TAM Update Reveals Disparity in IIoT Adoption Rates, Says ARC

By Chantal Polsonetti

Industrial automation devices used in both discrete and process manufacturing are widely identified as some of the largest potential segments within the overall Internet of Things.  IIoT’s potential is driven not only by the large number of devices shipped to industrial applications, but also the significant opportunity for retrofit of installed equipment.

ARC recently updated our assessment of the Total Available Market (TAM) for the IIoT at the endpoint device level.  This analysis assesses IIoT from the perspective of not only annual shipments of IP-connected devices, but also the prospects for retrofit of the large installed base of legacy installations.

The results reveal continued disparities in IIoT adoption for discrete versus process automation:  discrete manufacturers are moving faster to incorporate IIoT directly into their machinery and processes, while process manufacturers place greater emphasis on retrofit of existing installations.  Shorter lifecycles for discrete manufacturing equipment result in faster turnover and more opportunity for incorporation of new IIoT-oriented designs, plus discrete automation equipment can frequently be easily retrofit by simply adding a new connectivity module while leaving installed I/O in place.

IIoT Endpoint Device TAM
IIoT Endpoint Device TAM in Units and Dollars


Customers of discrete automation products are also further down the curve when it comes to recognizing the value proposition for connectivity.  Process manufacturing installations, on the other hand, are often siloed applications that have been in place for decades and need compelling business arguments to be replaced.

IIoT Share of Total Market

Another way of assessing the relative penetration of IIoT connectivity across sectors is to compare shipments of IP-based devices to the total market size for each device.  This analysis reveals that IP based devices will account for a four times larger share of the total discrete automation market relative to process by 2022.

IP endpoint connectivity will continue to represent only a small share of total devices shipped in the process automation sector for the near future.  This reflects our prediction for continued slow retirement of the installed base as process manufacturers hang on to installed equipment and opt instead to incorporate legacy installations via the network infrastructure tier.

Information for this blog was drawn from ARC’s recently released report, Industrial Internet of Things (IIoT) Endpoint Devices – Total Available Market (TAM) 2017-2022.  For more information on this and other available ARC market research, go to https://www.arcweb.com/market-studies.  You can join the conversation about this exciting topic on our blog sites or LinkedIn Groups:  IIoT and IIoT Network Edge.