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The Internet of Things: The Next Wave
Predicting the next innovative product that will be a consumer ‘must have’ is not an easy task. There is always the possibility of someone inventing one really cool device that would rival the success of tablets and smart phones, but Semico doesn't see that on the horizon, yet. We do see enormous opportunities in the markets that are commonly referred to as "The Internet of Things". There are several factors that we believe will drive the Internet of Things. These include but are not limited to:
- Controlling electric usage to minimize energy consumption
- Remotely monitoring home and appliances
- Security concerns for home, office and industrial environments
- Inventory control in business, retail and at home in your pantry or refrigerator
- Constant monitoring of home appliances and industrial equipment to prevent costly breakdowns
- Access to entertainment from home, auto or other remote locations
These are just a few of the advantages of having everything networked and connected to the Internet. One of the key drivers that Semico believes will influence the implementation of the Internet of Things is the increasing cost of electricity and the desire to monitor and control consumption.
This next wave is connectivity driven over smart grids, enabling healthcare, smart cities, asset tracking, sensor driven appliances and other applications yet to be developed. More specifically, Semico has focused on residential applications to quantify part of the potential for the “Internet of Things”
Semico recently completed an in-depth look at the impact of the Internet of Things on the residential market. The number of worldwide households tops 886 million. China represents the largest number of households with 45% of the total. Semico expects over the next decade the household that are classified as middle class will continue to expand in China thus representing an ever growing market. Europe comes in second with 35%, followed by the U.S. at 14%, and Japan at just under 6%.
So what kind of devices can tap into the Internet of Things? The answer is anything that can be networked and/or connected to the Internet. For just the residential environment, Semico has identified 70 different appliances that can potentially be considered for "Internet of Things".
Below are a few examples.
- Refrigerator
- Electric range/oven
- Microwave
- Washing machine
- Dryer
- Water heater
- Home robots
- HDTV
- Air conditioning/furnace
- Pool pump
- Garage door opener
- Security systems
- Smart meter
- Ceiling fan
- Door locks
- Smoke detectors
- Plug-in electric vehicle
- Sprinkling system
- Baseball bats
- Tennis rackets
- Football helmets
- Weight scale
- Health and fitness wearable
- Medicine dispensers
- and the list goes on for 70+ items
The next step in our analysis was to analyze all 70 applications and assign a penetration rate by device by region for the year 2023 (10 years out), in most cases our penetration rate assumption for connected devices range from 2% to 10%. Semico believes this is a very conservative view. From our perspective it is a conservative but reasonable adoption rate as we are already seeing manufacturers marketing Internet of Things products. One example is Lodi garage door openers. This manufacturer is currently selling a garage door opener that can be monitored and controlled from your smart phone or tablet. Pretty cool!
Based on conservative penetration rates of 2 to 10%, the worldwide "residential only" Internet of Things in 2023 will grow to 22.7 billion products. This would result in a semiconductor unit TAM of 204 billion devices associated with the Internet of Things. For comparison purposes, in 2012, the worldwide unit market for semiconductors totaled 673 billion. The residential Internet of Things represents a 30% increase in the number of semiconductor units compared to the 2012 unit TAM. Improved price points and widely adopted standards could set off a much higher product acceptance.
Combine this with Internet of Things for commercial and industrial applications and we can expect semiconductor fabs to be kept quite busy over the next ten years.
This excerpt came from an upcoming Semico Report. For more information contact Rickv@semico.com
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