The “hive mind” is science fiction utopia. Keys are never lost, no fact unremembered, and no communications unsent. Imagine a state of total awareness.
Over the next fifteen years the Internet of Things promises to connect every tangible item and every person in an immersive web of dynamic intelligence. It will yield stunning productivity, environmental, medical and human benefits. It’s also one of the most lucrative investment opportunities of our lifetimes.
With changes so massive coming you would think it would be easy to figure out how to take advantage. Most white papers at think tanks focus on the connectivity of the things, such as network equipment and sensors.
And to be sure, the recent spate of big semiconductor company mergers — i.e. Avago buying Broadcom, Intel buying Altera, and NXP Semi buying Freescale, then, itself succumbing to a takeover from Qualcomm — are aimed at scaling up to dominate the next phase of profound connectivity.
Yet most of the value of this brave new world will be in the software that compiles, analyzes and instantaneously leverages the data collected by billions of sensors.
The Internet of Things is a natural fit for General Electric, for instance. As the world’s largest maker of jet engines, diesel trains and other large industrial goods, finding ways to manufacture more efficiently is in its DNA. Sensors and software was just the logical next step. So in 2013 GE unveiled a productivity software platform called Predix in conjunction with Amazon Web Services, Accenture and EMC. The goal was to bring penny pinching predictive data analytics to the industrial sector at scale.
Luckily, GE had a willing guinea pig: itself. Since 2013 Predix has had a profound impact on GE’s production lines. In 2015 it was able to save $500 million through predictive maintenance. And by 2020, the company is expecting savings of better than $1 billion as the software and sensors are connected to more machines.
Elsewhere, BMW and Ford expect connected cars will communicate with each other and the network, relaying key data points like speed and destination. Using that data the network will not only route traffic and govern speed to relieve congestion, it will reduce accidents by constantly monitoring safe distances given weather and road conditions. In the nearer future smart assist features like automatic braking will make use of data from onboard sensors to slow the vehicle to avoid accidents even if the driver fails to reduce speed.
Johnson Controls wants to take that one step further with embedded sensors in roads, street lamps, traffic lights, buildings and other infrastructure. It will collect all of that data, analyze and make it useful so lights and air conditioning units shut off when nobody is around, traffic lights change to moderate the flow of cars and icy road conditions are relayed to oncoming cars, alerting them to slow down. If the drivers fail to do that, the cars will automatically reduce speed via their connected real-time data analytics software.
That’s the key. Sensors are not enough. Sensors merely collect data. When they are connected to machines, connected to real-time software, the magic begins.
IBM is building a major presence in data analytics — particularly in healthcare — with its Watson computing platform. In 2015 the company launched the Watson Health Cloud. The idea was to build a secure, open innovation platform where corporations and researchers could build systems and exchange data via an application program interfaces, or APIs.
Already pharmaceutical firms like Johnson and Johnson and Medtronic are working to develop new drugs. Apple and Under Armour are using Watson analytics to decipher the deluge of data connected watches and fitness bands bring. And medical facilities like Memorial Sloan-Kettering Cancer Center have made Watson the centerpiece of oncology research.
The size of the potential market for Internet of Things solutions could be huge. In 2015, as The Wall Street Journal reported, research firm IDC predicted the total market would grow to $1.7 trillion in 2020, from just $655.8 billion in 2014. And the company is predicting a staggering 29.5 billion connected devices.
As the paradigm shift continues many old business models will be upended, leading to new services, products and industries.
Naysayers are wrong about the Internet of Things because their focus is the things, the machines. The power and promise is leveraging data. Sensors, machines and real-time analytics mean we’re entering an era where reaction times will be smaller than at any time in history.
Businesses will have the ability to predict and remedy potential problems in real-time. That state of total awareness is going to lead to unprecedented control over resources and opportunity for investors.