This seems to be an interesting ask and can be a bit intriguing. You may get this if you are an experienced candidate and have something like this on your CV.
I hope you are aware of what Internet of Things (IoT) is. If not then , IoT is a system of interconnected interrelated computing devices that measure specific paramters/function and have the ability to transfer data over a network without requiring human interaction.
Basis this a candidate should first identify the areas of application of IoT and then monetization of IoT services:
1. Application of IoT : This can be very diverse and exhaustive. But it would be good for a candidate to detail the segments and appraoch and then check with the interviewer which segment he would prefer to focus on. Also note that the adoption of IoT services would vary across each segment based on the benefit of having IoT services.
Consumer Segment : (a) Individual : Wearable Devices (b) Home : Home Solutions like Smart LIghting, Surveillance, Smart Lock etc
Enterprises Segment : (a) Manufacturing (b) Logistics and Transportation (c) Healthcare (d) Smart Cities - Government (e) Automotive (f) Real Estate and many more
2. Monetization of IoT : There are broading 3 ways to monetize IoT services :
Device Revenue : Generated from the sales of IoT devices as per the identified applciatoin
Connectivity Revenue :The revenue from internet connectivity. Usually this is very nominal less than 8% and declining, also many devices are connected to already present Wifi so for ease the candidate should just mention this and not include this.
Value added Revenue : this may include revenue from value added services like monetizing data captured through devices as data as a service (DaaS), for up sell and cross sell or Platform as a Service (PaaS). During the interiew it would be good to mention these and not calculate the value impact as these too can have tiered monetization strategy - Freemium, Transactional, Volume Based etc.
So for easy the candidate should look at revenue from the sales of devices only.
Thus you can calculate the Market Size of IoT by application or function = # of Devices Sold Annually * Price of Device
Hope this help. For practice I would suggest (1) you work of calculting the size of few segments and (2) do some research on IoT. Please feel free to reach out to me in case of any queries.