Internet of Things Builds Toward Peak of Hype
The “Internet of Things” is building towards a hype cycle peak. In 2013, Gartner positioned the Internet of Things just shy of the peak of expectations. If the typical pattern holds, that means we might see and hear quite a lot about how big a market the Internet of Things represents.
Machina Research forecasts $100 billion in revenue by 2020 for applications such as toll-taking and congestion penalties. Smart parking-space management, expected to drive $30 billion in revenue.
Smart electricity grids that adjust rates for peak energy usage will represent savings of $200 billion to $500 billion per year by 2025, according to the McKinsey Global Institute.
And it is possible to see IoT upside in many consumer appliances, traffic management, waste management, Internet-managed assembly lines, connected factories and warehouses, for example.
But that illustrates a problem, namely that IoT represents hundreds of potential applications, industry segments or business models.
Also, IoT might in many cases represent a feature of some other existing product, such as kitchen appliances, not necessarily a discrete new revenue source.
Of course, if the hype cycle has validity, it also means those wild revenue hopes are certain to be dashed, in the near term.
After a new technology reaches the peak of the hype cycle, there is a longish following period where observers become disillusioned by the market’s failure to generate the promised revenues and growth.
Only after that period is over does a new market actually develop around a new technology that has proven its value.
Internet of Things will hit the peak of hype soon. After that will come a period where practical and real-world applications seem not to materialize. Eventually, that will be overcome. But IoT reminds me a lot of the mobile payment or mobile wallet opportunity.
After the peak of the hype cycle, the industry has settled down into a period where expectations are modest. And some observers are using language such as the “death of” near field communications, failure to gain traction and “no business model.”
IoT will likely experience a similar deflation of expectations. And observers will finally understand that IoT is, in fact, not a single market.