Covid-19 and what it means for IoT

It is still early days to fully size the impact of the current pandemic on the global economy, not to mention IoT. Nonetheless, what is important to note for both the enterprise and consumer is that IoT is not just about connecting devices, it is about using and analyzing the data these devices collect to achieve an outcome.

By no means do we think we have all the answers; the degree of uncertainty is still high– from the overall economic impact, to changes in consumer spend, and how enterprises in different verticals respond to the ‘new normal’. Rather, our analysis is a reflection on how the market has responded to Covid-19 so far and how we see (at this time) the future, recognizing that, for both the enterprise and consumer, IoT is not just about connecting devices but about using and analyzing the data these devices collect to achieve an outcome. And, of course, we will continue to monitor market developments, plough through quarterly reports, talk with the ecosystem players to try to gauge where the market is moving.

With that in mind, our views and analysis are guided by some top-level assumptions that underpin our latest forecast thinking.

Recession looms
Based on IMF data, global GDP will contract by 3 per cent this year and grow by 5.8 per cent in 2021. Whether or not these predictions still hold true is up for debate. Regardless, recent news suggests that the current crisis is far worse than the 2007-2008 financial crisis, pointing towards a U-shaped recovery in economic output, rather than the hoped for V-shaped fast recovery. As such, we look at any IoT market impact from a short-term and long-term perspective.

The ‘new normal’
On the demand side, the picture isn’t rosy. The Manufacturing PMI (Purchasing Manager Index), measuring the health of the economy, has nose-dived. This reflects low business confidence. Consumer confidence indexes have plummeted too, due to growth in unemployment and limited spending power. Almost overnight a large proportion of employees moved to a remote working environment, which increased enterprises’ urge to support their workers via cloud based software applications.  On the supply side, production has been impacted as manufacturers had to deal with supply chain disruptions, often looking to find alternative providers. China’s rapid re-opening has helped remedy some of these issues. But, in the longer-term, enterprises will look to build yet more resilience into their supply chains to be able to ‘track and trace’ and have visibility of their asset. Potentially, they will be also looking for a greater geographic spread of suppliers, and even at the potential for re-shoring – building greenfield operations to support in-country production.

The impact on IoT
Government measures put in place, related to social distancing, impacted travel and site visit restrictions, holding back services and project installations across all sectors. They have also underlined the importance of ‘out-of-the-box’ services that just work and can be easily deployed without specialists present. We’ve observed this trend on the consumer side, especially with regards to home security – self installed security cameras are on the rise. Granted, when it comes to enterprises, customized solutions are the preferred option as our survey shows, but this crisis might shift the status quo. In the short term, companies have been using software tools to ensure business continuity.

But what is the market actually saying? On the back of the launch of the 5G IoT for Manufacturing Forum a short survey to measure companies’ sentiment toward the impact of Covid-19 on their operations and ability to conduct BAU/provide services is being run.

Below are some of the key findings:

• Increase in automation, use of advanced analytics and increase in agility as a result of COVID-19
• Expectation that COVID-19 will increase customer demand for 5G while potentially shifting timelines
• Manufacturers see impact due to government measures – social distancing but overall, they see a rebound in the long term

The major downsides
We expect connected vehicles to be the most impacted sector across consumer IoT. Even before Covid-19 stopped cars rolling off the production line, new car sales had been slowing. This, combined with weak consumer demand, results in our expectations that connected vehicle growth will be less than 2 per cent in 2020 – compared to previous double-digit growth. The retail sector, for its part, will be forever changed, as the move to online channels accelerates. It’s important to recognize that a large proportion of retail stores are SMEs, many of which will struggle to survive the current crisis. Those that do, will most likely have to embrace digitalization. Smart city projects are also currently put on hold with cities having to reprioritize their budgets to focus on citizen safety. Interestingly, the crisis has highlighted the role drones and thermal cameras can play to monitor citizens or robots to sanitize the streets.

The hopeful upside
The current crisis has proven that companies that have already embarked on the digital transformation journey are faring much better. According to our 2019 IoT Enterprise Survey, 65 per cent of companies deployed IoT as part of their digital transformation agenda. Some of the planned deployments, especially for SMEs, will either never happen or be put on hold. But this isn’t true across the board. Smart health, including prescribed and non-prescribed medical devices, will grow even faster than we would have expected just six months ago. The current crisis has highlighted that globally, public health systems are struggling to cope; when the dust settles, and perhaps even ahead of a vaccine, post-mortems of where failings were made will focus on where technology can help, even if that does mean relaxing regulations. Telemedicine and remote patient monitoring are two areas that will be prioritized in developed nations. Similarly, smart buildings as a sector will change. Working from home practices are here to stay and this will have an impact on office space requirements, but at the same time health and safety measures will have to be put in place to ensure those who return to the workplace are not placed at risk.

What does it mean?
When all is said and done, after analysis of market trends at a global level, our forecast is seemingly unchanged: 24 billion IoT connections in 2025 vs 24.6 billion that we forecast at the end of 2019. As surprising as it might seem, we foresee that the immediate downturn will result in longer-term IoT adoption as enterprises will look to achieve business benefits (cost reduction, increase in revenue etc).

As history has shown, every crisis leaves a long-lasting legacy in terms of faster innovation and a ‘new normal’. Covid-19 will accelerate the move to digital and companies adopting IoT, AI/ML and 5G amongst other technologies to drive digital transformation.

source : https://www.mobileworldlive.com/blog/intelligence-brief-covid-19-and-what-it-means-for-iot/