IoT revenue of IBM, HPE, Cisco and Microsoft revealed

IoT investmentTechnology Business Research (TBR) has revealed the size of the IoT revenue – and revenue of top 4 IoT players such as IBM, HPE, Cisco and Microsoft — for the second quarter of 2016.

TBR’s Commercial IoT Benchmark, which analyzes the market performance of 21 companies, said Cloud services remain commercial IoT’s fastest-growing segment at 67.2 percent due to vendors’ evolving need for platforms, processing and storage.

Save ICT infrastructure, all IoT segments grew by double digits, proving the opportunity for vendors in the IoT ecosystem. ICT infrastructure’s slower growth, at 5.3 percent year-to-year, stems from the increasing popularity of IaaS.

Software composed the largest portion of commercial IoT revenue at $1.9 billion, or 32.5 percent of total revenue, in 2Q16. This is due to the broad existence of legacy database and application software that has not been moved to the cloud.

Incumbency in IT and/or in industry verticals is becoming a primary factor to success in commercial IoT. Microsoft’s base in software, for example, has made it an incumbent in IoT due to its ability to cross-sell software customers onto its Azure IoT platform.

“Incumbency proves a foundation for gaining leadership in IoT due to cross-selling, deep relationships and established knowledge,” said TBR Analyst Dan Callahan.

Companies with incumbencies in IT and consulting are the leaders in TBR’s benchmark.

IBM, Hewlett Packard Enterprise (HPE), Cisco and Microsoft are emerging as the top four in total IoT revenue in Q2.

IoT revenue of big 4 technology players

IBM $783.2 million

HPE $593.5 million

Cisco $576.2 million

Microsoft $505.7 million

GE Digital’s business is also rooted in incumbency, as most of its clients are previous customers using GE software (from which Predix evolved). GE’s incumbency advantage also serves as a limitation. Outside its traditional markets, the company struggles to gain traction. This struggle leads GE, as well as other companies, to seek partnerships with other incumbents to expand their respective customer pools.

GE’s new partnerships with Microsoft and Oracle will help improve GE’s position in the Q4 2016 Commercial IoT Benchmark due to access GE will gain to these companies’ vast enterprise relationships. Despite market consolidating around IT incumbents, the opportunity for a dark horse disruption remains possible.

Vertically oriented companies with strong IoT go-to-market strategies, such as PTC, are ripe for acquisition, and an unexpected purchase, such as by SAP, Bosch, Siemens, Hewlett Packard Enterprise, Oracle or Verizon, could shake up the status quo significantly.

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