Very little data currently captured by sensors today are tapped to support analytics, but the Internet of Things (IoT) market will continue to see growth over the next five years, fuelled by demand for new services.
One of the fastest growing segments in the region's IT industry, the Asia-Pacific IoT market was estimated to be worth $24.2 billion this year, growing at a compound annual growth rate (CAGR) of 26.8 percent to $79.3 billion in 2020. Services alone would account for almost three quarters of the market in five years, said Frost & Sullivan in a report Friday.
This growth will drive opportunities in several key markets including transportation, logistics, manufacturing, and consumer technology, all of which are predicted to see high growth rates in the next three years.
The research firm further noted that the IoT market would evolve from its current focus of connecting devices to tapping the data collected to develop new services and business models. This would transform how companies market their products and services.
Frost & Sullivan's Asia-Pacific senior industry analyst for ICT, Mark Koh, said: "With IoT, companies are moving from transactional product sales to a longer term relationship and service model, where everything can be offered as a service or 'service-tisation of industries'.
"As IoT moves from consumer- and enterprise-centric applications to vertical and industrial applications, the potential growth of IoT is expected to exponentially grow over the next five years," Koh said.
Currently, less than 5 percent of data captured by sensors were tapped for analytics, but Frost & Sullivan said this would increase as more devices connected to the internet. It added that the industry would move towards "computing decentralisation" as IoT technology became more widely adopted. P2P networks, for instance, would be more widely used and this would enable communication directly between connected devices, instead of the data having to be routed through a data centre.
Frost & Sullivan's Asia-Pacific senior vice president of ICT practice Andrew Milroy said: "The major IoT opportunities will be in the deployment and management of IoT projects. This will lead to a requirement for new skillsets which are currently scarce in the Asia-Pacific region."
Milroy also noted that the product-as-a-service model would become the norm across many industries, adding that more than 70 percent of Fortune 500 companies would operate this business model. The automotive and electronics industry segments, in particular, would lead the move at 15 percent and 13 percent, respectively. Auto makers, for instance, could come out to offer car-sharing services on a pay-per-use structure, while medical device manufacturers would offer healthcare monitoring systems.
The analyst said increasing cloud deployment would further boost IoT, though, this also could present several challenges, where large amounts of data would be involved, existing processes would need to be redefined, and security issues would pop up.
Some 25 percent of all enterprise IT workloads were expected to move to the cloud by 2020, compared to 12 percent this year. The Asia-Pacific datacentre and cloud computing services market would climb at a CAGR of 20.5 percent, hitting $77.3 billion in 2020 from $30.4 billion in 2015.
In 2016, as mobile devices become even more pervasive and IoT see increased adoption -- creating more attack vectors -- cybersecurity will be paramount, according to Frost & Sullivan. It added that the convergence of operational and information technology would allow cyber attacks to cause greater impact.
"Industrial control systems are more vulnerable than ever before and security will be the number one consideration as these systems are modified or developed. In 2016, it is evident that security will be prioritised and built into the architecture of any new systems before they are implemented," the research firm said.
With the vast amount of data created by growing IoT deployment, potentially outpacing social media and traditional online data, big data vendors would start looking at providing platforms that allow for better data management, data analytics, and data exchange.
Frost & Sullivan predicted that the industrial control system security market segment would grow at a CAGR of 45.2 percent, generating $1.5 billion in revenue by 2020. Looking to manage their risks and establish comprehensive security policies, enterprises in the region would invest in more advanced security tools, expertise, and threat intelligence, the research firm said.
Its Asia-Pacific director of ICT, Edison Yu, said: "Adopting an ecosystem approach towards security will not only allow enterprises to have the capability to prevent, detect, and remediate the threats using technology tools, but also help them build a strong capability of management of both internal and external threats with suitable governance process."
Mobile payments and ecommerce also were poised for growth in Asia-Pacific. The latter was predicted to grow 23 percent CAGR in Southeast Asia and worth almost $20 billion in Asean, where Singapore, Indonesia, and Malaysia expected to see the strongest growth rates.
This e-commerce growth would be fuelled by a growing middle-class population, as well as changing consumption and purchasing patterns, according to Frost & Sullivan. It added that the mobile payments market would account for more than 10 percent of total payment transactions in Asia-Pacific by 2020.