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The Telecommunications Industry Association (TIA) the leading association representing the manufacturers and suppliers of high tech communications networks, announced the release of its 20th annual ICT Market Review & Forecast (MR&F), along with a comprehensive survey and white paper examining enterprise usage of the Internet of Things (IoT).

The latest MR&F shows that overall U.S. information and communications technology (ICT) spending grew 5.7 percent in 2015, reaching a total of $1.45 trillion, driven by strong spending in high-growth markets. While this increase is ahead of the growth seen in 2014 (5.3 percent), the MR&F predicts that growth rates in all ICT market segments will decline over the next five years. The MR&F is the industry’s most comprehensive communications technology data review, analysis and projection (2016-2020).

TIA’s enterprise Internet of Things survey, produced with Machina Research, finds that within two years more than 90 percent of companies will be using IoT technologies. Currently, nearly half (48 percent) of U.S. businesses are actively using IoT, and another 43 percent expect to deploy IoT solutions within the next 24 months. In a white paper analyzing the survey results, TIA concludes that IoT is set to become a mainstream enterprise element by 2019.

Market Review & Forecast

TIA’s MR&F looks at U.S. ICT spending based on expected performance of communications technologies, dividing them into four segments:

  • Pacesetting Markets are those experiencing double-digit growth (includes: cloud computing, network virtualization, Internet of Things, intelligent transportation and more).
  • Turnaround Markets are those in which spending is changing directions or rapidly moving up or down (includes: infrastructure equipment, video conferencing, smartphones and more).
  • Steady State Markets are those experiencing single-digit growth with no major swings (includes: cybersecurity, robotics, health ICT, fixed broadband, data center construction and more).
  • Legacy Technologies and Services are those experiencing long-term declines (includes: circuit-switched landlines, enterprise voice systems, standard wireless handsets and more).

The 5.7 percent overall U.S. ICT spending growth in 2015 was driven by increases in the first three segments above, with Pacesetting Markets leading the way at 19.5 percent year-over-year growth. Turnaround Markets saw 10.6 percent growth and Steady State Markets saw 5.1 percent growth. Over the next five years, U.S. ICT spending is expected to see a 4.8 percent compound annual growth rate, reaching $1.8 trillion in 2020 – maintaining its position as one of the leading drivers of the U.S. economy.

However, the MR&F finds that only Steady State Markets experienced a 2015 growth rate that was higher than the year before (4.5 percent growth between 2013 and 2014). The report predicts that the decline in growth seen in Pacesetting Markets and Turn Around Markets will continue over the next five years. In 2020, Pacesetting Markets are expected to grow at 11 percent and Turnaround Markets at 2.3 percent. For the next several years, growth in Steady State Markets will remain higher than it was in 2014 before declining to 3.5 percent in 2020.

Additional key findings of the MR&F:

  • Spending on cloud computing ($78.8 billion, up 16.7 percent in 2015) leads the Pacesetting Markets segment. However, other technologies are experiencing faster growth rates, led by network virtualization ($1.95 billion, up 46.6 percent) and M2M ($15.5 billion, up 38 percent).
  • U.S. smartphone spending rose threefold in five years, reaching $52.9 billion in 2015. With 68% smartphone penetration, spending growth will slow – from 8.3 percent annual growth in 2015, to 1.2 percent in 2020.
  • Two Steady State Market technologies – IP VPN services and cybersecurity – will see impressive growth rates, despite having reached maturity. IP VPN services is expected to grow 8.7 percent from 2015 to 2020, driven by the expansion of cloud computing services, and cybersecurity is expected to grow 8.5 percent, driven by rising attacks as more data is transmitted.

IoT Survey & White Paper

Among the key themes identified in the white paper is that companies have broadly accepted the value of data to the health of their businesses. Fully 98 percent say the ability to receive real-time data from their products would be extremely beneficial, and 72 percent report plans to use IoT to capture data on product feature usage.

Companies historically have focused on IoT as a tool for improving the bottom or top line – so the high level of interest in using IoT for product performance represents a significant shift in enterprise engagement. The survey also finds that companies expect that, on average, 44 percent of IT budgets in 2020 will be dedicated to IoT development and maintenance.

When asked which functions are most likely to benefit from increased IoT adoption, companies identified operations applications (29 percent) above all others. Business intelligence and data analytics was also highly ranked (24 percent), followed by mobile apps (17 percent), and CRM (13 percent).

A range of issues and trends are analyzed in the white paper. The results come from a survey, conducted by Machina Research, of two hundred senior executives working in relevant business functions and for companies with at least $10 million in annual revenue. It was commissioned by TIA, along with Telit and InterDigital, and the white paper was written by Machina Research Principal Analyst Andy Castonguay.

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