Scenarios for IoT in 2025

If industrial IoT markets are developing rapidly (with naturally small volumes), thanks to cost and process optimisation, consumer markets are still struggling to take off. Several future scenarios are possible, depending on the level of trust in digital technology and the ability to monetise services and data.

Trust and business models will make all the difference

The level of user trust in digital technology and the ability to monetise are the two main variables shaping the development scenarios for the consumer IoT market, and likely to evolve quite rapidly. Trust, which today is relatively weak, is proving a major hurdle for these markets. The collected data are far more sensitive than general web data: piracy could result in loss of control over a connected product, rendering it unusable and possibly dangerous. Trust could be increased by incorporating security solutions and with a more protective (or stringent) regulatory framework. The other main obstacle today is the cost of the connected products, which is still high because most revenue is earned from hardware. The collected data are used chiefly for internal purposes, and services (including third-party ones) are rarely charged for. The switch to a more service-centric business model would help drive more widespread use. But this will only happen if there are solutions that ensure the objects are interoperable, and enable third parties to market services and utilise the data.

Evolution without disruption, thanks to gadgets and premium products

If these two parameters remain unchanged, a scenario of continuity with the status quo would be one of a world of gadgets (most of them eventually coming from China), viewed as accessories to smartphones, offering relatively basic features and free services via apps. Another continuity scenario would involve the rare situations where trust levels are rather high, thanks to strong security, often reinforced by the creation of a proprietary technical environment, albeit without achieving a high level of monetisation of the services. This would thus involve premium connected products, akin to Apple’s model for smartphones.

Disruption through human services, or automation and interconnection

There are two possible disruptive scenarios, characterised by the implementation of service-centric models. The first would see the market concentrate around specific uses, employing heavy and complex machinery, for which IoT is a major source of disruption, both financial and in terms of use (beyond just sending back data). To compensate for low trust levels, users turn to suppliers who offer human assistance. Under the second, more positive scenario, all the products would be connected through service orchestration platforms. These platforms would thus themselves provide most of the required technologies (artificial intelligence, security), to then utilise/monetise the collected data and/or serve as an intermediary for third-party services.

 
Four disruptive scenarios for connected products
IoT scenarios by key uncertainties
Low trust in digital High trust in Digital
Low-earning services Smartphone adjunct and/or gadget
(e.g.: bracelet)
Premium product
(e.g.: iPhone, NetAtmo)
High-earning services Coaching
e.g.: sports room)
Service orchestration
(e.g.: Amazon Alexa)
Source : IDATE DigiWorld from DGE-PICOM-Ministry of Sport
 
The winning model does not necessarily involve services
Change in the breakdown of Apple's net sales, 2014-2016