Internet became mainstream around 20 years ago and what a rapid pace of technology development we have seen over these years. Our lives have changed dramatically with the internet playing a pivotal and enabling role at work, home, leisure, for communities and governments, and just about everywhere. Every industry, every company and every one of us have benefitted from it. In more recent times, the huge momentum created by mobile smart phones has transformed us again all over again. Within this decade, smart phones will most certainly empower the massive transformation impacting each and every one of us in the world by creating new opportunities and improving our lives.
Global GDP over the last 20 years (1994 to 2013) has increased from USD 26.8 trillion to USD 74.2 trillion, an increase of USD 47.4 trillion or 2.76 folds. Among other factors, if there is one significant enabler which clearly has created the maximum impact in driving higher yield and productivity, it is internet-led technologies.
The next level of even more massive transformational impact which will radically change our world is already here. One of the biggest opportunities today is the Internet of Things (IoT). Everything we can think of around us at home, work, factories, labs, hospitals, on the street, in the car, plane or ship, etc., is interconnected and continuously communicating with one another, exchanging data and information. Cisco estimates its global opportunity to be USD 19 trillion over the next decade on account of increased connectivity driven by IoT.
2014 will be a key year for IoT. We are at the cusp of this huge opportunity driven by IoT. Mainstream adoption of several industrial and consumer IoT products and technologies will drive increased connectivity, richer user experience, improved efficiencies and higher collaboration across the ecosystem. Google’s recent acquisition of Nest is just the beginning of the new world, where the emerging ecosystem of Nest products around IoT will integrate with Google’s massive internet presence to drive significant expansion and create new opportunities.
IoT in an industrial context enables connectivity of intelligent and self-aware devices to drive higher efficiency through better visibility, collaboration, automation, optimization and drive ecosystem advantages of decision-making over a complex set of platforms. According to GE, 46% of the global economy will benefit from the industrial internet. Manufacturing only contributes to ~16% of the current global GDP, and clearly the impact of the industrial Internet will reach far beyond manufacturing into services sectors. Savings in industrial efficiency itself could be in the range of USD 320–640 billion per annum. That is Staggering! There are only 20 countries in the world which have GDPs of US $600+ billion!
While these numbers appear huge, they are not out of context. Everyday, there is an incredible amount of waste happening in the current systems due to suboptimal inventory planning, production, supply-chain, ordering systems, etc. These could be eliminated if intelligent devices and machines were to communicate with one another in a secure, real-time manner and make decisions which are driven by analytics. Continuous advances in technology for sensors, smart devices, analytics, cloud, security, mobility, etc. must be leveraged, and an industry standard ecosystem platform to bring together multiple smart systems and subsystems, within and outside the industrial environment, is needed as a key enabler to drive efficiencies and results.
The industrial internet will also drive huge opportunities in the field upgrade and retrofit market across capital intense industry segments. Factories around the world will not throw out their current manufacturing systems and move to new smart systems overnight, and here lie massive opportunities to create the “bridge” smart devices, products and platforms. Bridges which provide the advantages of the smart age of the industrial internet, and enable companies to immediately reap the benefits. Significant opportunities exist to add sensors and systems, and integrate technologies in a scalable, cost-effective and secure way, to provide industrial companies with the means to on-board the IoT world. In this engineering modernization opportunity around industrial IoT, it will be key to build sophisticated access-control layers for fail-safe industrial systems.
Several industries are already taking advantage of IoT. Sensors are being integrated into major aircraft subcomponents to monitor their condition in real-time and address any issues proactively; cities are installing smart sensors on street-lights to reduce power consumption when there is no traffic; garbage containers are enabled with sensors to indicate whether they are full and need to be emptied, etc. The efficiency savings hence generated are also helpful in creating new opportunities, economic activities, employment, etc.
IoT in a consumer context is even more fascinating and some amazing products have already been announced and many more will launch soon. Earlier this month at CES, several companies announced and displayed products leveraging IoT technologies. Consumer-oriented IoT products are expected to have a faster adoption rate as people embrace connected devices and enriched user experiences which address real-world, day-to-day situations. The low unit price point of many of these products is also a critical element for consumers to buy and use them daily. The more they are used, the more the feedback mechanism will improve subsequent generations of these products, platforms and technologies.
Version one of many wearable devices and smart products in multiple categories have hit the market recently. Smart watches, smart thermostats, smart home security systems, smart white goods, smart TVs and entertainment platforms, etc. are in the market. In addition, there are smart well-being and medical products, smart recreational and sport products, smart educational products, etc. which are making a beeline for launch. The possibilities here are simply endless. A Business Insider report puts this USD 2.5 trillion opportunity by 2020 as the “connected life market revenue”. Over a period of time, these IoT oriented products will become an integral part of our lives and much like our smart phones today, will become inseparable.
There are significant opportunities to build secure services and platforms around consumer-oriented IoT products and technologies. This is what will make the consumers stay and drive growth. Similar to what iTunes is to Apple’s products, emotional connections must bond with the combination of devices, platform and overall experience.
Looking back at how the internet over the last two decades, and more recently smart phones, have changed our lives, let’s embrace the next wave of massive transformational impact that the Internet of Things will drive as our tryst with immense possibilities continue to accelerate with IoT.