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Two recent studies—one from the market intelligence firm International Data Corporation (IDC), and one from the U.S. Department of Commerce (DoC)—have delivered, in rather different ways, the same basic message: The Internet of Things (IoT) is apt to be a very big deal.

The IDC study, released on 4 January, suggested that worldwide IoT spending, including hardware, software, services, and enabling connectivity, could expand to as much as US$1.29 trillion by 2020, versus an already impressive US$737 billion of spending estimated for 2016. And a preliminary DoC study, or “green paper,” laid out a variety of recommendations for the U.S. government to foster such growth, through vehicles such as the government’s own adoption of the technology, selected public-private partnerships, and workforce training.

IDC: Industry leads the pack

In its “Worldwide Semiannual Internet of Things Spending Report,” IDC looks for compound annual growth of 15.6 percent for IoT expenditures between 2015 and 2020. That projection includes an estimated 17.9 percent jump in IoT spending for full-year 2016 alone.

Within the broad US$737 billion in worldwide IoC revenues estimated for 2016, IDC calculates that the manufacturing sector—a large component of the so-called Industrial Internet of Things (IIoT)—was responsible for some US$178 billion. That number includes an estimated US$102.5 billion in investments to tune manufacturing operations, toward the goal of so-called smart factories incorporating sensor technology, machine learning and other techniques.

The transportation sector accounted for another US$78 billion in estimated 2016 IoT revenues, largely focused on freight monitoring. And utilities, according to IDC, invested US$69 billion in IoT technologies during the year, including nearly US$58 billion toward the vision of an IoT-driven “smart grid” for electricity and gas.

Sensor technology ascendant

Notwithstanding much hype about “smart homes,” the consumer IoT is only the fourth-largest segment identified by the IDC study. But IDC envisions spectacular growth here, with annual smart-home investments projected to double by 2020, reaching some US$63 billion.

On the technology front, while hardware represents the largest single component of IoT spending, IDC expects spending on IoT software and services to expand at the fastest clip. Nonetheless, IoT hardware spending could nearly double by 2020, reaching some US$400 billion, according to IDC. And the company expects that growth to be dominated by connectivity module and sensor technology—both areas with a strong optics-and-photonics component.

DoC: An “enabling environment” for IoT

The U.S. Commerce Department, meanwhile, weighed in on the IoT’s potential importance in a green paper, “Fostering the Advancement of the Internet of Things,” published on 12 January 2017. The paper outlined the broad scope of, and many areas apt to feel the impact of, IoT technologies. And it suggested that, as it did with the internet itself, the U.S. government could have a strong role to play in creating fertile ground for IoT growth.

The report, drawing on public comments and a September 2016 IoT workshop, articulated four broad “areas of engagement” for the government going forward: enabling availability of, and access to, physical and spectrum-related infrastructure to support IoT growth; crafting “balanced,” future-proof policy in areas such as cybersecurity, privacy, intellectual property and trade; promoting technical standards and interoperability; and encouraging markets through public-private partnerships, government procurement, workforce training and providing continued information about the size of the IoT sector.

More information on the DoC report, including a downloadable copy, can be found at the department’s IoT page at www.ntia.doc.gov/category/internet-things .