IoT Spending Forecasts Reach Sky: Cisco Systems, Inc. (CSCO), Facebook Inc (FB), and Microsoft Corporation (MSFT)


Asia/Pacific is going to be the biggest driver of Internet of Things (IoT) in the next five-year period at least until 2019. While North America will follow suit, Europe would be third biggest regions when it comes to spending on IoT. IDC said recently that it expects IoT spending to reach nearly $1.3 billion by the turn of 2019. That is a good news for companies focused on IoT like Cisco Systems, Inc. (NASDAQ:CSCO), International Business Machines Corp. (NYSE:IBM), Alphabet Inc (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT) and other firms. Some of them are focused on IoT to offset the losses witnessed in other sectors.

CAGR Until 2019

In the current year, IDC expects IoT to generate $698.6 billion and that it would witness 17.0% compound annual growth rate by the year 2019. Asia/Pacific is a leader in IoT spending with over 40% of the global spending coming from the region while North America and Europe would spend over $250 billion in the current year. The research firm believes that Asia/Pacific enjoys a rapid growth in IoT spending in the next five-year period. However, Latin America will be the biggest spender with CAGR of 26.5%, which would be followed by central, as well as, Western Europe. International Business Machines Corp. (NYSE:IBM), Cisco Systems, Inc. (NASDAQ:CSCO), Alphabet Inc (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT) and Facebook Inc (NASDAQ:FB) have all presence in most of the regions. Therefore, they are bound to take advantage of the available opportunities.

According to the IDC, it formed its opinion about Asia/Pacific based on three factors. They were creating the country’s technology investment requirements that are not completely addressed by the conventional IT. As a result, it would enable accelerated investment in IoT. The second factor is the government’s investments in infrastructure development, as well as, local business modernization. For instance, Philippines, India, and China are integrating more number of IoT elements. The third factor is the new promising consumer class that is quickening the expenditures in goods, as well as, services. That included IoT components too, IDC Research Manager for IoT, Marcus Torchia said.

Industries That Will Spend More on IoT

The research organization also pointed out that manufacturing and transportation were the lead sectors in the global IoT spending until now. In the current year, they were estimated to have spent about $165 and $78.7 billion respectively. However, it would be the Insurance, Healthcare, and Consumer sectors that are going to witness hectic spending on IoT elements in the next five-year period. The insurance sector is predicted to witness 31.8% of CAGR. IDC also believes that the consumer market would be the third biggest sector in spending towards IoT before the end of the outlook period, i.e. 2019.

IDC’s SVP and IoT Research Fellow, Vernon Turner, believes that both manufacturing, as well as, transportation were a perfect fit for IoT deployments. He said that it was because the two industries were focused on linking their products, customers, and supply chains. As a result, they could enhance their outcome business value.

Likely Gainers

While IDC has not disclosed the list of companies that stand to gain from its forecast, it is a fact that more IT companies are turning their focus towards IoT elements that included cloud computing too. International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT) recorded over 50% growth in their revenue from the cloud sector in the recent quarters. Similarly, Cisco Systems, Inc. (NASDAQ:CSCO) is concentrating on providing cloud infrastructure while Alphabet Inc (NASDAQ:GOOGL) is strengthening its presence. Facebook Inc (NASDAQ:FB) wants to promote the Internet in the region where there was no access to Internet. For instance, the social media is focusing on Asia/Pacific so that it could count upon the region for next round of growth drivers. There are also other companies such as Amazon.com, Inc. (NASDAQ:AMZN) and Yahoo! Inc. (NASDAQ:YHOO) who are focused on IoT elements and stand to gain.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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