Internet of Things

Technology

Overview

The Internet of Things (IoT) has permeated into our daily lives in our home, our car, as well as in our own body. But it transcends devices connecting people to their surroundings, patients to health services, into world economic agents enhancing businesses collaboration through their supply chains, improving operational efficiencies, and increasing companies’ intimacy with their customers.

The IoT space is driven by a huge number of new technologies and services that are still immature but it presents a greenfield of opportunities and challenges. There are already some basic reference points that help start defining and guiding the myriad of moving pieces that form this complex hyper-connected world. From a structural perspective, the IoT architecture is constructed with four basic building blocks:

Some of the top challenges are to be able to cobble all of this together. The reality is that IoT is not a single, monolithic space but it is instead made of thousands of small markets. One key adoption factor across all these markets and ecosystems will be the emergence of IoT platforms. The sensors and devices will get increasingly inexpensive, with applications multiplying, and connectivity decreasing in cost. The real value will be in the platform that ties all of this together. In addition, the high-value output that this IoT platform will deliver is the actionable information coming from this massive amounts of data coming and going across supply chains and systems. This information will transform businesses, change people’s lives, and bring social change.

From the IoT connectivity point of view, there are two major market segments with different requirements emerging: Massive and Critical applications.

Massive IoT connections are characterized by high connection volumes, low cost, requirements on low energy consumption and small data traffic volumes. Examples include smart buildings, transport logistics, fleet management, smart meters and agriculture. Many things will be connected through capillary networks.  This will leverage the ubiquity, security and management of cellular networks. Today, around 70 percent of cellular IoT modules are GSM-only. Network mechanisms are being implemented, resulting in extended network coverage for low-rate applications. Additional functionality will allow existing networks to support different device categories, and enable prioritization of devices accessing the network. Network system improvements, such as sleep mode, will support battery lifetimes beyond 10 years for remote cellular devices.

Critical IoT connections are characterized by requirements for ultra-reliability and availability, with very low latency. Examples include traffic safety, autonomous cars, industrial applications, remote manufacturing and healthcare, including remote surgery. Today, LTE’s share of cellular IoT device penetration is around five percent. Cost reductions will make LTE-connected devices increasingly viable, enabling new, very low latency applications. This will be achieved by reducing complexity and limiting modems to IoT application capabilities. Evolved functionality in existing LTE networks, as well as 5G capabilities, is expected to extend the range of addressable applications for critical IoT deployments.

Between 2015 and 2021, IoT connections are expected to grow with a CAGR of 23 percent. Over that time, Western Europe will add the most connections, led by growth within the connected car segment. A connected car is counted as one device, though it may have hundreds of sensors.

Impact

The Internet of Things (IoT) is transforming society as a whole and, in particular, businesses by creating never-seen before operational efficiencies and enhanced customer experiences. Early implementations of IoT have focused on the potential to transform business models that will drive higher operational efficiencies. However, these early adopter organizations have not yet recognized IoT’s potential as a massive change agent across organizations leveraging this new platform for new product development and untapped revenue streams.  In fact, a recent study by Oxford Economics found that today only 8 percent of organizations are actually using more than 25 percent of their IoT data. To maximize the impact of IoT investments, these organizations must leverage the revenue as well as the efficiency benefits that IoT brings them. Today’s top organizations’ priorities encompass the improvement of customer experience and better leveraging data into actionable information for strategic decision making. IoT provides opportunities to share information with customers, improve customer experience, and to gain insight into customer preferences.

Comparatively speaking, the adoption rate of digital infrastructure has been 5X faster than electricity and telephony. This infrastructure development has been a foundation for the IoT revolution.  There are multiple reasons for the fast growth of the IoT space:

  • Mobile technology, networks, and the proliferation of internet connectivity at lower costs have eased the ability for device manufacturers to integrate their devices with the rest of the supply chain.
  • There is willingness of companies and consumers to adopt more and more connected devices to their everyday business operations and lives.

The benefits of connected devices are spreading across industry ecosystems globally. Analysts are predicting that 30% of all industry leaders will be disrupted by digitally enabled competitors by 2018. In addition, recent research shows that by 2025, the IoT’s economic impact could reach US$11 trillion, or 11% of global economic value, and by 2030 the IoT could influence nearly the entire economy.(1)

A key ingredient of IoT are smart devices. They will come in every shape and size, from nanochips and smart dust to gigantic machines. The number of connected things will grow exponentially from 15 billion in 2015 to 200 billion in 2020.(2) But smart devices are just one of the components of IoT; there are other technologies that make the IoT such as cloud computing, data analytics software, mobile, and machine-to-machine communications.

The ultimate value of IoT will come from the actionable information that is synthesized and applied to improve a range of activities across diverse industry ecosystems and people’s lives. The impacts of IoT in these ecosystems will include cost reductions, optimization of supply chains, people safety, population health management, and many others.

Figure. Examples of industry ecosystems impacted by the IoT revolution




The sheer volume of IoT devices connected and communicating across all these ecosystems require careful security and privacy considerations. Authentication of critical data is an emerging security focus that will drive investments that will eventually solidify the adoption of IoT platforms.

1. McKinsey Global Institute, The Internet of Things: Mapping the Value Beyond the Hype (McKinsey & Company, June 2015)

2. “A Guide to the Internet of Things,” Intel Corp.


Back to Technology