Sep 3, 2019
| 5 min read

Insights

Connected Industry Pulse Check: August 2019

Our Pulse Check series highlights the key news and takeaways in Connected Industry for each month. The intention of these Pulse Checks is to see how quickly things happen - digitalization subsumes IoT, AI and Machine Learning goes mainstream, energy transforms to clean and decentralized while the emergence of autonomous vehicles, smart spaces and new tech like blockchain and 5G are taking off. As the industry is moving faster and continues to evolve, we share the stories you need to know to keep abreast with IoT news from around the world. 

AUGUST 2019

Summer is typically a slow season for new products and major developments, and 2019 is no exception. What’s different this year is that US-China trade tensions continue to ratchet the pressure on American companies to explore alternatives to Chinese manufactured goods and components. For Connected Industry, this creates challenges for supply chain planning – and the unpredictability of tariff policy has a silver lining in that the need to seek out alternative suppliers will help bolster the resiliency of business operations over time.

One of the dynamics about the Industrial IoT market that’s explored in a new report from BCG is that incumbent firms often have more sustainable competitive advantages against startups in IoT. Rather than risk being completely disrupted, large established firms can more effectively extend their business lines and diversify revenue models by partnering with startups. This changes the dynamics of investing from the VC perspective, which we explore in our Webinar "The Venture Industrialist; Investment Strategies for Connected Industry". There are ample opportunities for incumbents and new entrants to grow together around new opportunities.

Microsoft recently released a survey of 3,000 IoT decision-makers at enterprise companies for its first-ever “IoT Signals” report. 94% are planning an IoT implementation in the next two years and 88% believe it will be critical for their business, comprising about 30% of their revenue during that time frame. Once organizations adopt IoT, the top benefits align with the reasons they adopted – companies experience increased efficiency (91%), yield (91%), and quality (85%).  97% of executives responsible for implementing IoT projects have concerns about security but are going ahead with projects anyway. 

Security remains top of mind for companies, with security for smart cities severely lagging. According to ABI Research, smart city security spending coming from financial, information and communication technologies (ICT) and defense industries will account for 56% of the projected $135 billion in total cybersecurity critical infrastructure in 2024 with the remainder coming from energy, healthcare, public security, transport, and water and waste sectors. 

Funding for IoT continues to be healthy. A recent study by GlobalData shows that number of investments by the 10 VC firms in the Internet of Things space increased by 89.1% in 2018 compared to the 2014–2017 average. Total investment value also recorded an increase of 145.2%. Six of the top 10 VC investors headquartered in the US. Baidu made the highest number of investments while Andreessen Horowitz led in terms of investment value.

We hope that the resolution of US-China trade tensions will occur in the near term – but ongoing challenges are forcing creative solutions to the fore. Looking into the rest of the year, the solid economy in the US appears to be resilient despite fears of recession, and we expect investments and adoption of IoT to continue apace.

   

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Momenta Partners encompasses leading Strategic Advisory, Talent, and Venture practices. We’re the guiding hand behind leading industrials’ IoT strategies, over 200 IoT leadership placements, and 25+ young IoT disruptors.  Schedule  a free consultation to learn more about our Connected Industry practice.