Among the many phenomena and related technologies that show exponential growth in recent years and (will) result(s) in digital transformation (initiatives) is the Internet of Things, a.k.a. IoT. It has taken over 15 years for the Internet of Things to become a reality that will impact many areas of business and society. Yet, it will take several more years before it is a daily reality in all possible areas, for numerous reasons.
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The idea of the Internet of Things indeed goes back quite some time. In the nineties, technologies such as RFID, sensors and a few wireless innovations led to several applications in the connecting of devices and “things”. Most real-life implementations of RFID in those days happened in logistics, warehouses and the supply chain in general. However, there were many challenges and hurdles to overcome, as we covered early 2001 in research and a white paper for a Belgian RFID specialist who targeted primarily logistics and retail.
Still, the use of RFID (and along with it, several NFC or “near field communication”, wireless technologies), became popular in areas beyond logistics and supply chain management: from public transport, identification (from pets to people), electronic toll collection (see image), access control and authentication, traffic monitoring, retail to – back then – innovative forms of outdoor advertising. That growing usage was, among others, driven by the decreasing cost of RFID tags and increasing standardization.
From RFID to the Internet of Things
Although RFID strictly speaking has nothing to do with the Internet of Things, the possibility of tagging, tracking, connecting and “reading” objects went hand in hand with what would become known as the Internet of Things around the beginning of this century.
It was obvious that the connection of the types of “things” and applications – as we saw them in RFID – with the Internet would change a lot. It might surprise you but the concepts of connected refrigerators, telling you that you need to buy milk, or the vision of an immersive shopping experience (without bar code scanning and smart real-time information) go back since before the term Internet of Things even existed.
Again, it took a long time. Furthermore, we shouldn’t play the Internet of Things to just these popular and widely known concepts, even if consumer-related attention for the IoT without a doubt has led to the grown attention for it as you’ll read further.
The exponential growth of IoT
Internet of Things growth in numbers
One thing we can agree on is that the internet of Things still has a long way to go and that growth of connected devices or “intelligent things” will indeed grow exponentially over the coming years.
With that growth, enabled by what Gartner would call a “nexus of forces”, comes growth in many other areas such as traffic, storage, processing capacity, data volumes, you name it.
The exact predictions regarding the exponential growth of the Internet of Things in the broadest context differ but it’s assumed (Gartner) that by 2020 we’ll live in a world with over 26 billion connected devices. Some go even further and predict anything from 37 billion intelligent things connected to the Internet by 2020 (such as Cisco, earlier the company talked about 50 billion, see below) to even over 200 billion. Regardless of the exact numbers, one thing is clear: there is a LOT that can still be connected and it’s safe to assume we’ll probably reach the lower numbers of connected devices (20-35 billion) by 2020.Some reasons for the exponential growth of the Internet of Things
So, why this exponential growth of the Internet of Things and, admittedly, equally exponential growth of the attention for it, sometimes feeling like a hype?
Well, first of all IoT today is effectively hyped (yet, at the same time very real). Gartner’s latest Hype cycle for emerging technologies shows that the Internet of Things is at the peak of inflated expectations (while NFC is reaching the slope of enlightenment).
There are numerous reasons for the growing attention for the Internet of Things. While you will often will read about the decreasing costs of storage, processing and material or the third platform with the cloud, big data, smart (mobile) technologies/devices, etc. there certainly is also a societal/people dimension with a strong consumer element (more in the Goldman Sachs infographic below).
Consumer applications of the Internet of Things
Give and take 5 years ago, consumers rarely saw what the Internet of Things would mean to their private lives. Today, they increasingly do: not just because they are more interested in technology but mainly because all these applications are happening and mentioned on virtually every news outlet and website that covers technology.
Wearables and smart watches, connected and smart home applications (with Google’s Nest being a popular one but certainly not the first), you know the examples.
Although it is said that there is some technology fatigue appearing, the combination of applications in a consumer context and of technology fascination undoubtedly plays a role in the growing attention for the Internet of Things. That consumer fascination/applications aspect comes on top of all the real-life possibilities as they start getting implemented right now and the contextual and technological realities, making the Internet of Things one of those many pervasive technological umbrella terms, leading to genuine digital transformation opportunities in several areas, digital disruptions and, simply, business opportunities in the broadest sense.
Industries driving the Internet of Things
From the sheer perspective of (number of) devices, IoT is driven by consumer devices. According to a 2015 report by IC Insights (via Datamotion), a research company specializing in the semiconductor market, the increasing popularity of wearable devices and IoT devices is boosting sensor shipments.
However, behind this popularity and the growth of IoT, are several industries with some clearly taking the lead.
Given the “origins” of the Internet of Things and the most typical (early) use cases, manufacturing (for now) is still taking the lead. In April 2015, Gartner analyst Jim Tully said that there were 307 million installed units at the time of the Q&A in the manufacturing industry where systems with sensors have always been embedded into manufacturing and the automation processes.
In a May 2015 forecast on the worldwide growth of the Internet of Things market (poised to grow 19% in 2015) IDC forecasts the IoT market in manufacturing operations will reach $98.8 billion in 2018. Drivers: efficiency optimization and “linking islands of automation”.
Facing huge challenges and transformations for several reasons, utility firms have 299 million units installed according to Gartner’s Tully. Among the many typical use cases: smart meters to improve efficiency in energy, from a household perspective (savings, better monitoring etc.) and a utility company perspective (billing, better processes and of course also dealing with natural resources in a more efficient way as they are not endless).
“Smart” is the word of the day in the service economy in which utilities operate.
Retail is moving up fast, both in operations and customer-facing circumstances as Tully says.
In its mentioned forecast on the worldwide growth of the Internet of Things market, IDC also emphasized retail in an ongoing effort to digitize the consumer experience. Digital signage in retail outlets is in fact the big driver in 2015, IDC found.
Connected cars and all the other evolutions in the automotive industry are driving the IoT market as well.
Again, according to the same research by IDC, connected vehicles is the hottest US market in the overall Internet of Things picture.
Other industries (also mentioned by IDC) include healthcare, transportation (where “smart devices” and sensors have existed for quite some time), government (also since quite some time) etc.
Add to that the consumer context of IoT and you know why it is such a hot topic. However, just as was the case with RFID, there are still many challenges ahead, also regarding technology and standards.
Below is the promised infographic by Goldman Sachs.