What is Industry 4.0 and why you should care as a B2B tech company?
It is now the 21st century and we are seeing the 4th Industrial Revolution, otherwise known as Industry 4.0. Industry 4.0 focuses on real-time data, automation, and technological advancements such as AI and machine learning. The IT industry inevitably becomes the center of growth and the main driving force behind Industry 4.0.
Why the US?
The two countries driving Industry 4.0 forward, the U.S. and China, have been two dominant technological and economic leaders as industrial production and growth are most prominent in these countries. However, regarding advanced digitalization and performance, the U.S. is ahead of China. In 2017, the U.S. had a 3.5% market share in global industrial production, second only to China at 5.6% (1). In terms of numbers, the U.S. invested $3,350 billion in industrial production. However, the U.S. ranks first place for predictive analytics, second for smart and connected products, and third for advanced materials, while China respectively ranked first (tie), seventh, and fourth place (1).
It is projected that the U.S.’s manufacturing revenue will increase from $7.5 billion in 2017 to $41.6 billion in 2027, an annualized increase of 114.8% in revenue (1). The Americas, especially thanks to the technological advancements made in North America, are expected to experience a rapid growth rate of 74% in digitization (1). This growth in digitization will also positively impact other industries such as health care, automotive, industrial manufacturing, and electronics. Meaning that these industries in the US can become your fastest growing target market.
Operating Conditions and Outlook
The IT sector in the U.S. relies on some key conditions. Those conditions are:
Corporate profit is one of the main forces behind corporations’ investment in technology. If corporations are profitable, they are more likely to invest in technological advancements. Due to the Covid-19 pandemic, corporate profit is expected to be strained in 2020. However, the IT sector expects corporate profit to increase in the future and experience an annualized growth rate of 11.9% from 2021 to 2026 (2).
Private investment in computers and software
An increase in investment in computers and software will also drive demand for technological advancements and features higher. Additionally, private investment in computers and software also positively impact the tech industry by encouraging businesses and individuals to use technology such as cloud services, IT services, computing services, etc. Private investment in computers and software in the U.S. is expected to increase in the future, which promises more investment in companies that operate in industries related to computers and software.
To comply with regulations put in place to battle the Coronavirus pandemic, such as being in quarantine and social distancing, many businesses have allowed employees to work from home. This inspires many businesses and individuals to expand their online presence or start online businesses. The rise of online businesses creates a higher demand for software, software services, and IT services. The percentage of companies and businesses that will be conducted online is expected to increase in the future.
Use of the Internet
As the use of smart devices, such as smartphones and iPads, increases, demand for services and products that are directly related to these devices also increases. With relatively inexpensive data plans, more and more people are choosing to buy devices that have Internet capabilities. Due to saturation, the use of the Internet via mobile devices will increase at a slow rate in the future.
The higher people’s disposable income is, the more likely they are to invest in technology such as smart devices and software. While disposable income in the U.S. is expected to decrease in 2020 and 2021 due to the economic effects from the pandemic, it is forecasted to increase in the future. Therefore, it can be expected that people will start spending more in 2022, including on tech products and services.
Technology is always being improved. Technological advancements drive the demand for themselves higher by always being more efficient, effective, cost-saving, etc. And these advancements are not expected to slow down anytime soon. With innovations such as 5G, micro-chips with more intricate design than ever, smart devices, and AI, the IT sector is forecasted to experience both revenue growth and an increase in global investment spending. With many successful tech start-ups based in North America, especially the U.S., most unprecedented technological advances are expected to be produced by U.S. startups.
U.S. startups, especially tech startups, are gaining this much support from investors partially because the IT sector and its industries are projected to have positive growth in the future. This growth comes from a number of changes regarding how businesses are conducted, including moving businesses online to cut down costs and an increase in demand for business software as a result. If you’re an international tech startup and want to be a part of this growth, you need a go-to-market strategy. Penetrating the North American market is expensive, time consuming, and risky. The best way to save capital and mitigate risk is to partner with a U.S-based sales outsourcing agency who specializes in taking international startups to market in North America. Outsourcing sales will give you instant market access, allow you to validate product-market fit, and start generating trust with American companies...and all of this is possible without investing millions of dollars in an in-house global sales team.
(1) In-depth: Industry 4.0 2019. (2019, August). Retrieved November 08, 2020, from https://www.statista.com/study/66974/in-depth-industry-40/#:~:text=In-depth%3A%20Industry%204.0%202020%20Statista%20Digital%20Market%20Outlook,of%20it%20is%20thus%20also%20the%20smart%20factory..
(2) Moses, J. (n.d.). Business Processing and Hosting Services in the U.S. (Rep. No. 51821). Retrieved November 08, 2020, from https://www.ibisworld.com/united-states/market-research-reports/data-processing-hosting-services-industry/.