Cisco is looking to connected devices for future revenue growth (CSCO)

IoT Platform Market Growth

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Cisco sees the Internet of Things ("IoT") as one of its primary revenue growth drivers in the future, CEO Chuck Robbins said on the company's earnings call last week.

The networking hardware giant's net revenue has been declining for seven consecutive quarters, and it hopes the IoT could provide the revenue boost it needs to return to overall growth. The "Internet of Things" is the concept of modern electronics talking to each other; given Cisco's focus on networking technology, it's a logical move.

Cisco's IoT business is currently fairly well-positioned, thanks to two offerings.

Jasper IoT platform. Cisco purchased Jasper, a software platform that enables companies to connect, manage, and automate their IoT devices, back in early 2016. Since then, the company has invested millions in the offering to deepen its capabilities, and has made it compatible with popular IoT networking standards like LoRa and Narrowband-IoT. That's fueled Jasper's rise as a leader in the space — as of February 2017 the platform connected about 40 million IoT devices globally. That could be very valuable if the company is able to hold that lead as the market expands — BI Intelligence forecasts that global IoT platforms spending will rise from $100 billion in 2015 to $315 billion in 2021.
IoT-specific networking hardware. Cisco's core business is in networking hardware — gateways, routers, and other telecommunications equipment. That made it easy for the company to start manufacturing networking hardware for IoT-specific networks, like low-power wide-area networks (LPWANs). While this segment still contributes a very small part of Cisco's overall revenue, if existing hardware clients begin to deploy connected devices in the coming years, they could turn to the company to power the networks connecting their devices.

But there are many of hurdles Cisco needs to overcome before the IoT can become a larger part of its overall business. While Cisco has made upgrades to Jasper in the past year, so have its competitors. GE continues to acquire software startups to improve its Predix platform, and the rise of managed services like Microsoft's IoT Central put pressure on offerings like Jasper that require firms manage their IoT projects in-house. Further, the growth of company's IoT-specific network hardware business hasn't kept up with the growth in the IoT at large, and currently faces some stiff competition from companies like Dell and IBM that offer very similar products. That means Cisco must continue to innovate and differentiate its products if it wants to rely more heavily on the IoT for revenue growth.

Peter Newman, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the evolving IoT platform ecosystem that:

Explains the coming growth of the IoT platforms.
Profiles a number of leading platforms.
Highlights the central role platforms play in the IoT.
Looks to the future of the IoT platforms market.

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