Gartner unveils the software vendors of the future

Manufacturing firms to become software specialists as IOT takes off, analyst claims

The rise in the Internet of Things (IoT) will see traditional manufacturing companies emerge as credible software vendors in the future, according to Gartner.

About 25 billion "things" will get connected to the internet in the coming years. Gartner claims this will mean the creators of such products - which were previously never connected - will essentially become software vendors in part as they provide software to accompany their products.

This will mean "things" manufacturers will need licensing and entitlement management (LEM) solutions as the value of their products shifts from the device itself to the software running on it.

"The IoT is creating a new type of software vendor for whom LEM is vital to protect, differentiate and monetise their offerings," said Laurie Wurster, research director at Gartner. "We expect that by 2020, a failure to put in place a LEM system will result in a 20 per cent drop in potential revenue generated from software for device manufacturers connecting to the IoT."

Many manufacturers of non-connected products may not consider the opportunity to get them connected to the internet, which Gartner suggests requires a change in mentality across the sector.

Wurster added: "By monetising the software on their devices, these vendors will be able to increase and drive recurring revenue streams, creating billions of dollars of additional value.

"For example, with an estimated 25 billion-plus 'things' in the marketplace, and if manufacturers are able to collect an average of $5 for software from each of these installed units, that translates to additional revenue estimated at $130bn."