The Internet of Things - A Study in Hype, Reality, Disruption, and Growth

The confluence of efficient wireless protocols, improved sensors, cheaper processors, and a bevy of startups and established companies developing the necessary management and application software has finally made the concept of the Internet of Things (IoT) mainstream.

The number of Internet-connected devices surpassed the number of human beings on the planet in 2011, and by 2020, Internet-connected devices are expected to number between 26 billion and 50 billion. For every Internet-connected PC or handset there will be 5-10 other types of devices sold with native Internet connectivity.

These will include all manner of consumer electronics, machine tools, industrial equipment, cars, appliances, and a number of devices likely not yet invented. In our view, the concept of the IoT will disrupt consumer and industrial product markets generating hundreds of billions of dollars in annual revenues, serve as a meaningful growth driver for semiconductor, networking equipment, and service provider end markets globally, and will create new application and product end markets that could generate billions of dollars annually.

In the following report, we explore the history of the IoT, some early applications that are already disrupting existing markets, and some interesting applications that have the potential to go mainstream in the next several years. We also explain the value chain of companies that creates the IoT in various end markets and attempt to quantify its impact on specific semiconductor, software, device, and service provider end markets. Topics covered:

• A Series of Verticals Rather Than One Market
• Semiconductors: IoT a Bigger PAN Than WAN Driver; Microcontroller/Sensor Growth Meaningful
• Product Disruption in Consumer and Industrial Markets
• Impact on Networking Equipment
• Impact on Wireless Service Providers
• For a Select Few, the IoT Defines Their Business