The proliferation of smart mobile devices in the enterprise was but a pale foreshadowing of a new era in which every budget is an IT budget, every company is a technology company, and IT spending on both smart- and “smart” devices will approach $4 trillion per year, according to research firm Gartner.
If it keeps on this pace, global spending on IT will grow 3.6 percent during 2014, to $3.8 trillion during 2014, according to a new study presented at a Gartner conference in Florida Oct. 7.
But that money will have far greater impact than the relatively modest growth percentage, according to Peter Sondergaard, Gartner’s global head of research. The engine of the new economy will be the confluence of cloud computing, social collaboration, mobile technology and information, and the Internet of Things, creating connections and relationships among objects in the physical and virtual worlds that have never existed.
Rather than focusing on servers, storage, datacenter networking and management equipment – or even on laptops, smartphones and tablets – the $3.8 trillion in spending on information technology will be spread among devices of all types, from cardiac monitors to semi-trailer telematics to refrigerators and self-adjusting home heating/air-conditioning systems.
Connecting standalone products, making them remote-controllable, adding the ability to report on their status or that of their environments and other capabilities will create enough new functions and services to add $1.9 trillion in value to the global economy by 2020, Sondergaard predicted.
In the telecom and technology markets alone, sales, service and integration related to the Internet of Things will generate at least $309 billion in revenue by 2020.
In 2009 there were 2.5 billion devices with individual Internet IP addresses, most of them servers, PCs, smartphones and other traditional IT hardware. By 2020 that number will be 30 billion, only a small percentage of which will be standard IT equipment, according to Gartner studies.
Gartner isn’t the only one making grand predictions about the future of smart devices.
Cisco Systems, which calls the future the Internet of Everything, predicts 50 billion connected devices by 2020 rather than 30 billion. The company is also more bullish on the value of the connections among all those devices – predicting it will increase private-sector profits 21 percent by 2022 and add $14.4 trillion to the global economy.
Mckinsey Global Institute emphasizes the risk involved in a big change from disruptive technology, but predicts the economic impact of the Internet of Things will be $2.7 trillion to $6.2 trillion per year by 2025.
Estimates from other analyst firms and technology companies (most of them already selling products or advice in markets likely to be affected by the Internet of Things) range so widely that it becomes difficult to keep the billions straight from the trillions.
Such numbers also generate skeptical blowback, even from such optimists as Robin Duke-Wooley, CEO of Beecham Research, which produced the studies on which Cisco’s expectations are based. “Growth rate projections are often far too high for what is essentially a solutions business, not a consumer products business,” he told M2Mnow.Biz in December, 2012. “New projects and technology changes are also often assumed to happen much too rapidly. The forecast errors for these are potentially huge.”
Whether its own economic projections are accurate or not, Gartner is backing the potential of the Internet of Things to create widespread changes in every aspect of business in the same way the World Wide Web turned every company with a web site into a content publisher and e-commerce company, even those that resisted.
“Digitalization exposes every part of your business and its operations to these forces,” Sondergaard said. “It is how you reach customers and constituents; how you run your physical plant; and how you generate revenue or deliver services.”
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