As the number of connected devices and sensors continues to grow, Internet of Things (IoT) manufacturers will need to differentiate their offerings by implementing innovations such as value-added services (VAS) to ease the IoT development process for customers. Hardware development kits (HDKs) are one such innovation. According to the latest market study by ABI Research, the leader in technology market intelligence, the HDK install base will nearly double from approximately 11 million units in 2014 to 21 million units in 2020 at a CAGR of about 12 percent.
Read ABI Research’s Application Development Services for IoT Hardware report.
“When you look at revenues generated along the IoT value chain, the number of companies that offer hardware based solutions is roughly the same as those that offer value-added services,” says Ryan Harbison, Research Analyst at ABI Research. “However, device-generated revenues only account for 10 percent of total IoT revenue, whereas value-added services revenue accounts for 70 percent of total IoT revenue.”
Of IoT companies surveyed, more than 90 percent of hardware companies operating in the IoT space also offered VAS to complement their physical offerings. Meanwhile, only 33 percent of VAS companies provided hardware components. This suggests that the IoT adage, which surmises that software companies will become hardware companies and vice-versa, is only partially true.
“These findings are due to many factors,” continues Harbison. “These complementary VAS help attract developers to specific kits and ecosystems by allowing hardware companies the ability to differentiate their hardware offerings. Additionally, there are greater barriers to entry for IoT VAS companies who lack the resources and infrastructure necessary to offer hardware components. As such, there is pressure on device manufacturers to differentiate their hardware by offering additional services.”
Additional services that device manufacturers can deploy to differentiate their hardware solutions include application development, analytics and device management tools. For instance, HDKs allow developers who may not have a strong background in hardware development the ability to create and prototype IoT solutions.
“HDKs, which are becoming increasingly easier to obtain, help device manufacturers target IoT inventors by streamlining the IoT product development process,” concludes Harbison. “Virtually every semiconductor company offers a handful of solutions targeting developers at different price points and experience levels. There is no shortage of open-source solutions through products like Arduino boards.”
These findings are part of ABI Research’s M2M and IoT Platforms and Services, which includes research reports, market data, insights and competitive assessments.
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