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Sizing (uncertain) IoT opportunities in South East Asia needs a robust approach

Internet of Things (IoT) is expected to impact industries as wide ranging as farming to aeronautics. Telcos, software developers, hardware manufacturers and appliance manufacturers are developing and launching products to tap into IoT’s potential.

However, IoT’s actual potential is not yet clear. Forecasts for IoT revenues globally range between USD 500 billion and 1.5 trillion in 2020, while estimates for the number of IoT devices range between 13 and 30 billion. This wide range of projections is a result of the uncertainty that still exists with regards to the implementation, standardization and utilization of IoT as the technology continues to evolve.

The guess work required for companies to develop business plans is mitigated in certain advanced IoT markets like the US where there is already a wide range of industries using the service. Two US telcos have reported IoT revenues of approximately a billion dollars in 2016, and can pinpoint sectors that show high growth potential based on their own sales pipeline.

However, in South East Asia (SEA), IoT is still nascent, with potential users in many industries still unclear about how to value the monetary benefits of an IoT implementation. For technology providers wanting to sell IoT services, plausible forecasts for the region are challenging. This makes it hard for businesses to identify and prioritize opportunities and develop supporting business plans.

How should IOT forecasts in South East Asia be developed?

Pioneer Consulting Asia (PCA) has developed a framework to assess opportunities and produce 10 year forecasts of device volumes based on a ground-up analysis of demand drivers industry by industry.

We have applied it for Singapore. Our analysis identified 6 key industries that will generate the highest demand for IoT devices. These are highlighted in Exhibit 1 below, along with our estimates for IoT device growth in Singapore from 2016 to 2025.

Exhibit 1. PCA’s IoT opportunity sizing analysis and 10 year forecast for IoT devices in Singapore

We note that key drivers in the region vary from country to country, depending on the country’s stage of development, population size, and key economic sectors.

Once we have identified high potential industries, PCA works with clients to determine the attractiveness of specific opportunities looking at 6 key dimensions:

  1. Revenue potential

  2. Technical capabilities of the client

  3. Partnership availability

  4. Halo effect

  5. Investment needs

  6. Partnership complexity

The graphical output of this framework is illustrated in Exhibit 2.

Exhibit 2. PCA’s IoT opportunity assessment framework

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