The global Artificial Intelligence (AI) in the IoT market is expected to grow at a CAGR of 27.3% during the forecast period (2021-2026). The need to efficiently process huge volumes of real-time data being generated from IoT devices, the growing demand for performance management appliances, and the need to reduce downtime and maintenance costs are the primary factors driving the growth of the market.
IoT technology is the keystone for various organizations to digitally transform, thus, empowering them to upgrade the existing processes by creating and tracking new business models. More and more companies are viewing IoT as an important element for business success, thus increasing the adoption. For instance, according to a study of 3,000 decision-makers involved in IoT decisions at enterprise companies by Microsoft in 2020, 90% of the organizations consider IoT as critical to the overall success of their business. This number was 88% during the previous year. Additionally, 94% are satisfied with IoT in their organization.
The retail industry is leveraging cloud AI in IoT-based services to augment their customer experience programs and generate more customer-oriented products. For instance, in a smart retail environment, a camera system outfitted with computer vision capabilities can use facial recognition to recognize customers when they walk through the door. Suppose the system detects the majority of customers walking into the store are Millennials. In that case, it can push out product advertisements or in-store specials that appeal to that demographic, therefore driving up sales.?
Furthermore, most of the companies are shifting to the cloud from on-premise AI, owing to faster delivery time with low latency and real-time tracking, which is likely to foster the studied market growth during the forecast period?. For instance, Amazon Echo Amazon has introduced Web Services IoT, a managed cloud platform, and lets devices connect securely to cloud applications and other devices. They have several partners, such as Fitbit, Uber, Spotify, and others
During the spread of Coronavirus, the ability for organizations to access scalable, dependable, and highly secure computing power whether for vital healthcare work, to help students continue learning, or to keep unprecedented numbers of employees online and productive from home are some of the critical factors owing to the growth of the market in this situation. Hospital networks, pharmaceutical companies, and research labs are using AI-enabled IoT devices to care for patients, explore treatments, and mitigate the impacts of COVID-19 in many other ways. All of the above factors have accelerated the growth rate of the market in the short run and are expected to augment it further in the long term.
Due to intense competition in industrial IoT and market maturing, many legacy vendors in the infrastructure management space are offering software to gain a stronghold throughout the value chain. For instance, In February 2021, IBM and Red Hat announced a new collaboration to use a hybrid cloud designed to deliver an open, flexible, and more secure solution for manufacturers and plant operators that will drive real-time value from operations data from industrial IoT.
However, lack of skilled workforce, along with growing concerns regarding data security, are some of the major factors restraining the studied market growth.
Key Market Trends
Manufacturing Industry is Expected to Witness Significant Growth
Manufacturers are increasingly taking steps to achieve 100% automated data management systems. AI-enabled IoT applications for manufacturing can also efficiently deal with operations such as monitoring and optimizing equipment performance, production quality control, and human-to-machine interaction. Faster and efficient manufacturing and supply chain operations allow reducing product cycle time significantly.
For instance, in May 2021, Bosch launched a new AIoT platform that provides real-time data on energy consumption at manufacturing sites. The Phantom Edge platform is designed to deliver manufacturing efficiency, real-time alerts, and notifications for timely actionable insights. It also automates data capture and measures accurate downtimes by providing timely, bias-free, and precise data that form the basis for managers to set targets, track performance, analyze, and improve on a continuous basis.
Moreover, With the high rate of adoption of sensors and connected devices and the enabling of M2M communication, there has been a massive increase in the data points that are generated in the manufacturing industry. These data points could be of various kinds, ranging from a metric describing the time taken for a material to pass through one process cycle or a more advanced one, such as the calculation of the material stress capability in the automotive industry.?
Various vendors in the market are also offering professional services specific to the manufacturing industry. IBM offers its IoT professional services under Watson, including consulting and boasts prominent clients in manufacturing space. For example, Mahindra & Mahindra Ltd, an automobile manufacturer in India, has adopted connected engineering solutions from IBM. ?
Further, an India-based start-up, Lincode Labs, utilizes AI and Industrial IoT solutions to increase the profitability of manufacturers. The company helps manufacturers automate visual inspection and improve overall equipment effectiveness (OEE) by identifying product defects using computer vision and artificial intelligence with the help of deep learning. All these factors combinedly are expected to drive the growth of the market studied during the forecast period.
North America is Anticipated to Hold Major market Growth
The growth in the region in AI in the IoT market is associated with an increase in the numbers of early adopters of the technology. Other factors influencing the growth of the market are the presence of most of the major players in the region, higher cloud adoption rate among the end-user, which is also driving the investment in the studied market.? The market players in the area are even viewing strategic partnerships and collaborations among various significant players in the market as a lucrative path towards market expansion.
Additionally, awareness about IoT solutions in industries is significantly higher in the region compared to others. According to a study by Mendix in March 2021, 78% of the US manufacturing workers welcome digitalization and, eight in ten manufacturing workers are interested in learning new digital skills.
5 G-enabled IoT connections are expected to further raise the market demand in the United States. As per IoT Association, the United States leads in terms of smart home adoption, with the highest intelligent home device ratio per household and the most significant consumer propensity to own devices across two or three use cases (security, energy, and appliances).
Moreover, the country expects billions of devices connected to the internet, devices, and sensors of the internet of things. With the onset of 5G networks, more bandwidth and faster internet speeds can be utilized by Google and Facebook, for instance, to develop more advanced services soon. ?
Furthermore, the region is also witnessing the increasing investment in the market which is expected to be one of the key driving factors for the growth of the market during the forecast period. For instance, in February 2021, Advantech, an industrial IoT solutions provider, partnered with Momenta Ventures to launch the AI and IoT Ecosystem Fund, with a target USD 50 million capital focused on AI and IoT innovators in North America and Europe.
The AI in IoT Market is highly competitive owing to the presence of a large number of players in the market operating in domestic as well as in the international market. The market appears to be fragmented. Owing to the increase in the applications of AI in the IoT market, major players in the market are adopting strategies like product innovation, partnership, mergers, and acquisitions. Some of the key developments are:
May 2021 - Google Cloud announced the general availability of Vertex AI, a managed machine learning (ML) platform that allows companies to accelerate the deployment and maintenance of artificial intelligence (AI) models and IoT. Vertex AI requires nearly 80% fewer lines of code to train a model versus competitive platforms. It enables data scientists and ML engineers across all levels of expertise to implement Machine Learning Operations (MLOps) to efficiently build and manage ML and IoT projects throughout the entire development lifecycle.
October 2020 - PTC and Rockwell Automation announced the expansion of the strategic alliance. The extension will ensure the continuity of both the companies’ sales and product development efforts. The companies’ primary joint offering FactoryTalk InnovationSuit powered by PTC is a comprehensive digital transformation software suite that offers fully integrated Industrial Internet of Things (IIoT), edge to cloud analytics, MES, and AR solutions required for the connected enterprise. The alliance is expected to continue to leverage each other’s resources and market presence to bring innovation to their products and serve their customer through 2023 and beyond.
June 2020 - Verizon and Microsoft formed a partnership to significantly accelerate time to market for IoT solutions. This partnership will provide all the critical components in the IoT value chain, such as connected devices, network/capability, cloud hosting, and artificial intelligence. As part of this partnership, Verizon’s 5G/LTE Network, ThingSpace IoT platform, and Critical Asset Sensor (CAS) devices have been integrated with Microsoft Azure to enable IoT Builders to create new IoT applications quickly and efficiently.
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