The NEXT BIG THING – ‘The Internet of Things’ (IoT)
- First post of a three part series.
The ‘Internet of Things’ revolves around increased machine-to-machine communication. It is built on cloud computing and networks of data-gathering sensors; it’s mobile, virtual, and instantaneous connection. It is being said that IoT is going to make everything in our lives from streetlights to seaports “smart”. When we talk about making machines “smart,” we’re not referring strictly to M2M. We’re talking about sensors. A sensor is not a machine. It doesn’t do anything in the same sense that a machine does. It measures, it evaluates; in short, it gathers data. The Internet of Things really comes together with the connection of sensors and machines. The real value that the Internet of Things creates is at the intersection of gathering data and leveraging it.
The Internet of Things (IoT) in its essence describes how the physical world is being connected to the Internet. According to a report by Gartner, it is estimated that besides smartphones, tablets and PCs more than 50 billion “things” will be connected to the Internet by 2020. Much like the Internet did roughly twenty years ago, IoT is bringing convenience, efficiency and safety to a totally new level by changing industries and society itself. Some industry experts go as far as saying that IoT will be the most influential and most disruptive technology in the history of mankind. McKinsey estimates that IoT will be an aggregated $11 trillion business opportunity over the next ten to fifteen years – equalling about 11% of the world economy.
Creating a ‘smart’ factory or ‘smart’ home was far-fetched some 10 years ago as it required expensive, custom-made automation systems that could only be afforded by a handful of companies and households. But now the scenario has changed and it is becoming more and more prevalent. There are many reasons why the IoT opportunities are occurring now.
· Affordable hardware: Costs for actuators & sensors have been cut into half over the last ten years with more and more companies investing in such devices.
· Smaller & Powerful hardware: Sensors, communication technology, etc. have shrunk to millimeter or even manometer levels. Now we can get a low-energy, state-of-the-art sensor with ubiquitous connectivity of the size of your fingertip.
· Ubiquitous & cheap mobility: Cost for mobile devices, bandwidth and data processing have declined as much as 97% over the last ten years with larger investments and increased competition.
· Availability of supporting tools: Big data tools & cloud-based infrastructure have become widely available and fairly sophisticated.
· Mass market awareness: The vision of a connected world has gained such momentum, that companies have initiated IoT development & marketing budgets. This is the reason why there is much better understanding and awareness among the masses.
In the world of today, IoT has completely elevated the importance of data. It is believed that in this changing business paradigms, IoT data is the new gold. Gathering and connecting data points from physical objects is the key to letting new IoT business cases come to life. As Robert Metcalfe postulated in the 1980s; “The value of a telecommunications network is proportional to the square of the number of connected users of the system. Insightful data is the key to unlocking this value.” This trend will be seen in many industries where selling the main product becomes a by-product, while the business model around the data becomes the main product. On top of that, we will see the creation of entirely new industries that build business models solely on IoT data and use hardware partners to get access to the necessary data sources. The business operating models that have boosted the productivity in a variety of industries with massive amount of data gathered by these IoT devices are as follows:
Industries are constantly using valuable data generated via IoT devices to create custom products that take into account personal preferences of the end customer. The IoT is only going to grow. It is believed that currently less than 0.1% of all the devices that could be connected to the Internet are connected to the Internet. But just think of the tremendous potential and limitless opportunities that IoT can bring to the businesses and to the society if its complete potential is exploited.
In the subsequent posts we will be talking about IoT Architecture and Platforms.