Reality Check: 50B IoT devices connected by 2020 – beyond the hype and into reality

How far is the hype surrounding claims of up to 50B IoT and machine-to-machine devices by 2020 away from reality?

For half a decade, the predictions for growth in the “internet of things” and machine-to-machine markets have been staggering:
• 2010, IBM: “A world of 1 trillion connected devices” by 2015.
• 2011, Ericsson’s CEO Hans Vestberg: “50 billion connected devices” by 2020.
• 2013, Cisco: “50 billion things will be connected to the internet by 2020.”
• 2013, ABI Research report: “30 billion” by 2020.
• 2013, Morgan Stanley report: “75 billion devices connected to the IoT” by 2020.
• 2014, an Intel infographic: “31 billion devices connected to internet” by 2020.
• 2014, ABI Research updated report: “41 billion active wireless connected devices” by 2020.
• 2015, Gartner Research: “4.9 billion connected things in use in 2015 … and will reach 20.8 billion by 2020.”
Although the specific predictions and the numbers differ, what is remarkable is that the numbers predicted for 2020 have been consistently extremely large over the years. The IoT market is experiencing explosive growth around the world and the numbers are still performing at what Gartner calls the “peak of inflated expectations” in its well-known “hype cycle” diagrams.
But how realistic are these massive numbers? Even the most conservative prediction – Gartner’s 20.8 billion connected things by 2020 – is predicated on a steady 30% annual growth. Cisco’s oft-reported 50 billion connected things is dependent on linking up “tires, roads, cars, supermarket shelves, and yes, even cattle” by 2020, according to the company’s blog. No one can know if either of these things will happen.

Why the big numbers are hype

First, adoption rates for new technology tend to spike over an initial introduction period and then trail off. Consider the smartphone market – in 2014, worldwide sales passed 1 billion units, and yet in the fourth quarter of 2015, worldwide sales growth was the slowest since 2008, at 9.7%.
Second, while the IoT is a broad category, suggesting that we could slap an IP address and sensor on every possible “thing” on planet Earth is honestly stretching the concept. It is true IoT connectivity could enhance most any industry, but just because it can doesn’t mean it will – and not necessarily by 2020. Some businesses and people won’t want to connect any time soon and, more importantly, some can’t connect their things yet. According to the United Nations, as of 2014, only 40% of the world’s population has internet access. There is not an internet of things without the internet, and counting only the “things” is putting the cart before the horse.

But … what if the numbers are real?

Let’s say those huge numbers are realistic. If an estimated 6.4 billion things are connected today, as Gartner estimates, we’ve got four years to connect another 14.4 billion to 43.6 billion. How will this work? What do businesses, government and standards organizations need to do to prepare for this growth? Turns out, things don’t just connect themselves and the impact of that many connected devices is not subtle.
As we mentioned, connectivity is not yet ubiquitous around the world. To get more things online, we need to expand cellular or perhaps satellite connectivity across the vast, mostly rural spaces. The U.N. reports more than 90% of those not yet online are in the developing world, and getting these people – and their things – connected will be a challenge for businesses and governments.
Certainly, the benefits of IoT technology are already being proven for these distant areas. The organization Sweet Sense has teamed up with government and nongovernment organizations to put IoT sensors on water pumps in rural Africa. This enables the NGOs that install the pumps to track their functionality. In a Rwanda study, only 56% of the water pumps were working consistently. After adding the Sweet Sense technology to track the pumps’ function via cellular IoT systems and analytics, the water pumps were able to be repaired more quickly and 91% of the pumps could be kept working on a regular basis.
With projects like this, IoT connectivity can help provide clean water more days out of the year for more people – however, these systems can be counted in the hundreds of devices right now. They’ve yet to scale up to the enormous numbers in Gartner’s or Cisco’s predictions.

Can we scale up to 50 billion devices?

Scalability is at the heart of this problem. Even if all these people and places can be connected with all these things, that will generate massive amounts of data. Take the example of a relatively simple cellular IoT/M2M device that generates a mere 4 megabytes per month, which is far less than most cellphone data monthly plans. If the world does reach 50 billion devices by 2020, then the number of cellular IoT/M2M devices would be about 2.5 billion, given that these are likely to be about 5% of all connected devices. The data this small subset of all connected things would generate is a whopping 10 million terabytes per month. And again, that’s about 5% of all the data that 50 billion connected things could possibly generate.
How will all this data be transported? How will it be stored? How will it be analyzed? How do you search through it? How will it be kept secure and private? Each of these issues must be addressed. Finding timely, actionable information within these vast data stores could be difficult and expensive. The costs of metered transport, storage and analytics have to be accounted for by industry, and distributed processing of information is vital.
Consider data security: When large numbers of things are creating and disseminating increasing amounts data, security measures have to be built into the process from the start. How do you do that? Today, the news regularly reports on breaches of financial information or hacked devices from baby monitors to connected vehicles. If 50 billion devices are connected by 2020, undoubtedly some of the data they generate will need to be carefully secured, whether it’s financial, health or other personal statistics.
Editor’s Note: The RCR Wireless News Reality Check section is where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.