According to BCC Research, the global market for IoT platforms should grow from $629 million in 2016 to over $2.3 billion by 2021, reflecting a five-year compound annual growth rate (CAGR) of 30%. As a segment, the cloud SaaS (Software as a Service) and PaaS (Platform as a Service) market should reach $2.1 billion in 2021, up from $528.4 million in 2016 on a projected five-year CAGR of 31.5%. The on-premise market as a segment is expected to reach $100.6 million and $256.7 million in 2016 and 2021, respectively, on a five-year CAGR of 20.6%.
The global IoT platform market is expected to see a wider adoption of pure cloud-based SaaS and PaaS, barring industries where on-premise or private network-based deployments are necessary and preferred over cloud-based solutions. This trend will also benefit the revenue structure of these vendors with a higher long-term return compared to a one-time sale provided by the license-based revenue model.
An interesting trend shaping this segment is the growing interest of many of the larger IT service providers who view IoT platforms as high margin solutions that will generate a steady revenue stream through cloud-based, subscription revenue models. This has spurred a number of high value acquisitions in the past three years, and the recent Cisco-Jasper acquisition is expected to be a game changer for the IoT platforms market in 2017 and beyond.