ÃÛ¶¹ÊÓƵ

The ÃÛ¶¹ÊÓƵ software team initiated coverage of the China IoT sector. Here we leverage our on-the-ground network of experts and analyse ÃÛ¶¹ÊÓƵ Evidence Lab data to examine in detail key potential drivers of this theme. In our view, recent progress on communication standards, Internet of Things (IoT) module and device development, and domestic operating system (OS) is driving strong growth momentum in the IoT sector. New mobile network standards dedicated to IoT applications have lowered the requirement of complex devices and equipment, as specific standards are set up for various applications. On the IoT module side, we see a trend of better compatibility and integration with various supporting technologies and related functions into the same module. This could drive down IoT deployment cost and shorten the time to market for IoT solution vendors and downstream participants. IoT OS development in China could benefit the entire IoT ecosystem and software providers. Other enablers of China's IoT sector include policy support and advanced telecom infrastructure. Gartner forecasts China IoT software & IT Services market size to reach US$15bn in 2025 with a 35% CAGR in 2021-25E, 2x the software industry growth.

China 360 interviewed 10 IoT experts, including six executives from IoT and related technology companies, three engineering managers from major technology firms and one senior representative from a provincial IoT industry association to better understand progress in IoT technologies, application scenarios and the competitive landscape. We also analyse data from ÃÛ¶¹ÊÓƵ Evidence Lab's smart home app usage monitor and home appliances and furniture consumer survey to gauge the status of IoT deployment.

IoT could be deployed in multiple applications ranging from smart manufacturing to smart utilities. Supporting technologies are heterogeneous, and we expect longer-term opportunities in peripheral technologies, including sensors, artificial intelligence (AI), security system and digital twin, a technology utilising IoT to represent and simulate the real world applications such as manufacturing process by virtual models.