The Factors That Drove Rapid Industry Adoption of the IoT

March 16, 2020 by Luke James

It may seem like it was only a few years ago when the Internet of Things (IoT) was a relatively obscure concept rarely known of outside of tech circles—that’s because it was.

It is safe to say that in just a few short years, the IoT has exceeded many estimates and expectations. Today, a plethora of IoT-enabled devices—i.e. devices that are capable of connecting to the Internet and communicating with other ones—are widely available, from home assistants to washing machines, very few stones have been left unturned. 

Now, a new report by The Economist Intelligence Unit (EIU), which examines the results of its own IoT Business Index survey and includes in-depth interviews with industry executives, has illustrated just how much the IoT has grown in a relatively short space of time.


The 2020 IoT Business Index

The EIU’s IoT index is based on a global and cross-industry executive survey. Now in its third edition following a three-year hiatus, it shows that a major step change in IoT took place between 2017 and 2020.

When the EIU last measured business adoption of the IoT in 2017, it found that a technological transformation had yet to take off. “Most companies are… still in the early phases of their IoT journey,” it was said at the time. However, it also found that faster progress and growth was imminent, with two-thirds of companies indicating that they expected to grow their IoT investments within the next three years, admitting that “the IoT promises to be in a very different—and more advanced—state in three years’ time”. Three years later, this claim has been vindicated.


Key findings from the report are that:

  • Internal and external-facing IoT adoption has advanced substantially since 2017.

  • Artificial intelligence is vital to realizing the IoT’s true value.

  • Current progress is reflective of an increased level of investment by businesses.

  • Security concerns are preventing wider IoT adoption. 

Even before this year’s study, it was obvious even to those outside the tech space that the long-predicted advent of the IoT was here. Since 2017, the number of internet-connected devices—the IoT’s standard growth metric—has grown faster than anticipated.

According to IoT Analytics, this figure sat at the 9.5 billion mark at the end of 2019, 1 billion ahead of its own prediction of 8.5 billion.


A line graph showing IoT investment growth from 2017 to 2020.

A line graph provided by The Economist Intelligence Unit that tracks IoT investment growth from 2017 to 2020. Graph used courtesy of The Economist Intelligence Unit


The Factors Driving Rapid Growth

The EIU study has found that three factors are responsible for driving the IoT’s rapid growth: an explosion in smart-home products, stronger mobile machine-to-machine connections, and rapid adoption in China.

It is the first factor, especially that is the most visible and commonly cited sign of the IoT’s growth. Amazon’s category of Alexa products was launched back in 2014, however, it really took off between 2017 to 2019 when the number of speakers in the U.S. grew by 150% from 67 to 135 million. “If you look at the retail and consumer-device segment [of the IoT], adoption is far greater than it was in 2017,” says Regu Ayyaswamy, global head of IoT and engineering services at IT services provider TCS, who was interviewed as part of the EIU’s research.

Indeed, all you need to do is walk into your local electronics store and there will be aisles full of smart home products and cloud-connected devices that cover everything from refrigerators to CCTV cameras and garden sprinklers that can react to changes in weather. 

There is more to the IoT than consumer devices, though. And while industrial IoT applications have not seen the same level of growth as consumer ones, they are certainly picking up the pace. According to Berg Insight, by 2018 there were 34 million vehicles using connected telematics and telemetry systems on the road globally, 10 million connected streetlights, and 61 million cargo tracking devices in use.  


A graph detailing advances in IoT adoption from 2013 to 2020.

A figure detailing the advances in IoT adoption from 2013 to 2020 by The Economist Intelligence Unit. Image used courtesy of The Economist Intelligence Unit.


A Step Change in Adoption

The sheer growth of the IoT, on the whole, has led the EIU to the conclusion that there has been a “step-change in adoption”. In the three years leading up to 2020, adoption truly matured and progressed from planning into practice as companies began concentrating on the value of IoT data—now, virtually every company wants a piece of the action. 

The IoT Business Index 2020: a step-change in adoption was written by The Economist Intelligence Unit and sponsored by Arm. It examines the results of the latest IoT Business Index, a measure of IoT adoption by the global business community. The index draws on a survey of 825 business executives, conducted in late 2019. Survey respondents were drawn from Europe (30%), North America (30%), Asia-Pacific (30%) and the rest of the world (10%).