The global enterprise Internet of Things (IoT) market will grow to $650bn by the end of 2023, according to a report by GlobalData thematic research.

The IoT is an umbrella term used to refer to the ability of physical objects to connect with other devices over the internet; think smart fridges, smart watches and smart cars. 

“Interest in the IoT shows no signs of waning in 2023,” GlobalData wrote in the report.

“Soaring inflation will force enterprises to realign their IoT preferences to those devices that add the most value per unit,” the research firm added. 

The growth in the IoT market will come from a range of industries and locations throughout the year.

Just under half of the entire global enterprise IoT market growth will be attributable to the rise of smart cities.

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By GlobalData

According to GlobalData, $315 billion of the $650bn will be attributable to smart cities with the other $335 billion coming from the industrial internet.

“The automotive sector will be a significant growth driver with requirements for EV charging networks, in-car services, and factory automation increasing connections and revenues,” John Marcus, principal analyst at GlobalData, told Verdict.

“Other verticals are becoming more connected: one global player says its hospital deployments now have four times as many connected devices as they did a few years ago,” he added.

Investment in the IoT sector fell significantly in 2022

The predictions come as 2022 saw an overall drop in total funding in the sector, with total investment declining by 22%.

However, despite the IoT market not escaping the downward economic trend of the year, the average funding for Industrial IoT startups more than doubled in 2022, according to Crunchbase data.

“Despite venture capital generally cooling off due to current economic conditions, the research reveals investor confidence is higher than ever for the long-term prospects of companies developing products in the IoT,” Dr. Sara Ghaemi, technical director at Avnet Abacus, said.

The total value of IoT deals has actually been falling since its stratospheric peak in 2018.

In 2019, the value of IoT deals totaled $54m, a significant drop from $71m the previous year.

The value and volume of deals stayed roughly the same throughout 2021, until a significant drop in total investment in 2022.

IoT deals in 2022 totaled $34m made up of 741 deals, plummeting from a previous $52 made up of 901 deals.

GlobalData is the parent company of Verdict and its sister publications.