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Global AI in IoT Market Size and Share Analysis 2023-2028
The Artificial Intelligence (AI) in Internet of Things (IoT) Market is projected to experience significant growth, increasing from USD 73.23 billion in 2023 to USD 106.91 billion by 2028, at a Compound Annual Growth Rate (CAGR) of 7.86% during the forecast period (2023-2028).
The market for AI in IoT is determined based on revenues generated from various components utilized across different end-user verticals worldwide. The analysis is derived from insights obtained through both secondary research and primary sources. The study also encompasses the major factors influencing market growth, including drivers and restraints.
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USD 66.1 billion in 2021
Component, End User, and Geography
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The primary drivers fueling the market’s growth include the need to effectively process vast volumes of real-time data generated by IoT devices, the rising demand for performance management appliances, and the desire to minimize downtime and maintenance costs.
IoT technology plays a pivotal role in the digital transformation of organizations, enabling them to enhance existing processes and create new business models. As a result, companies increasingly recognize IoT as a crucial element for achieving business success, leading to its widespread adoption. The convergence of AI and IoT technologies results in intelligent machines capable of emulating rational behavior and supporting decision-making with minimal human intervention. The growing focus on managing IoT-generated data effectively to gain valuable insights and ensure real-time monitoring to enhance customer experiences are key growth drivers for the market.
The retail industry, for instance, is leveraging cloud-based AI in IoT services to enhance customer experience programs and develop customer-centric products. Utilizing computer vision and facial recognition technology, smart retail environments can identify customers and tailor product advertisements or in-store specials to specific demographics, thus boosting sales.
Furthermore, the shift of many companies from on-premise AI to cloud-based solutions, offering faster delivery times with low latency and real-time tracking, is expected to foster market growth during the forecast period. Leading companies like Amazon and IBM have introduced cloud-based IoT platforms, enabling secure connectivity and enhancing real-time value from industrial IoT operations data.
However, the market’s growth is restrained by factors such as a shortage of skilled workforce and growing concerns regarding data security. Ensuring data security is of paramount importance, as AI and IoT technologies collect sensitive and essential data from users or clients. The potential for unauthorized access to private and sensitive data remains a significant concern, hindering market expansion.
During the COVID-19 pandemic, the market experienced a surge due to organizations’ reliance on scalable, dependable, and highly secure computing power. AI-enabled IoT devices were extensively used in healthcare settings, research labs, and educational institutions to care for patients, explore treatments, and facilitate remote work, leading to a rapid growth rate in the short term and promising further expansion in the long run.
The market is segmented based on various factors, including component, end user, and geography.
Segmentation by Component
Platform – Application Management, Connectivity Management, Device Management
Services – Managed Services, Professional Services
Software – Data Management, Network Bandwidth Management, Real-time Streaming Analytics, Remote Monitoring, Security, Edge Solution
Segmentation by End User
Banking, Financial Services, and Insurance (BFSI)
IT and Telecom
Energy and Utilities
Other End-user Verticals (Transport and Mobility, Government, and Retail)
Segmentation by Geography
Middle East and Africa
The AI in IoT market is characterized by a highly competitive landscape, with numerous players operating in domestic and international markets. In 2022, the software segment held the largest market share at 40.57%, valued at USD 26.83 billion, projected to reach USD 42.72 billion by 2028. During the forecast period (2023-2028), the platform segment is expected to register the highest Compound Annual Growth Rate (CAGR) of 8.79%.
The application management layer plays a crucial role in software applications, encompassing functions such as maintenance, version control, and updates. This layer is vital for enabling enterprises to make operational decisions and run their operations more effectively. As it is the layer most engaged with by business users, vendors offering advanced AI solutions and continuous upgrades are likely to be favored by buyers.
In 2022, the manufacturing segment held the largest market share at 26.98%, valued at USD 17.84 billion, expected to reach USD 29.16 billion by 2028. The healthcare segment is projected to register a higher CAGR of 9.60% during the forecast period (2023-2028). Manufacturers are increasingly adopting AI-enabled IoT applications to optimize equipment performance, production quality control, and human-to-machine interaction, leading to faster and more efficient manufacturing and supply chain operations.
Healthcare organizations are harnessing IoT and AI technologies to improve human performance on tasks such as diagnostic and therapeutic decisions. IoT-enabled care providers can simplify assessments, track medical equipment, improve diagnostic accuracy, and enhance remote patient monitoring. Smart hospitals are utilizing IoT-connected technologies and robotics to provide advanced healthcare support and treatment, with real-time patient monitoring and smart image analysis contributing to preventive measures and early detection of diseases.
In 2022, North America held the largest market share at 37.28%, valued at USD 24.65 billion, expected to reach USD 37.82 billion by 2028. The Asia-Pacific region is projected to register a higher CAGR of 10.19% during the forecast period (2023-2028). North America’s dominance is driven by widespread AI and IoT technology adoption across industries such as automotive, manufacturing, retail, and healthcare. The region’s focus on digital transformation and AI integration in manufacturing is contributing to sustainability and increased productivity.
Numerous global companies are partnering with market vendors to integrate AI-based IIoT (Industrial Internet of Things) into their production lines, driving market growth. Partnerships such as P&G and Microsoft are leveraging IIoT, digital twin, data, and AI to accelerate product delivery, boost customer satisfaction, and increase productivity while reducing costs. The United States, with its high-tech ecosystem and AI-driven IoT solutions, is a key player in the North American market. Companies in the region are actively collaborating with IoT solution providers to improve their market share.
The AI in IoT market is characterized by intense competition, attributed to the presence of numerous players operating in both domestic and international markets. This market segment comprises prominent entities, including Microsoft, Salesforce, AWS, SAP SE, Oracle, and IBM Corporation. The reputation and brand identity associated with these companies wield significant influence in the market. Established brands, synonymous with excellence and performance, are anticipated to hold a competitive advantage. Vendors offering advanced AI solutions and continual upgrades in their offerings are likely to be the preferred choice for buyers.
In November 2022, Microsoft made a notable announcement, initiating pre-orders for its new Surface products, namely, Surface Laptop 5 and Surface Pro 9. This move showcased the company’s vision for the future of Windows PC, emphasizing the seamless integration of PC and cloud technologies, tapping into innovative AI advancements to unlock novel user experiences. Microsoft demonstrated its commitment to substantial investments in IoT research and the intelligent edge, thereby enriching Azure IoT with new services and features tailored for industries like healthcare. This strategic approach reinforces Microsoft’s positioning to define success in the era of intelligence.
Likewise, in November 2022, AWS IoT Core introduced an important addition, AWS IoT Core Device Location. This innovative feature empowers customers to track and manage IoT devices using precise location data, such as latitude and longitude coordinates. Through AWS IoT Core Device Location, customers gain the ability to optimize business processes, streamline maintenance efforts, and explore new business use cases, thus further enhancing the platform’s utility and appeal.
Key companies profiled in this report include Amazon Web Services Inc. (Amazon Inc.), IBM Corporation, Autoplant Systems India Pvt. Ltd, SAP SE, Google LLC (Alphabet Inc.), Microsoft Corporation, Oracle Corporation, Salesforce.com Inc., PTC Inc., SAS Institute Inc., General Electric Company, Hitachi Ltd.
Recent Industry Developments
January 2023 – In a recent development, Servify, a device management startup, has successfully completed the acquisition of Jubi.ai, an engagement platform known for its AI capabilities. As a result of this transaction, Jubi.ai will now become an integral part of Servify. The team from Jubi.ai will join Servify’s technology, product, and innovation teams, enhancing the company’s expertise in AI-driven engagement solutions. This partnership comes at an opportune time, as businesses increasingly seek to provide their clients with advanced AI-powered engagement solutions.
October 2022 – Accenture and Google Cloud have jointly announced the expansion of their global partnership, reinforcing their commitment to foster individual talent growth, enhance shared capabilities, and create innovative solutions using data and AI. The collaboration aims to provide improved support to clients in developing robust digital cores and transforming their businesses through cloud-based solutions. By leveraging Google Cloud infrastructure and expertise, Accenture intends to assist clients in various critical areas such as cybersecurity, data analytics, application modernization, and more.
October 2022 – Izuma Networks, a prominent provider of edge computing services, has completed the acquisition of Pelion’s Device Management division, a well-established provider of IoT services. The move comes at a time when the demand for pushing IoT applications to the edge is increasing due to the rise of complex applications like AI models operating on advanced edge compute and microcontroller platforms, as well as the substantial data generated by 5G-powered sensor and imagery components. With support from Softbank, Izuma Networks aims to streamline and integrate edge and IoT products while developing new offerings to help clients address rapidly evolving global security and regulatory requirements.
Key Questions Answered
How large is the AI In IoT Market?
The AI In IoT Market is expected to reach USD 73.23 billion in 2023 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 7.86%, reaching USD 106.91 billion by 2028.
What is the current size of the AI In IoT Market?
As of 2023, the AI In IoT Market is expected to be valued at USD 73.23 billion.
Who are the key players in the AI In IoT Market?
The major companies operating in the AI In IoT Market include Amazon Web Services Inc. (Amazon Inc.), IBM Corporation, Autoplant Systems India Pvt. Ltd., SAP SE, and Google LLC (Alphabet Inc.).
Which region is experiencing the fastest growth in the AI In IoT Market?
The Asia Pacific region is estimated to experience the highest Compound Annual Growth Rate (CAGR) over the forecast period (2023-2028) in the AI In IoT Market.
Which region holds the largest share in the AI In IoT Market?
As of 2023, North America accounts for the largest market share in the AI In IoT Market.