A Connected Life
If you think the tsunami of new technologies, more spectacular one day after another, are now within your grasp of understanding, and soon to be mastered in implementation, do not pat yourself on the back and take a breather. The proverbial light at the end of the tunnel is a far bigger and faster tech train than the many you are just beginning to feel comfortable with. And it’s coming right at you. Yes, your business will soon ratchet up to another level of innovative opportunities and complex challenges.
We are hearing or reading the words IoT or the “Internet of Things” more frequently. It is the next technology mega-trend. And there are some early manifestations of it, from fitness bracelets to watches, connected refrigerators and automobiles, to thermostats and industrial equipment. But it’s still in the nibbling-around-the-edges phase. However, as breakthroughs in reducing the cost of sensors, processing power and increasing bandwidth continue, it will accelerate the ability to connect with more things, faster and cheaper.
IoT is simply connecting potentially billions of everyday devices to the Internet. And it’s generally considered to be the third phase of the development of the Internet. During the 1990s the stationary Internet connected with roughly a billion users according to a Goldman Sachs study. Then in the 2000s, the mobile phase connected another 2 billion. And now, in the IoT phase, it’s estimated that the Internet will connect with a potential 70 billion “things” or devices by 2020, (see the Business Intelligence chart), up from about 10 billion today.
And, of course, it’s not just the connecting of things to the Internet as the end goal. It’s how those connections will ultimately benefit consumers, industries and even cities. So, while the Internet and “things” are connecting, it’s the final connection with consumers, and improving their lives in some way, that will determine the things being connected to.
The McKinsey Global Institute defines the IoT and this new class of devices as being able to “monitor their environment, report their status, receive instructions, and even take action based on the information they receive.” It transforms static objects like apparel, tools and appliances, among a few, into sensor-enabled devices that have intelligence and can communicate with other devices and gadgets in our lives, and especially our PC’s smartphones and tablets.
Low Hanging Fruit
Ripe for early adoption and rapid growth are “wearables,” cars, homes, cities and industrials. As cited in a Business Insider article, following are examples of specific categories:
- Consumer electronics products spanning alarm clocks, digital video cameras, home audio systems, and speakers.
- Kitchen and home appliances such as refrigerators. washers and dryers, and coffee makers.
- Lighting and heating products, including bulbs, thermostats, and air conditioners.
- Safety and security monitoring devices such as baby and assisted living monitoring systems, smoke detectors, fire hydrants, cameras, sensor-equipped drawers and safes, and home alarm systems. Machina and the GSM Association believe that there will be $270 billion in savings by 2020 thanks to sensors and devices that enable the elderly to live independently as opposed to care homes.
- Musical instruments.
- Toys ranging from desk-friendly remote-controlled mini-cars to hovering quadricopters.
- Health and fitness products that measure exercise, steps, sleep, weight, blood pressure, and other statistics.
Cisco believes that connected advertising and marketing (Internet-connected billboards for example), will be one of the top three loT business to business categories along with smart factories, and telecommuting support systems.
Intelligent traffic management system applications such as toll-taking and congestion penalties, as well as smart parking space management will be other areas for major expansion.
One waste management system innovation has been equipping garbage cans and recycling bins with RFID tags that allow sanitation staff to see when garbage has been put out. By doing this, the city of Cleveland was able to eliminate 10 pickup routes and cut operating costs by 13 percent. In Cincinnati, residential waste volume fell 17 percent and recycling volume grew by 49 percent through use of a “pay as you throw” program that penalizes those who exceed waste limits.
Smart electricity grids that adjust rates for peak energy usage will represent savings of $200 billion to $500 billion per year by 2025, according to the McKinsey Global Institute.
Smart water systems and meters in the cities of Doha, Sa~o Paulo, and Beijing have reduced leaks by 40 to 50% by putting sensors on pumps and other water infrastructure.
These are just some of the industries and categories that will soon witness explosive growth, truly transforming our personal lives, workplace productivity, consumption and shopping behavior.
What’s The Bottom Line Market Value?
McKinsey Global Institute and Cisco project total economic value in the trillions of dollars. Cisco projects that loT will create over $14 trillion in value over the next ten years, while also providing innovative new products and services, along with greater efficiencies. To put this number in some kind of context, total global GDP is around $70 trillion.
One obvious barrier has to do with privacy and security concerns, which certainly isn’t new, but will take on much broader implications in the IoT world. However, as I’ve said before, the emerging Millennial culture will be the most enthusiastic adopters of IoT because having been born with “digital brains,” they will best understand it. And as we’ve witnessed, they are largely transparent in their personal lives, so in my opinion, security and privacy will end up being last Century’s fear.
Significant barriers do exist when one considers the cost in capital, time and complexity to create infrastructure and the configuration of “big data” required to collect and analyze all of the loT devices. Further, the potential new government policies and regulations are largely unforeseen in this early stage.
Finally, it’s difficult to estimate the ROI for businesses launching into largely uncharted waters, and just what the end benefits will be to generate such returns on investment.
However, as the following chart from Business Insider Intelligence tells us, the vast majority of enterprises think positively of loT.
So, the bottom line on the bottom line is that Moore’s law keeps reminding us that not only can we not slow the “technology train,” if we don’t jump on it, as it gains speed, it will simply barrel over the top of us, crushing those businesses that have no ability to stand in its way.
I say, bring it on, IoT!!!