Although Verizon is still looking to expand its 5G network to 60 US cities by the end of the year, European and Asian telecom companies have put similar projects on hold. Without an efficient infrastructure, the future of IoT solutions that process large volumes of data closer to the edge of the network (surveillance cameras in Smart Cities, industrial robots, self-learning Smart Home devices, etc.) remains uncertain. The global logistics industry, which loses $350 million per week due to lockdowns, will hardly invest in blockchain-based IoT systems for cargo tracking. And while smart speaker, wristwear, and personal audio device sales are projected to grow 9.8% this year, most consumer IoT vendors will have to shift focus towards communication and entertainment technology to meet their revenue targets.
The bold predictions analysts were making about the Internet of Things in late 2019 will most likely remain unfulfilled. Today, it’s impossible to discuss technology trends out of the quarantine context. And here’s how the global lockdown is affecting the Internet of Things sector.
Before the quarantine, the business IoT market had been growing at a steady pace. The majority of companies had moved from IoT project planning to implementation and increased IoT investments by 20%.
Then the virus emerged, and the global economy slid into recession. Through 2020, businesses will be focusing on restoring negative cash flows, optimizing the workforce, and adjusting capital expenditures.
As companies are pulling back on near-term infrastructure investments, hardware-related projects will see the sharpest cut. Software solutions, on the other hand, will display a modest 2% growth driven by the increasing demand in collaborative tools, document management software, and cloud solutions.
Due to the quarantine and overreliance on China’s manufacturing power, 75% of companies are reporting supply chain disruptions. It is estimated that the coronavirus outbreak has already caused a 12% decline in smartphone production, while smartwatch brands registered a decrease of about 16%.
In IoT, the supply of chips, sensors, and development boards may take longer to ramp back up to normal than in other business areas.
This will force technology companies to adopt a multi-supplier, multi-location approach to hardware manufacturing and support small and medium-sized enterprises involved in the production of hardware components.
In the long term, businesses will consider moving production facilities away from China. Wistron Corporation, one of Apple’s manufacturing partners, has already voiced plans to assemble iPhone components at a new plant in India, while Google is set to begin the production of Smart Home products in Thailand.
According to Yahoo! Finance, 35% of Americans admit the lockdown has affected their current financial situation.
As a result, consumers have cut spending on clothing, beauty products, and consumer electronics (except for home entertainment devices).
The application downloads for major consumer IoT solutions can serve as an indicator of customers’ diminishing interest in connected devices. Philips Hue application, for instance, has dropped 30 places on the US Lifestyle iOS Apps chart since February. Speaking of Home Automation, analysts expect Smart Home sales to plunge 20% by the end of this year.
With the global economy in a recession, IoT companies are seeking ways to leverage their skills, infrastructure, and products to fight both the economic and public health problems associated with the pandemic.
Despite the quarantine, the global Internet of Things market is expected to reach $243 billion this year — up from $150 billion in 2019. There is a strong indication that the declining demand for IoT solutions in the automotive, logistics, and consumer electronics sectors will be a short-lived phenomenon, which could eventually spur the Digital Transformation of traditionally analog industries.