Innovation as a service refers to services provided by firms that help other companies with innovation initiatives like product development, process design, business model experimentation, and IP management on a subscription or hourly basis. These firms partner with both early-stage startups and large enterprises to help them leverage external talent, skills and resources in areas like AI, IoT, AR/VR, blockchain etc. to develop new products and services.
The global Innovation as a Service Market is estimated to be valued at US$ 1.76 Bn in 2023 and is expected to exhibit a CAGR of 17% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
The growing collaboration between startups and large enterprises remains the key driver aiding the growth of the Innovation as a Service Market. Many large corporates are partnering with innovative startups to leverage their novel technologies and business models, helping both sides to unlock new opportunities. Additionally, the rapidly evolving digital technologies are forcing organizations across industries to be more innovative in processes and product development to stay ahead of competition. This has significantly increased the demand for external innovation partners that can provide strategic guidance, technical expertise and development resources on a flexible pay-per-use model, thereby propelling the Innovation as a Service Market growth over the forecast period.
SWOT Analysis
Strength: Innovation as a Service provides companies access to the latest innovations without requiring large internal RD budgets or staff. This allows companies to stay on the cutting edge of new technologies in a cost effective manner. As-a-service models also provide flexibility to scale innovation capabilities up or down as needed.
Weakness: Companies lose some control over the direction of innovations when outsourcing to IaaS providers. Insourced RD allows companies to focus directly on innovations most relevant to their business goals. Additionally, some companies may have concerns about intellectual property ownership and data security when working with external partners.
Opportunity: The emerging technology areas like artificial intelligence, augmented reality, blockchain, and IoT provide vast opportunities for new innovations. IaaS models allow both large and small companies to tap into these disruptive technologies faster than building capabilities internally. New regions outside traditional life sciences hubs also provide expanding addressable markets for innovation services.
Threats: Economic downturns may force some companies to cut innovation budgets, negatively impacting IaaS revenue growth. Regulations around new technologies like AI could increase compliance costs. Significant mergers or acquisitions within the IaaS industry may concentrate market power among fewer large players.
Key players: Key players operating in the Innovation as a Service market are Johnson Johnson (DePuy Synthes), Medtronic plc, Stryker Corporation, Zimmer Biomet Holdings, Inc., Smith Nephew plc, NuVasive, Inc., Globus Medical, Inc., Wright Medical Group N.V., Arthrex, Inc., DJO Global, Inc., Össur hf., CONMED Corporation, Breg, Inc., Orthofix Medical Inc., Bioventus LLC. These companies are focusing on expanding service offerings and global footprint to capitalize on the high growth opportunities.
Regional analysis: North America is currently the largest and fastest growing regional market for innovation as a service. This is due to concentration of life sciences companies and startup activity and investment in the US. However, Asia Pacific is emerging as an important secondary market driven by new innovation hubs in countries like India, China, and Singapore with growing RD budgets.
Key Takeaways
The global Innovation as a Service market is expected to witness high growth over the forecast period of 2023 to 2030 supported by an estimated CAGR of 17%. The total addressable market size is projected to reach US$ 1.76 billion by 2023.
