Consolidation, Partnerships Are Reshaping Hot IIoT Market, Cambashi Finds

Consulting firm’s study of the Industrial Internet of Things (IIoT) market shows industrial and enterprise software providers joining forces, and total revenues up more than 40%.

Cambashi, a market research, industry analysis, and consulting firm, has released its inaugural Cambashi Industrial Internet of Things (IIoT) Observatory — a dataset including information about market spending and user communities. The global study, which focuses on the emergence of connected applications, seeks to define the scope and segmentation of the market.

According to Cambashi, the IIoT market is undergoing major changes, with solution providers consolidating and new ecosystems forming. “Now the very nature of the future connected world requires that companies that have previously been competitors or customers of each other, or providers to each other, need to bring their pieces of an overall solution together to bring a complete solution [to market],” said Simon Hailstone, principal consultant for Cambashi, during “New Insights on Industrial IoT,” a webinar associated with the Observatory release.

It appears that those collaborative relationships are paying off, with global 2018 total revenues up 42% over 2017. “And what we're also seeing in that time is a proportionally faster rise in the IT enterprise providers compared with the OT industrial providers,” Hailstone observed.


Relative growth of global OT/industrial software revenue (in orange) compared with IT/enterprise (in blue) from 2017 to 2018. Chart source: Cambashi.

Operational technology (OT)/industrial providers may not be increasing their revenue as quickly, but they are raking in a larger share than information technology (IT)/enterprise providers, as a whole. “This is partly because OT/industrial has a higher initial base, but it is still true to say that IT enterprise software is making great strides,” said Alan Griffiths, principal consultant for Cambashi. “The picture will become more complicated in future as consolidation and partnerships change the shape of the ecosystem,” he noted.

More Movement in a Multifaceted Market

Cambashi defines nine market areas for connected applications. “The interesting thing is that there's … clear market traction across all of our nine market areas, including things like connected workers and connected cities, which is a good indicator of the direction of this market. We also have evidence that there [are] more implementations moving away from what one analyst described as ’pilot purgatory’ toward full operational activities,” said Hailstone, referring to implementations that stall or are abandoned before they’re completed.


Market areas for connected applications, and the underlying technology and services. Image source: Cambashi.


Top 10 use cases (industry applications) by connected market area, based on published case studies. Asset management and performance monitoring lead the pack. Chart source: Cambashi.

This substantial interest in the technology is driving providers to form cross-category alliances in response. There are already notable examples of IT/enterprise and OT/industrial providers joining forces, Griffiths explained: “Dassault Systèmes recently announced a major partnership with ABB to develop software for digital industrial solutions based on Dassault’s 3DX PLM and ABB’s Ability automation software portfolio. Rockwell [Automation] recently announced a major partnership with PTC where it's investing a billion dollars in the company, and is using PTC's ThingWorx [IIoT platform] with its factory floor offering. And at the Hannover Messe [industrial technology trade show] in April this year, Siemens announced a major open manufacturing collaboration venture with Volkswagen using Amazon's AWS platform.”


Enterprise and industrial providers are teaming up. Image source: Cambashi.

Not all the new relationships are collaborative; some are acquisitive in nature. “To illustrate this trend towards consolidation,” Griffiths continued, “PTC acquired ThingWorx and Kepware, Siemens acquired J2 Innovations and Enlighted and Mendix, Dassault increased its investment in BioSerenity — a firm that connects patients through sensors in clothing — and Microsoft acquired Express Logic.” And the shakeups won’t end there: Cambashi expects “significant” changes and consolidation in the market in the next few years.