The first act for IoT has ended and the technology has come to market. Early adopters have shown it works: Surveys reveal that 57% of business buyers say the ROI from IoT is greater than they expected, and the momentum toward wider adoption has begun, according to The Economist IoT Business Index.
Now the more interesting Act II begins. This next decade will be similar to what PC makers experienced in the 1980s, the thrill ride of the Internet 1.0 in the 1990s and the smartphone revolution in the 2000s. And if the past is any indication, it will unfold like this:
IoT will undergo a Cambrian period
The Cambrian Period was brief in geological terms, but it gave birth to a fantastic explosion of life forms that evolved into the animals and insects we know today.
The same occurs in technology: Companies emerge, new ideas hit shelves and in a decade or less the landscape is clearer. Silicon Graphics and Packard-Bell faded out after spectacular starts, but they contributed innovations that resonated for years.
Will robots go mainstream through sophisticated elder care bots whose intricate technology for mood sensing and interaction trickles down, or will an armada of Charmin Roll Bot-like devices fuel a market from the other direction? At this point, it’s impossible to know. What we can predict is that we’ll see a burst of creativity followed by a convergence toward select form factors and services. Either way, the burst of creativity will be fascinating.
The need for a new infrastructure will emerge
New technologies need new infrastructures. The electric light gave us power plants and cars created demand for paved streets and freeways. You can get cash from ATMs around the world because of a complex system most people take for granted.
Real-time data, such as vibrations signaling a pending equipment failure or data on changing traffic conditions, will be at the heart of many IoT services and may constitute 30% of all data by 2023. But real-time doesn’t mesh well with today’s cloud-centric infrastructure.
Low latency and high throughput are a must. The sheer volumes also mean potentially high bandwidth costs. It is expected that $700 billion will be invested in edge data centers serving metro centers, public and private 5G networks, and other backbone technologies to close the gap between what we want and what our existing networks can do.
New business models
“Capital equipment producers see IIoT as a way to shift from selling goods to services,” said Kevin Prouty, Group Vice President for IDC Energy and Manufacturing Insights. “If successful, it could substantially enhance their business models, customer relations and supply chains.”
Caterpillar and other manufacturers have begun to integrate optimization services into heavy equipment, giving traditional equipment makers new revenue streams and new levels of customer interaction. Over time, these will also become more prevalent in consumer markets. For example, your refrigerator will dynamically be adjusted to earn peak power incentives.
The job market will change and grow
A current average, high-end saloon car contains an armada of electronic amenities and runs an estimated 100 million lines of code. A fully autonomous car will require around 1 billion.
Even if AI writes many IoT apps, it’s a no-brainer that we will need more software engineers. We will also need anthropologists, UX designers, writers and marketing execs to make these systems intuitive, understandable and attractive.
Ground rules for privacy will get established
Through practice and experience, we will develop ethic, laws and unstated social conventions around AI and IoT. Data will be shared — applications to streamline supply chains or improve human health won’t work without data sharing — but sharing will take place with open, knowing consent.
Commands to your smart speaker may get processed locally to avoid hackers or even employees from listening in from the cloud.
The law of small numbers will loom large
One of the most powerful impacts of IoT will come from the underestimated power of efficiency. Air conditioners and electric fans account for nearly 10% of all electricity consumed globally. The International Energy Agency projects AC energy could triple by 2050.
Efficient designs and IoT-assisted control could reduce this load while allowing cooling to grow. It could also reduce water demand — power plants are one of the largest consumers of water worldwide — as well as stabilize the grid, which in turn would allow more people to have access to power.
IoT’s ability to unobtrusively eke out efficiencies will have other impacts as well. Unplanned downtime costs businesses billions of dollars a year in lost production and unanticipated repairs. For example, mining company Ciner lost $30,000 per hour when a mill at one site unexpectedly clogged. Analyzing physical data from its machines has allowed the company to predict and prevent incidents; tiny adjustments will have big impacts.
What about act III?
Act III is the age of indifference. Technology becomes so pervasive that we forget it’s there. Innovation shifts from breakthrough advances to technologies for inching out incremental performance gains. Price becomes the main difference between competitors and brands gradually lose their value.
The good news for IoT is that Act III may not come for a while. The universe of things that aren’t smart remains quite large. A recent census of smart commercial and industrial devices found that only 4.7% of the world’s electric motors were currently capable of being linked to networks, and only a fraction of those were connected, according to IHS Markit.
Moreover, making these devices smart will require more than attaching a networking module onto a steel casing. Hardware makers and software developers will have to immerse themselves in the design conventions and business practices of unfamiliar industries. The customer expectations and cost considerations will vary broadly. Success in IoT will ultimately revolve around learning a new culture and the educational process will take time.
But the opportunity is too great to miss.
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