A New Customer Segment Emerges in the Maturing Nordic IoT Market

25 Sep

A New Customer Segment Emerges in the Maturing Nordic IoT Market

ANDERS ELBAK (Research Director)

Organizations in the Nordics are expected to spend more than €12 billion on Internet of Things (IoT) solutions this year. As the market shows signs of saturation and the current double-digit market growth is about to wane, a new customer segment is emerging.

 

Two years ago, almost 80% of organizations investing in IoT were deploying their first solution. Today, however, more than half are either just maintaining and operating an existing solution or are extending one — by adding more sensors, new capabilities, or integrating it deeper into business processes.

We also see that the first-time deployer segment today is significantly different to what it was just two years ago, when organizations typically embarked on their IoT journey because they saw a specific opportunity to solve a problem or optimize existing business processes.

Today, a significant number of first-time deployers are mainly driven by external factors. As companies up and down the value chain start embracing IoT, the entire value chain is being disrupted. When, for example, a manufacturing company extends a solution that initially focuses on manufacturing process optimization to include inventory management, material suppliers and shipping companies are compelled to — or eventually required to — digitize and integrate their processes to remain competitive and relevant.

These first-time deployers are the most likely to perceive IoT as transformational for their business; they are also more likely to stand out in terms of preferences and decision making:

  • They are more likely to focus on customer engagement and experiences, and do not see IoT as a means to reduce cost or enhance efficiencies.
  • They see security concerns, cost, and changing business processes as the main challenges, while technology, complexity, and skills shortage are not yet on their radar.
  • They are more likely to depend on third parties, but least likely to have an allocated IoT budget, so funding needs to be found elsewhere — typically in the IT budget.

The knock-on effect from one industry to another is also evident in IDC’s IoT spending forecasts. Last year, the manufacturing industry accounted for 22% of total commercial IoT spending, but by 2023 this is expected to drop to 17%. Transport and retail, however, are expected to increase their share by more than 2 percentage points combined.

Other fast-growing industry segments include health and other public sector areas. On the whole, the Nordic IoT market will grow at an average rate of 12%, and approach €20 billion in 2023. The market is driven by software (as analytics becomes even more in demand), the wider availability of management and integration platforms, and the growing number of enterprise applications integrating with IoT infrastructures.

Understanding the market dynamics and evolving customer preferences are of course paramount for IoT vendors, but executives in all companies need to consider how IoT will eventually have an impact on the value chain. They should address it proactively to steer the development in the right direction and take advantage of being a first mover in IoT adoption.

Other resources:

Nordic Internet-of-Things Forecast, 2018-2022

Nordic IoT Decision-Maker Survey Insights, 2019: Market Maturity Changes Customer Demand and Preferences 

 

If you want to learn more about this topic or have any questions, please contact Anders Elbak or head over to https://uk.idc.com and drop your details in the form on the top right.

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