chain visibility software, companies get a much better handle on where their current goods in transit are and when they are expected to arrive. The tools also provide instant alerts when a crucial shipment is expected to get delayed. Upcoming supply chain visibility software vendors, like project44 or FourKites, purchase a great amount of data themselves from various stakeholders, such as port operators, to inform their customers.

C. Adoption success story: In 2020, a US-based food and beverage retailer company chose FourKites’ supply chain visibility software to gain visibility over its shipments’ estimated arrival times. According to FourKites, the company managed to attain a 99% accuracy rate on estimated delivery time predictions.

D. Selected market statistic: Supply chain visibility software vendor project44 claims to have collected 100 billion terabytes worth of supply-chain-related data in the last ten years. This number has been growing from 2 billion in 2010 to 79 billion in 2021.

The post 8 key technologies transforming the future of global supply chains appeared first on IoT Business News.

IoT Analytics published a 217-page adoption report containing statistics on the current and future status of Industry 4.0 and smart manufacturing.

This research is based on the feedback from 500 decision makers in manufacturing organizations.

Key insights:

• A look at five key statistics shows that Industry 4.0 activity has risen since 2011, with COVID-19 and the 2022 slowdown presenting recent bumps on the road.
• The analysis considered five indicators: Public search interest, academic papers, startup funding, M&A activity, and enterprise adoption.

Key quotes:

• Dimitris Paraskevopoulos, analyst at IoT Analytics, says: “The concept of Industry 4.0 was introduced 11 years ago and first started as a vague concept to revolutionize manufacturing through “cyber-physical systems”. It has since become a mandatory part of most manufacturers’ strategy. Today, search interest has increased by 140 times and all signs point to the fact that interest in Industry 4.0 is still going strong.”

• Knud Lasse Lueth, CEO of IoT Analytics, adds:
  

  “Our latest research shows that industrial companies have further advanced on their digitization journey. The fact that 72% of manufacturers have an Industry 4.0 strategy in place is a clear indicator that adoption is happening, and Industry 4.0 is here to stay.”

The rise of Industry 4.0 in 5 stats

More than 10 years after its creation, it seems that Industry 4.0 is in full swing: Public search interest has risen 140 times since then, 50,000 research papers were published on the topic in 2021 alone, start-ups are now receiving a total of $3 billion in funding each year (Q3 2021 to Q3 2022), and M&A activity has doubled.

The term “Industry 4.0” was first publicly introduced at Hannover Fair 2011 by German Chancellor Angela Merkel who (as rumor has it) picked up the term, sparking a number of interesting discussions as a result.

What first started as a vague concept to revolutionize manufacturing through “cyber-physical systems” has since taken shape.

Some of the key advances since 2011 include:

• Much more powerful chipsets
• Widespread adoption of cloud services
• Containerization of software
• Creation of much-improved software middleware/tools
• Open interfaces to edge computing hardware
• New and improved communication standards/protocols
• Availability of relevant AI models and libraries

Few of these were obvious 10 years ago.

| “Industry 4.0” Definition
The use of modern I4.0 tech stack elements, or specific supporting technologies that enable manufacturers to integrate various data sources, achieve higher OEE, reduce costs, or improve other KPIs relevant to a production setup (manufacturing of goods, mining, oil, and gas) mostly in conjunction with rolling out new or improved use cases.

Here is a look at five key stats that show how “Industry 4.0” activity has changed since 2011:

#1 PUBLIC SEARCH INTEREST: 140 TIMES HIGHER

Searches for Industry 4.0 on Google in 2022 are 140 times higher compared to the year it was first introduced and made public (2011). In addition, related terms such as Industrial IoT and Smart Manufacturing grew quite fast in the same time frame as well (32 times and 3.5 times more searches respectively).

Industry 4.0 is an umbrella term that describes several advances in the manufacturing industry. The below picture shows how four of the supporting technologies for Industry 4.0 have also risen in popularity in the same time frame:

Search interests for “Cobots” increased more than 10 times since 2011, “Additive Manufacturing” almost nine times, “Digital Twin” more than four times, and “Machine Vision” 1.3 times. These supporting technologies are also representative of the interest in several other Industry 4.0-related technologies.

#2 ACADEMIC PAPERS: 200,000+ PAPERS PUBLISHED

More than 50,000 academic papers on Industry 4.0 were released in 2020 and 2021, and more than 200,000 have been published in total within the last 10 years. It is safe to say that a lot of research is being done on Industry 4.0. One of these ideas can be the “next big thing” that will move the topic forward.

Based on Google Scholar, the three most cited papers relating to Industry 4.0 are:

#3 FUNDING: 2,513 DEALS SINCE 2011

The annual funding of start-ups that are active in Industry 4.0 has increased by +319% from 2011 to 2021. 2021 saw a total of $2.2 billion of funding spent on upcoming companies that develop technology related to Industry 4.0. A total of 2,513 deals were announced in the 11-year time frame. The total number of funding rounds decreased when COVID-19 hit in 2020 and has also taken a hit as of late with the inflation and war-related slowdown.

Notable investment rounds included a $179 million Series A for BrightMachines in 2018, a $100 million Series C for Tulip Interfaces in 2021, and a $75 million Series E in Xometry in 2020.

#4 M&A ACTIVITY: DOUBLED FROM 2011 TO 2021

The annual number of Industry 4.0-related acquisitions reached a peak of 132 in 2021. This marks a 116% increase in the past 10 years. In the first three quarters of 2020, there were less than half
acquisitions compared to the usual average in the rest of the years. COVID-19 had a clear impact on the M&A activity as well.

Notable acquisitions included AspenTech acquired by Emerson for $11 billion in 2021, Fetch Robotics acquired by Zebra Technologies for $290 million in 2021, and IQMS acquired by Dassault Systèmes for $425 million in 2018.

#5 ENTERPRISE ADOPTION: MOST ORGANIZATIONS NOW HAVE AN INDUSTRY 4.0 STRATEGY

A 2015 World Economic Forum survey of 250 market leaders found that 88% of the participants did not understand the underlying business models and long-term implications of the industrial IoT to their industries

A 2019 Industry 4.0 adoption survey by IoT Analytics showed that the situation had changed with 25% of Industry 4.0 use cases already fully or extensively rolled out with enterprises on a global level.

The latest 2022 Industry 4.0 adoption survey now shows that companies have even further advanced. Companies that are not executing against an Industry 4.0 strategy are in the minority. A staggering 72% of the survey respondents report that they are in the process of implementing their Industry 4.0/Smart Factory with many initiatives in progress and some already completed.

The post The rise of Industry 4.0 in 5 stats appeared first on IoT Business News.

IoT Analytics conducted a keyword analysis based on ~3,000 earnings calls from ~1500 US-listed companies and found five themes of interest in Q3/2022 that are likely to influence the strategic agenda going forward.

Key insights:

• Three themes noticeably gained traction in Q3/2022, i.e., the recession, raw materials, and Industry 4.0
• Mentions of sustainability-related topics decreased in the last quarter but seemed to stabilize at a higher level than in previous years. Hybrid work has sidelined remote work.

Key quote:

• Philipp Wegner, principal analyst at IoT Analytics, says:
  

  “Boardrooms seem to be focused on dealing with the economic slowdown and discuss immediate threats to their business like the recession, inflation, and disrupted supply chains. However, sustainability-related topics have increased quite strongly in the last two years, even if they are slightly down in the last quarter.”

What CEOs talked about in q3/2022: Economic slowdown, raw materials, and industry 4.0

Introduction

In their earnings calls in Q3/2022, 35% of CEOs talked about recession – with layoffs, hiring (freezes), and downsizing the primary topics for most.
Industry 4.0 (+143% growth compared to Q2/2022) and other tech-related topics (such as process automation with +53%) grew strongly, although on a smaller level.

The three most-discussed topics we track remain COVID-19, inflation, and supply chains (mentioned in 57%–72% of all earnings calls).

Topics such as the economic slowdown and automation rose in importance in Q3, while several other topics that had gained significant attention in previous quarters faded. Russia (16%) and Ukraine (19%) were still mentioned by many CEOs but by approximately 50% less than in the previous quarter. Additionally, discussions concerning hybrid work (–28%) and remote work (–50%) declined in the last quarter (see analysis below). In Q3/2022, the topic of new work was of less importance in the high inflation and economically turbulent environment.

In this article, we highlight five themes of interest in more depth, including three key upcoming themes (economic slowdown, raw materials, and Industry 4.0), and two additional themes of interest, i.e., hybrid/remote work and sustainability.

#1 KEY UPCOMING THEME: ECONOMIC SLOWDOWN

In their Q3/2022 earnings calls, 35% of all CEOs talked about “recession.” This number was up 74% from the previous quarter. The analysis shows that, like “recession,” many of the upcoming themes in those earnings calls were related to a weakened economy. With high inflation rates not seen in decades, the topic of inflation was discussed in 71% of all earnings calls in Q3/2022 (up 4% since the previous quarter but overall up 646% in the past two years). The gloomy forecast for economic growth led to many boardroom meetings discussing layoffs.

The keywords “downsizing” (+83%), “layoff” (+54%), and “hiring” (+22%) all increased considerably in Q3 2022. It is essential to mention that “hiring” was often used in the context of a “hiring freeze” or “stop hiring.” However, many companies are still trying to hire, and labor markets seem surprisingly resilient. In the US, job opening rates are still higher than unemployment rates. Additionally, unemployment in Europe continued to decrease in Q3/2022. Nevertheless, companies as diverse as Klarna, Credit Suisse, Meta, and Ford announced layoffs or hiring freezes in Q3/2022.

Discussions about a recession are now (35%) even more frequent than during Q2/2020 (33%), when the COVID-19-induced downturn reached the point of a recession. In Q3/2022, talk about recession reached an all-time high since IoT Analytics began tracking earnings calls (Q1/2019).

Key quotes:

“We are seeing advertisers worried about a possible recession and so we’re seeing them reduce their spend in places that are easy for them to turn off and turn back on.” – Anthony Wood — Chief Executive Officer, Roku, 28 July 2022

“Given the uncertain global economic outlook and the hiring progress achieved to date, as Sundar previously announced, we intend to slow the pace of hiring. We expect our actions on hiring to become more apparent in 2023.” – Ruth Porat — Chief Financial Officer, Alphabet, 26 July 2022

“There’s a massive opportunity to talented professionals who aspire to build their future on ServiceNow. And as an employer, while others in the tech industry are slowing or even stopping hiring, ServiceNow is hiring. We are hiring. We are doubling down on our talent brand.” – Bill McDermot — Chief Executive Officer, ServiceNow, 26 July 2022

#2 KEY UPCOMING THEME: RAW MATERIALS

Several CEOs (3%) talked about copper (+30% compared with Q2/2022), and 2% talked about lithium (+13%). These two raw materials are part of a long list of other raw materials, such as lumber, nickel, and cobalt, all of which experienced increased price volatility in the past three years.

Copper prices experienced quite a roller coaster ride and increased to record heights in March 2022 after hitting rock bottom in March 2020. Since then, its record high price decreased by 18% in the past six months.

Lithium is needed in many types of batteries and is particularly important for connected devices and electric vehicles. In Q3/2022, GM introduced a new supply chain initiative, while Tesla’s CEO, Elon Musk, asked entrepreneurs to enter the lithium refining business, calling it “a license to print money” (see quotes below). Lithium prices increased by 190% in the past year.

Policymakers are trying to ease the pain of strained raw material supply chains by pushing for more strategic autonomy. The European Union, for example, is working on a Raw Materials Act, including an early warning system and crisis management mechanism for critical raw materials, boosting investment in production and recycling, and ensuring a global level playing field.

Key quotes:

“What this means is GM now has binding agreements securing all battery raw materials supporting our goal of 1 million units in annual capacity in North America in 2025. This includes lithium, nickel, cobalt, and the full CAM supply. As we move forward, we will increasingly localize our supply chain just as we have localized battery cell production.” – Mary Barra — Chief Executive Officer, General Motors, 26 July 2022

“There’s like software margins in lithium processing right now. So I would really like to encourage, once again, entrepreneurs to enter the lithium refining business. You can’t lose. It’s a license to print money.” – Elon Musk — Chief Executive Officer, Tesla, 21 July 2022

#3 KEY UPCOMING THEME: INDUSTRY 4.0

On a much smaller scale than the previously mentioned topics, Industry 4.0 was discussed by 0.4% of all CEOs in Q3/2022 (+113% since Q2/2022). By nature, Industry 4.0 primarily applies to the manufacturing industry. The recently published IoT Signals Report—Manufacturing Spotlight (August 2022), jointly published by IoT Analytics, Microsoft, and Intel, shows that 72% of manufacturers have to date partially or fully implemented a smart factory strategy.

Despite the prevalence of the pandemic, looming recession, inflation, and global supply chain issues in the past year(s), manufacturers are determined to fast-track their digital transformation projects in the next three years. With some companies having made significant Industry 4.0 investments several years back, implementation success stories are now entering earnings calls, as some of the quotes below show.

Key quotes:

“We have our factories. Some of them are already at industry 4.0. And all of these investments and strategies are paying off.” – Judy Marks — Chief Executive Officer, Otis Worldwide, 27 July 2022

“Factory automation is something that we have been doing for a number of years. I think about the Iver facility we have at Pratt Canada that went online more than five years ago, completely lights out manufacturing. So we have been making investments, I’ll call it, an industry 4.0 across all of our factories. We’ve got the new project down in Dallas, the new factory, automated factory that’s going in down there” – Greg Hayes — Chairman and Chief Executive Officer, Raytheon Technologies, 26 July 2022

#4 THEME OF INTEREST: REMOTE WORK AND HYBRID WORK

The remote work discussion in Q3/2022 appeared in 1.1% of earnings calls. This constitutes a decrease of 50% compared to the previous quarter and a decrease of 94% since its peak in Q2/2020. Concurrently, hybrid work was mentioned by 2.3% of CEOs and was down 28% since the previous quarter.

Considering the future, two developments become apparent:

1. Remote work was one of the key topics during the COVID-19 lockdowns when 18% of CEOs discussed this topic in their earnings calls. It has decreased ever since and seems to be a topic of the past.

2. Hybrid work has grown much slower than remote work. While it never reached the double-digit shares of remote work, it seems more likely to remain relevant in the long run. It has decreased since its peak of 4% in Q3/2021 but seems to have stabilized at approximately 2%.

It appears that most CEOs aim to use a hybrid work setup with some mandatory office days but more freedom than before the COVID-19 lockdowns. Apple, Google, and Tesla, for example, have called their office clerks back from their home offices to their respective brisk-and-mortar headquarters. However, most offer a higher degree of freedom compared with three years ago.

Key quotes:

“The year-on-year increase in general and administrative expenses driven by higher deal sales taxes, which are tied to revenue, as well as increased personnel-related expenses due to return to a hybrid work environment.” – David Goulden — Chief Financial Officer, Booking Holdings, 04 August 2022

“Hybrid work is now just work, and it’s imperative that collaborate synchronously and asynchronously as well as remote and in-person.” – Satya Nadella — Chairman and Chief Executive Officer, Microsoft, 27 July 2022

#5 THEME OF INTEREST: SUSTAINABILITY, CLIMATE, AND EMISSIONS

The share of earnings calls that discuss sustainability (discussed by 21% of all CEOs), climate (14%), and emissions (13%) decreased in the previous quarter. However, in the long run, since Q1/2019, this shows a highly positive trend. All three topics have gained extensive boardroom importance. In early 2020, discussions about the transition to a more sustainable and greener economy drowned in the noise caused by the COVID-19 lockdowns. The same seems to be happening currently, as CEOs focus on handling the upcoming recession, high inflation, and high uncertainty. Nevertheless, most CEOs seem convinced that the push towards more sustainability be beneficial for their enterprises.

Key quotes:

“We see IoT exploding. You see all of the climate activity is going to be a tailwind to our business because you have to connect all these industrial systems to be able to control them.” – Chuck Robbins — Chairman and Chief Executive Officer, Cisco Systems, 17 August 2022

“One of the biggest long-term opportunities in alternatives will be the intersection of infrastructure and sustainability. Recent supply shocks have only increased the focus on energy security and compounded the need for infrastructure investments.” – Larry Fink — Chairman and Chief Executive Officer, Black Rock, 15 July 2022

The post IoT Analytics : What CEOs talked about in Q3/2022 appeared first on IoT Business News.

IoT Analytics published the Q2/2022 update of their “Global Cellular IoT Module and Chipset Market Tracker & Forecast”.

This tracker & forecast is a structured nested database containing 1.7 million data points, allowing a look at the quarterly cellular IoT module market with detailed drill-down options. The following article highlights some of the key insights derived from the data.

Key insights:

• The global cellular IoT module market has grown from two to 10 key technologies. At the same time, the market has grown 15 times since 2010 according to IoT Analytics’ latest research on the topic.
• Module companies have expanded their portfolio from hardware-only to bundling hardware, software, connectivity solutions, and services to provide end-to-end solutions.
• Recently, IoT module prices have significantly increased due to the global chip shortage.

Key quotes:

• Knud Lasse Lueth, CEO of IoT Analytics says:
  

  “The market for cellular IoT continues to be in a long-term cyclical uptrend with smart meter, Transportation, Supply Chain and Logistics, and Automotive and Telematics industries at the forefront of module consumption. From a competitive perspective, we expect to continue to see fierce competition between Western and Chinese module companies.”

• Satyajit Sinha, Principal Analyst at IoT Analytics adds: “In the digital supply chain age, end-to-end tracking demands multiple connectivity modes. Hence, the collaboration of cellular and LoRa technology is expected to be beneficial for end-to-end tracking. Cellular components had been missing from the Semtech portfolio prior to the acquisition. For example, if chipsets such as the Lora Edge LR1120 get embedded into a combined module with LTE-M or Cat 1, the resulting module covers almost all major wireless types of connectivity, including Sub-GHz LoRa, SATCOM S-band, 2.4 GHz Lora, and Cellular IoT.”

The evolution of cellular IoT modules from 2010-2022

Between 2010 and 2022, the cellular IoT module market grew 15 times, with approximately 2.5 billion modules forecasted to be shipped by the end of 2022. The market for IoT modules exploded at an unprecedented rate during this time, and the market dynamics have changed. For example, in 2010, the top five module companies contributed 82% of global cellular IoT module shipments, whereas in 1H 2022, that number reduced to 55%. To understand this change and evolution, we highlight 10 insights on how the technology landscape and the competitive landscape have changed since 2010.

Five key insights on the shifts in the cellular connectivity technology landscape

1. From two to 10 technologies

In 2010, the cellular IoT module market consisted of only two connectivity technologies, 2G and 3G, with 57% and 43% shipment shares, respectively. In 1H 2022, those technologies made up 5% and 1% market share, respectively. At the same time, eight major new technologies have been introduced to the market.

2. The rise of LTE-CAT 1

2014 marked the beginning of the rise of the LTE-Cat 1 technology standard. It is defined by 3GPP’s Release 8, which specifies that each IoT module comes embedded with two receiver (Rx) antennas based on either Intel or Qualcomm chipsets. LTE CAT 1 first started to become the go-to alternative for 2G and 3G IoT applications in North America when 2G networks were being retired by network operators at the end of 2017. The massive migration from 2G/3G to LTE-Cat 1 started in 2018.

3. Adoption of NB-IoT

In 2018, we started to see the first adoption of NB-IoT based on HiSilicon chipsets. NB-IoT became the new alternative for 2G IoT applications in China. At that time, most US operators relied on LTE-M. However, soon after, many started to opt for a dual model (NB-IoT+ LTE-M) LPWA strategy. Hence, since 2019, we have seen mass adoption of the LPWA dual mode module, with adoption still growing at a higher rate than LTE-M in 1H 2022.

4. The new LTE-Cat 1 bis

The absence of LTE-M in China and the technical limitations within NB-IoT in 2020 led to a rise in demand for a new segment: low-cost LTE-Cat 1 bis modules. Cat 1 bis, based on 3GPP Release 13, is characterized by a single antenna and is optimized for low-power applications. Further, LTE-Cat 1 bis is emerging as a viable alternative to LPWA technology, especially in Europe and Latin America. As predicted by IoT Analytics in last year’s IoT Module analysis, both LTE Cat 1 and LTE-Cat 1 bis shipments grew in 1H 2022 by 37% and 41% YoY, respectively.

5. The slow takeoff of 5G

The latest addition to the IoT connectivity stack was 5G, and it was expected to take off in 2021. However, due to inhibiting factors, such as the COVID-19 pandemic, the chip shortage, and increased prices and inflation, 5G today only stands at a 2% market share of global cellular IoT module shipments (1H 2022). We expect that after the 3GPP release 17, we will see a higher 5G adoption rate. We also expect that the first 5G red cap modules to be released in 2024.

Five key Insights on the shift in the IoT module competitive landscape

1. Early market leadership by Sierra Wireless and Gemalto

In 2010, Gemalto acquired Cinterion and became the 2nd largest global cellular IoT module provider behind Sierra Wireless. At that time, SIMCom was the only Chinese module player in the global cellular IoT module shipments ranking.

2. The rise of Quectel

In 2016, Chinese module maker Quectel entered the global top five rankings, replacing uBlox for the first time. Low pricing was Quectel’s key strategy for penetrating the market. In the same year, Telit acquired Novatel Wireless, strengthening its Security and Surveillance segment.

3. Quectel’s market leadership

In 2018, Quectel, for the first time, ranked #1 in China’s cellular IoT module shipments ranking, replacing Sunsea AIoT. In 2019, one year later, the company also, for the first time, ranked #1 globally, replacing Sierra Wireless in the top spot. Quectel is still leading the global ranking in 1H2022, and we expect the company’s market leadership to continue over the next four years.

4. The rise of other Chinese players

In 2017, Sunsea AIoT acquired both Long Sung Tech and SIMCom and remained ranked #2 for three consecutive years (2018–2020). In 2020, Fibocom entered the top 5 ranking for IoT module shipments outside of China for the first time. In 2021, China Mobile OneMo entered the top 5 ranking for the first time in China’s cellular IoT module shipments ranking due to the high-volume shipment of NB-IoT modules.

5. Divestments and acquisitions

While Chinese companies gained market share, Western companies refocused their activities and ownership structures. In 2019, Telit sold its automotive business segment to TUS International, while French aerospace supplier Thales acquired Gemalto. In 2020, Sierra Wireless sold its automotive business segment to Rolling Wireless. In July 2022, Telit and Thales jointly announced the formation of Telit Cinterion, with Thales holding a 25% stake in Telit Cinterion. Telit Cinterion plans to spin off the automotive IoT unit again after completing the merger. In August 2022, semiconductor company Semtech announced its intent to acquire Sierra Wireless. The announcement raised many eyebrows in the industry as Semtech had advocated for unlicensed low-power wide-area standard LoRa for a long time. It appears Semtech’s vision is to go beyond selling hardware. Semtech is looking to scale Sierra Wireless’ high-margin IoT Cloud services, which are part of Sierra Wireless’s end-to-end IoT product, connectivity, and services portfolio. Semtech will likely also allow its customer to opt for both licensed (NB-IoT and LTE-M) and unlicensed LPWA (LoRa) connectivity depending on the use cases and application requirements.

IoT Module market in 2022

In the last 12 years, the IoT Module market has undergone significant changes; the market has grown with significant market leadership changes. Module companies have also expanded their portfolio from hardware-only to bundling hardware, software, connectivity solutions, and services to provide end-to-end solutions (e.g., Telit’s deviceWise and OneEdge or U-Blox’s addition of Thingstream).
This month, IoT Analytics updated its research on the topic by publishing the Global Cellular IoT Module and Chipset Market Tracker & Forecast, which provides a quarterly look at the revenues and shipments of 36 cellular IoT module companies and 14 IoT chipset companies.
The data shows that in 1H 2022, global cellular IoT module shipments and revenue grew 22% and 38% YoY, respectively. At the same time, global cellular IoT chipset revenue grew by 42% year-on-year. The growth outperformance of chips vs. modules was due to higher adoption of more expensive integrated chipsets.

IoT module prices have also increased significantly on the back of the global chip shortage. The average cellular IoT chipset wholesale selling price grew 16 % in 1H 2022 (compared with 1H 2021). The average cellular IoT module chipset wholesale selling prices increased 13% in the same period. Although the chip shortage situation in 1H 2022 has improved compared with 1H 2021, chipset lead times are still far from pre-crisis levels.

Comments on recent M&A activity

Telit acquiring Thales’ IoT portfolio

“Telit Cinterion is expected to put further pressure on the other Western module suppliers due to its broadened portfolio including security and eSIM/iSIM capabilities. The company is also spinning off its automotive IoT unit to focus on Industrial IoT. We expect Telit Cinterion to become the second biggest IoT module company outside China when the acquisition closes.” – Satyajit Sinha, Principal Analyst at IoT Analytics

Semtech acquiring Sierra Wireless

“In the digital supply chain age, end-to-end tracking demands multiple connectivity modes. Hence, the collaboration of cellular and LoRa technology is expected to be beneficial for end-to-end tracking. Cellular components had been missing from the Semtech portfolio prior to the acquisition. For example, if chipsets such as the Lora Edge LR1120 get embedded into a combined module with LTE-M or Cat 1, the resulting module covers almost all major wireless types of connectivity, including Sub-GHz LoRa, SATCOM S-band, 2.4 GHz Lora, and Cellular IoT.” – Satyajit Sinha, Principal Analyst at IoT Analytics

Outlook: The cellular IoT module market until 2026

With 6 billion cellular IoT connections expected by 2026, the market for cellular IoT continues to be in a long-term cyclical uptrend with smart meter, Transportation, Supply Chain and Logistics, and Automotive and Telematics industries at the forefront of module consumption.

Shipments of 5G are expected to contribute toward 16% of shipment share by 2026. Furthermore, the rise of 5G and later 5G redcap is expected to play a key part in the market’s growth beyond 2026. There is also a trend towards the adoption of module-based design (vs. chipset-based design), especially in the industrial and enterprise spaces.

From a competitive perspective, we expect to continue to see fierce competition between Western and Chinese module companies. Prices continue to play a key role in gaining volume in the market. However, we do not think that IoT modules will end up as a pure commodity. Differences in implementation security, eSIM /iSIM, and end-to-end solutions (among others) remain some of the key features affecting the decision-making when opting for a specific module company.

The post IoT Analytics: The evolution of cellular IoT modules since 2010 appeared first on IoT Business News.