50B Devices by 2020: The Math Behind The Number

Internet of Things or IoT has been a megatrend worldwide for the last decade or so. I have seen a frequently quoted number from Cisco that indicates the number of connected devices will be 50B by 2020. But what is the math behind the number? How did Cisco arrive at that number? How many analysts, companies, presentations, and blogs have used that number?

I read through, again, the Cisco IBSG report which was published in 2011, and here is how the number was computed:

1. Cisco started with a report from Forrester (actually in the Cisco IBSG PDF Report – the reference is to a number quoted by George Colony of Forrester Research in a post published by InfoWorld – March 2003) that states there are 500m Connected Devices
2. Next take the number of connected devices in 2003, and get the number of devices per person – 500 Million divided by 6.3 Billion – resulting in 0.079 Devices per person.
3. Using data from US Census Bureau and their internal IBSG data for 2010 – the next step was to state the number of Connected Devices was 12.5 Billion, and dividing that by the world population (6.8 Billion) results in 1.84 devices per person. Please note that per Cisco the 12.5 Billion number includes Smartphones and Tablet PCs.
4. Cisco then used the work done by a team of researchers in China that showed the size of the Internet doubles every 5.32 years. The reference in the report is to the following: Internet Growth Follows Moore’s Law Too
5. Next step was very easy – multiply the number from 2010 every 5 years – you don’t even need a calculator now – you get 25 Billion for 2015 (double from 12.5 in 2010, and that leads to 50B in 2020.

The 50B number does not get into a bread down by categories on the devices. We cannot make out from this number the percentage of sophisticated devices such as Smartphones or the percentage or low-power, low-cost number.

This number probably (and anecdotally) is one of the most cited number to show the growth of IoT. The math behind it looks simple and abstract but it helped propel the market forward!

 

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