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McKinsey says Germany leads in connected-car technologies (Photo: Cisco)

Internet-of-Things related revenue is set to double in Germany to 23 billion euros a year by 2020 from less than 10 billion euros today, according to a new McKinsey study.

The consultants said IT and telecommunications service providers are set to gain business especially from manufacturing industries and the connected car.

Industry 4.0, which foresees fully connected manufacturing processes, has a potential of 9 billion euros a year, while the connected car can generate 4 billion euros in revenue by 2023, McKinsey said.

Germany has a "good starting position" when it comes to IoT implementations, McKinsey partner Dominik Wee said. "The preconditions for a wide distribution of the internet of things are there," he said in a press release. Wee is the author of the study.

The strategy consultants, which looked at more than 150 potential applications across the industrial spectrum, found that the German auto industry is among the leaders in connected-car technologies. But Europe's largest economy is lagging when it comes to digitizing healthcare and networking buildings to create so-called "smart homes."

McKinsey noted that it isn't just IoT hardware that offers the greatest growth potential. Especially software that provides platform applications for the internet of things will be in high demand, the report predicted.

That's not necessarily good news for Germany. Said Wee: "In the area of software competence, Germany has some catching up to do."