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IoT In The USA: 3,000 Companies, $125B In Funding, $613B In Valuation, 342,000 Employees

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2,888 businesses building the Internet of Things employ 342,000 workers, have raised $125 billion in funding, and have created $613 billion in value.

95 of them are now unicorns: billion-dollar startups.

The July 2017 IoT Revolution Landscape - click to get full resolution

ReadWrite Labs

Spoke Intelligence and ReadWrite, an IoT-focused publication and accelerator, just released their inaugural IoT Revolution handbook, and the numbers are very, very significant. 2,748 companies in the U.S. alone, plus another 140 in Canada, make the IoT scene in North America. (Disclosure: I am an unpaid advisor with a small equity stake in ReadWrite Labs. I did not participate in this research.)

Smart matter

IoT is the "internet of things," a blanket term for adding intelligence and connectivity to products and sensors. Personally, I prefer the term smart matter, the future result of adding three things to all products and environments: chips, radios, and sensors.

Ultimately, we're "smartifying" and connecting everything and every thing ... giving all things the ability to sense, to act, to control themselves, to be controlled by humans, and to impact their environment.

Current investment focus

The lion's share of the firms are in one predictable state, California, where no less than 1,345 companies provide IoT solutions. (Note that while companies on the list sell IoT products and services, many of them also provide other products.)

ReadWrite Labs

More interesting than the total numbers, perhaps, are the places where entrepreneurs and investors are placing their bets. More than a quarter of the companies are in just five categories:

  • AI and machine learning (401 companies)
  • Connected home (282 companies)
  • Healthcare - Enterprise (240 companies)
  • Facilitative reality (216 companies)
  • Data security (208 companies)

These categories make sense: AI and machine learning are essential to not only processing but also accelerating decision-making on the flood of information that IoT appliances and sensors are creating. The connected home is the low-hanging fruit of IoT -- consumer IoT -- that enables people to monitor and control their home and media.

Healthcare is clearly a massive revenue opportunity, and "facilitative reality" encompasses much of what both giants and startups are building augmented reality and virtual reality. At this time, that's mostly focused on entertainment, but that won't remain the case for long.

And massive investments in data security -- $7.1 billion -- are attempting to answer the challenges of IoT security.

The world has already seen massive attacks on public infrastructure from almost nonexistent IoT security, like the Mirai botnet that unleashed distributed denial of service attacks on publishers' servers, and newer attacks such as the Persirai malware that has targeted over 100,000 remote cameras.

Perhaps surprisingly, IoT has been a thing for a long time. The first mentions in Google Trends are in 2004.

John Koetsier

Clearly, however, the trend has been on the rise since 2013, with a sharp spike in 2015 and continuing growth in 2016. Two-thirds of Americans now have connected devices in their homes, according to an IAB study that USC professor Julie Albright has cited.

Given this long, slow build, some have felt disillusioned, saying that IoT is hitting the slope of disillusionment -- the phase in the hype cycle after over-hyping and before real value is generated.

That value is coming, however, according to experts who counsel patience:

"It's all about finding the real money-saving use cases that move the needle for the customer and productizing them in a way that aligns incentives of end-user, buyer, and seller," says VC Mike McCormick, a venture capitalist at Comet Labs. "More of these are emerging."

Independent analyst Scott Raynovich agrees:

"The problem is that IoT is actually five different markets," he told me via Facebook. "Consumer IoT is pretty slow to develop unless you are taking about connected cars, probably one of the most viable markets. Industrial IoT has many components including telemetry and energy automation, all of which are proceeding slowly but surely."

The new IoT Revolution landscape will be unveiled in full at tomorrow's IoT Revolution Summit in San Francisco. The accompanying ebook is also available.

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