A number of publications have proclaimed 2013 as the dawn of the era of the “Internet of Things”.   As an industry, we always need an acronym and a neat, marketable reference point to help people digest what we tell them.  There is a storm of activity around the Internet of Things; it’s appeared on at least ten of the “Top Tech Trends for 2013” lists, including those compiled by Gartner, IDC,  and M2M World News.  The numbers being thrown about are astronomical, from the amount of value generated through efficiency and productivity gains, to the numbers of connected objects, both stationary and those roaming the earth, looking for a friend to talk to.

A new study from General Electric surmises that the “Internet of Thingscould add between $10 trillion and $15 trillion to global GDP over the next 20 years. I would take a very skeptical view of some these numbers; (anyone remember the catastrophes that never befell the world on 1/1/2000)?  To be sure there will be efficiencies, but GDP growth likely won’t enable that magnitude of savings.

In any case, the real impact will be in the growing incidence of increasingly intelligent and networked sensors that will be able to give real substance to the D3: Deployment-Detection- -Decision model that is emerging in machine intelligence.

  • GE, the manufacturing giant reckons the “industrial internet”, as it terms the phenomenon, could find direct application in sectors accounting for more than $32.3 trillion in global economic activity, but expects this figure to reach about $82 trillion – one half of global economic output – by 2025.
  • Aviation fuel savings (GE has put over 43,000 commercial jet engines in service) would be worth about $30 billion over the next 15 years, while the same efficiency improvement in the global gas-fired power plant fleet could lead to savings of about $66 billion in fuel consumption.
  • The global health industry could realize savings of more than $63 billion by reducing process inefficiencies by 1%
  • Capital expenditures in upstream oil and gas exploration and development could be curtailed by $90 billion; the amount GE believes could be realized by a 1% improvement in capital utilization.

GE says the savings are possible by combining three elements of the industrial internet: “intelligent machines”, “advanced analytics” and “people at work”.  While the industrial internet starts with the embedding of sensors in an array of machines, it is the collection and analysis of data this process allows that generates much of the savings, with an additional boost provided by connecting people at work or on the move.

Machine-to-Machine Figures Set to Soar – Numbers All Over the Map

Cisco and Ericsson agree (perhaps a bit optimistically) that in 10 years there will be 50 billion devices connected to the web, compared with Intel’s estimates that by 2015 the world will have 15 billion connected devices, up from 5 billion in 2012.

Interestingly, from a revenue perspective, global researcher Machina Research estimates that global M2M revenues will soar from $200 million in 2011 to $1.2 trillion in just 11 years, reaching that figure in 2022.  Of the projected $400 billion M2M services revenue, just $9 billion will come from the provision of basic cellular connectivity,” said Jim Morrish, a director at Machina Research. Morrish goes on to point out that, “There are much richer rewards available to mobile operators who can expand their offerings beyond the provision of connectivity. MNO (Machine Network Operator) pursuit of full service revenue will be a defining characteristic of M2M in the next three to five years.”

Although Machina Research believes nearly 10% of services revenues will come from the provision of connectivity, it says around $29 billion of this figure will be generated by service enablement.   Expect MNOs like Verizon, T-Mobile, and ATT to expand their offerings to include cloud services, intelligent building management, intelligent medical device networks, and “smart and secure” connected homes in the next 12-24 months.

In general, opportunities for strategy providers and service and technology partners will ramp up dramatically in 2013.  Some trending investments include huge infrastructure projects using “smart” metering to enable better electrical power distribution, roadway traffic optimization systems in congested urban areas, and medical data management infrastructure to enable data collection from mobile health delivery systems.

By most accounts, we are at the beginning of a highly disruptive journey, with the potential to rewrite much of our worldview.  Significant shifts in manufacturing, heavy industry processes, hospitality, commercial building management, and domestic housing are on the horizon.  As the ancient Chinese saying goes, “May you live in interesting times”.

Original Author: Jeremy Eckhous