Hard-hit transportation, entertainment, and retail sectors pull back on IT capital investments
Many planners see Internet of Things technologies as integral to the pandemic recovery effort. Sensors and autonomous devices will help track and secure buildings and people to aid in the economic recovery. However, the recession-like conditions caused by COVID-19 will first drag down IoT spending by double digits, according to ABI Research.
The Lowdown: Industries such as transportation, shipping, retail, and entertainment are decreasing their IoT investments due to the lack of demand for their services and the need to conserve cash. The IoT market is also experiencing supply-chain disruptions and manufacturing slowdowns. The combination of disruptions on the supply and demand side is causing IoT spending to slip by up to 18%, ABI Research concluded.
The Details: The decline is likely a temporary dip as IoT is seen as an integral component to the reopening of the economy following the COVID-19 pandemic. Public health and facilities planners see IoT devices and their connected systems as the means of protecting people as they return to workplaces, retail stores, and entertainment venues. According to IDC, IoT spending was on track to top $1 trillion annually by 2023.
The Impact: The disruptions and declines in demand for devices and services will likely hit the nascent IoT channel hard. According to research by The 2112 Group, only 7% of channel partners see IoT as an essential technology to the economic recovery. At the beginning of the year, 2112 found that 17% of resellers and integrators saw IoT as a growth opportunity.
The Buzz: “COVID-19’s impact on IoT is threefold. Some applications will experience a decline in shipments during 2020, ergo a reduction in the expected growth rate to their installed base,” said Jamie Moss, research director for M2M, IoT, and IoE at ABI Research. “Yet with no intrinsic change to their desirability and utility, they will return to expected growth in subsequent years. Some will experience a temporary stall in 2020 that will be compensated by increased activity immediately after, to bring installed base expectations back into line, while others will experience fundamental shifts in demand, both positive and negative, for years to come as consumer and enterprise priorities shift in light of COVID-19.”