Edward Gately - 14th October 2016
Embedded technology, devices that are dedicated to a single functionality and are often driven by the need to perform a specific task, will continue to evolve and the emergence of open standards will continue to drive growth in this industry, according to a new industry report from BCC research.
The report reveals that the Internet of Things (IoT) is expected to drive growth in the volume of low-cost embedded devices, yielding whole new product lines and spurring growth in the embedded hardware and software technology market.
Embedded devices are defined to functionality, are efficient and dependable, capable of using different peripherals, and contain digital and analogue parts, according to the report. The applications for embedded markets feature four segments: consumer; communications; enterprise; and other. The global market includes both hardware and software technology.
"The IoT has emerged as a new hot technology in embedded markets,” according to BCC Research analyst Anand Joshi. "IoT promises to connect every device to the Internet and allow them to talk to each other. The implications of this technology are mind-boggling. IoT devices can exist in many shapes and forms, and their volume could be in the billions. This is expected to drive the volume of low-cost embedded devices, which will create different demands on processing power and connectivity."
The global market for embedded technology should reach $169 billion in 2016 and nearly $221 billion in 2021, growing at a five-year compound annual growth rate of 5.5%, according to BCC Research. Embedded hardware, the largest and fastest-growing segment, with a 5.6% five-year compound annual growth rate, should total $163 billion and $213 billion in 2016 and 2021, respectively.
The embedded software segment should reach $5.9 billion in 2016 and $7.2 billion in 2021, demonstrating a five-year compound annual growth rate of 4.1%.
Several key trends are affecting the overall market, according to the report. In general, the embedded hardware market is showing signs of maturity and some cutting-edge products such as memory (RAM and Flash) have already been reduced to commodities.
Nearly every segment considered in this report is weathering pricing pressure and manufacturers are seeking new revenue models. The industry also is undergoing consolidations with mega-mergers among semiconductor firms in both 2015 and 2016. Given the competition in the marketplace and declining profit margins, the report forecasts additional mergers throughout the forecast period.
While the overall industry continues to innovate, companies that develop applications based on embedded technology have been able to secure higher valuations, BCC Research said. This has helped increase technology penetration, although underlying components and software have shown limited upside.