IoT 2016 in review: The 8 most relevant IoT developments of the year

As we go into 2017 our IoT Analytics team is again evaluating the main IoT developments of the past year in the global “Internet of Things” arena. This article highlights some general IoT 2016 observations as well as our top 8 news stories, with a preview for the new year of opportunities and challenges for global IoT businesses.

For your reference, here is our 2015 IoT year in review article.

In 2016 the main theme for IoT was the shift from hype to reality. While in 2015, most people only heard about IoT in the media or consumed some marketing blogs, 2016 was different.

Many consumers and enterprises went out and started their own IoT endeavors or bought their own IoT devices. Both consumer IoT and enterprise IoT enjoyed record uptake, but also saw some major setbacks.

A. General IoT 2016 observations

A1. Consumer IoT

Millions of consumers bought their first IoT Device in 2016. For many of them this was Amazon Echo (see below for more details).

Smart Home IoT 2016
Image 1: The Amazon Echo Dot was a consumer IoT 2016 success (left hand side) while other devices didn’t always convince (e.g., Nest thermostat – right hand side)

Unfortunately many consumers also realized that marketing promises and reality are often still disparate. Cases of disappointed users are increasing, for example a smart thermostat user who discovered that his thermostat was disconnected for a day.

Some companies were dissolved in 2016, such as the Smart Home Hub Revolv in April – causing many angry customers. Others went bankrupt, such as the smart watch maker Pebble in December. And some didn’t even come to life at all, such as the augmented reality helmet startup Skully that enjoyed a lot of publicity, but filed for bankruptcy in August without having sold a single product.

A2. Enterprise IoT

On the enterprise/industrial side of things, IoT 2016 will go down as the year many firms got real about their first IoT pilot projects.

A general wake-up call came in September when a massive cybersecurity attack that involved IoT devices (mainly CCTV cameras) shut down DNS provided Dyn and with it their customer’s websites (e.g., AirBnB, Netflix and Twitter). While this kind of attack didn’t directly affect most IoT companies, its implications scared many IT and IoT decision-makers. As a result, many IoT discussions have now shifted towards cybersecurity solutions.

B. Top 8 IoT 2016 Stories

For us at IoT Analytics, the IoT Security Attack on Dyn servers qualifies as the #1 story of the year. Here are our top takeaways from IoT 2016:

IoT 2016 in review

1. Biggest overall story: IoT Security attack on Dyn servers

The Dyn DDoS attack was the first large-scale cybersecurity attack that involved IoT devices – Dyn estimates that 100,000 infected IoT devices were involved. As a first-of-a-kind, it sent shockwaves through corporate IT and IoT.

Chinese CCTV system manufacturer, Hangzhou Xiongmai Technology Company, was at the core of the attack.  Its cameras (among others) were infected with the so-called Mirai malware. This allowed the hackers to connect to the infected IoT devices and launch a flood of well-timed massive requests on Dyn servers – which led to the shutdown of their services.

2. Biggest Consumer IoT Success: Amazon Echo

Launched in June 2015, the Amazon Echo Smart Home Voice Control was undoubtedly the consumer IoT success story of the year. Recent data provided by Amazon reveals that device sales exploded by 9x (year-on-year vs. last Christmas).

Amazon sold more than 1 million Echo devices in December 2016.

Our app-based Smart Home models confirm this trend suggesting that Amazon sold more than 1 million Echo devices in December 2016 and close to 4 million devices throughout the whole of 2016.

With these gains, Amazon has suddenly become the #1 Smart Home Hub and is leading the paradigm shift towards a voice-controlled automated home. Google jumped on the same train in October by releasing Google Home; Microsoft Home Hub is expected to follow in 2017.

3. Most overcrowded space: IoT Platforms

When we launched our coverage of IoT Platforms in early 2015, little did we know that the topic would soon become the hottest IoT area. Our count of platform providers in May 2016 showed 360 platforms. Our internal research is now well over 400. IoT Platforms is also well placed in the Gartner Hype Cycle 2016.

Companies have realized that the value of IoT lies in the data and that those that manage this data will be the ones capturing a large chunk of this value. Hence, everyone is building an IoT platform.

The frightening part is not necessarily the number but rather the fact that the sales pitches of the platform providers all sound like this: “We are the only true end-2-end platform which is device-agnostic and completely secure”.

4. Largest M&A Deal: Qualcomm/NXP

While we can see a massive expansion of global IoT software/analytics and platform offerings, we are also witnessing a consolidation among larger IoT hardware providers – notably in the chip sector. In October 2016, US-based chipmaker Qualcomm announced it would buy the leader in connected car chips NXP for $39B, making it the biggest-ever deal in the semiconductor industry.

Other large hardware/semiconductor acquisitions and mergers during IoT 2016 include Softbank/ARM ($32B) and TDK/Invensense ($1.3B)

5. Most discussed M&A Deal: Cisco/Jasper

In February, Cisco announced that it would buy IoT Platform provider Jasper Technologies for $1.4B. Journalists celebrated the acquisition as a logical next step for Cisco’s “Internet of Everything” story – combining Cisco’s enterprise routers with Jasper’s backend software for network operators and hopefully helping Cisco put an end to declining hardware sales.

6. Largest startup funding: Sigfox

Sigfox already made it into our 2015 IoT news list with their $100M Series D round. Their momentum and the promise of a global Low Power Wide Area Network led to an even larger funding round in 2016. In November, the French-based company received a record $160M in a Series E that involved Intel Capital and Air Liquide among others.

Another notable startup funding during IoT 2016 involved the IoT Platform C3IoT. The Redwood City based company received $70M in their Series D funding.

7. Investment story of the year: IoT Stocks

For the first time IoT stocks outperformed the Nasdaq significantly. The IoT & Industry 4.0 stock fund (Traded in Germany under ISIN: DE000LS9GAC8) is up 17.5% year-on-year, beating the Nasdaq which is up 9.6% in the same time frame. Cloud service providers Amazon and Microsoft are up 14% for the year, IoT Platform provider PTC is up 35%. Even communication hardware firm Sierra Wireless started rebounding in Q4/2016.

Some of the IoT 2016 outperformance is due to an increasing number of IoT acquisitions (e.g., TDK/Invensense). At the beginning of 2016 we asked if the underperformance of IoT stocks in 2015 was an opportunity in 2016. In hindsight, the answer to that question is “Yes”. Will the trend continue in 2017?

8. Most important government initiative: EU Data Protection policy

In May, the European Union passed the General Data Protection Regulation (“GDPR”) which will come into effect on 25 May 2018. The new law has a wide range of implications for IoT technology vendors and users. Among other aspects:

  • Security breaches must be reported.
  • Each IoT user must provide explicit consent that their data may be processed.
  • Each user must be given the right to object to automated decision making.
  • Data coming from IoT Devices used by children may not be processed.

From a security and privacy policy point of view the law is a major step forward. IoT technology providers working in Europe and around the world now need to revisit their data governance, data privacy and data security practices and policies.

C. What to expect in 2017:

  • War for IoT platform leadership.
    The large IoT platform providers are gearing up for the war for IoT (platform) leadership. After years of organic development, several larger vendors started buying smaller platform providers in 2016, mainly to close existing technology gaps (e.g., GE-Bitstew,, Microsoft-Solair).
  • War for IoT connectivity leadership.
    NB-IoT will finally be introduced in 2017. The new low-power standard that is heavily backed by major telco technology providers will go head-to-head with existing LPWAN technology such as Sigfox or LoRa.
  • AR/VR becoming mainstream.
    IoT Platform providers PTC (Vuforia) and Microsoft (Hololens) have already showcased a vast range of Augmented Reality / Virtual Reality use cases. We should expect the first real-life use cases emerging in 2017.
  • Even more reality and less hype.
    The attention is shifting from vendor/infrastructure topics such as what the next generation of platforms or connectivity standards will look like and towards actual implementations and use cases. While there are still major developments the general IoT audience will start taking some of these technology advancements for granted and focus on where the value lies. We continue to follow that story and will update our list of IoT projects.

Our IoT coverage in 2017: Subscribe to our newsletter for continued coverage and updates. In 2017, we will keep our focus on important IoT topics such as IoT Platforms, Security and Industry 4.0 with plenty of new reports due in Q1/2017. If you are interested in a comprehensive IoT coverage you may contact us for an enterprise subscription to our complete IoT research content.

Much success for 2017 from our IoT Analytics Team to yours!

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Disclosure: While our opinions are well researched these predictions are not guarantees. The author did not and does not intend to suggest any specific action by any investor or shareholder and strongly suggests that any decision made to buy or sell shares of IoT stocks be made after consultation with an investment advisor as to the suitability of such an investment

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<a href="" target="_self">Knud Lasse Lueth</a>

Knud Lasse Lueth

Since founding IoT Analytics in 2014, my focus has been to build a team that produces high-quality research in areas such as IoT, AI, Cloud, and smart manufacturing. Throughout my journey, I have authored or co-authored over 100 reports, always with a commitment to delivering analyses that are not only trustworthy but also rich in insight and uniqueness.

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