Industrial manufacturers see data storage costs decline, AI investments rise

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Although industrial manufacturers are lagging somewhat in their adoption of cloud-based services and connecting their legacy systems to digital networks, the vision for a vast Internet of Things (IoT) market is starting to take shape, according to ABI Research.

Industrial manufacturing applications will generate more than $138 million this year from cellular and satellite connectivity fees, ABI predicts. The Industrial IoT (IIoT) market will add more than 13 million new wireline and wireless connections worldwide in 2017 to an installed base exceeding 53 million connections.

“The costs for data storage and compute processing dropped significantly in the past few years, making the digitization of industrial equipment now possible for nearly every manufacturing business,” said Jeff Orr, research director at ABI Research. “New applications are possible, including predictive analytics, digital twin simulation modeling, and gaining insight that enables new business models and sources of revenue.”

The Asia-Pacific region has the largest concentration of new IIoT connections, with more than five million additional expected in 2017. The global opportunity will continue to grow over the next four years, with a forecast of 18 million new IIoT connections annually by 2021, though some compression is expected for connection-related revenues, which will decline to $122 million in 2021.

Most connections are made using fixed line (DSL, cable modem, Ethernet, and PSTN) deployments, ABI noted. Wireless connections will account for about 25 percent of new IIoT connections in 2017. Mobile network operators (MNOs) continue to shift their networks away from 2G technologies toward 4G LTE.

In industrial manufacturing, connections are also increasing their use of low-power wide area (LPWA) technologies, which will see the most growth over the next four years for all IIoT connection types.

“Manufacturers historically isolated their factories, plants, sites, and facilities from data connections, but significant opportunity remains for these organizations to leverage the benefits of a digital network and enable first-time connections,” Orr said. “As connections increase, manufacturers will be able to extract data for use in analytics applications and ultimately provide better machine-level communications to improve workflow.”

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