Over the last five years, anybody following the trends of the ‘IT industry’ cannot have failed to notice the increasing prevalence of the so-called internet-of-things (‘IOT’) across the media and academia (and marketing types).
In 2016, there are hundreds of IOT dedicated events and organisations: conferences, interest groups, universities, start-ups. Soon there will be thousands. Even governments have started to hail IOT as the new champion of the digital economy. We get it: it’s a game-changer – maybe…
Where does this excitement come from? Is IOT actually shifting a paradigm? Or is it yet another technological red-herring to convince venture capitalists to finance a new technological hype bubble? One surprising thing about IOT is the amount of money spent for its worldwide promotion, we’re talking estimated budgets nearing US$100M per year. There are clearly some strong vested interests behind this, so in plain English: Where is the money?
In the 1990s and early 2000s, the electronics industry was driven by the explosive expansion of the ‘consumer electronics’ and ‘smart devices’ market. Tens (perhaps hundreds) of billions of dollars were invested in developing new chip technologies and production lines. This led to affordable audio devices, mobile personal computers, smartphones, tablets, and so on.
But this market is nearing saturation. The world market penetration of ‘personal electronic devices’ (in developed economies at least) is closing in on 100%. It’s also rapidly increasing in the rest of the world. In marketing terms, we’re nearing the end of the S-Curve. Economic impact: profits start drying-up. This is a major concern for electronics companies.
The current global production capacity is sized to serve a growing market, if demand drops to only serve a product refresh model then an estimated 60 plus per cent of the world’s chip production capacity will become redundant.
So, either the industry finds another market to keep chip production facilities running or it will face a very severe crash in the next decade. For an early taste of what this could mean see the recent woes of Japanese electronics giants like Sharp, Sony, and Toshiba. The solution, they think, is called IOT. The logic goes like this: now that every human is equipped with a personal device, let’s ‘connect’ all the objects with which they interact. The numbers are astronomical.
The average person interacts with thousands of objects per day – many of them personally-owned property and even more interestingly most of them being frequently renewed ‘consumables’ (think food packaging). In other words, not only does IOT have a huge market potential (hundreds of billions of objects), it holds the promise of a never-ending consumer demand.
That is the justification behind the huge PR and spin-doctoring budgets that have brought IOT to the forefront: the electronic industry would like us all to adopt IOT – but do we need it? Dozens of craftily designed ‘future scenarios’ tell us how great life will be when every object is connected. But how much is real value, and how much is a solution in search of a problem?
We do see real, tangible, benefits in some aspects of the magical ‘IOT’. To name a few:
- Transport: especially with the advent of smart and autonomous vehicles and supporting infrastructures (V2V, new generation ITS) that can have an enormous impact practically and environmentally on the way we travel
- Infrastructure management: especially intelligent maintenance with devices that ‘phone home’ preventatively: great to avoid disruption and reduce costs (especially true for distributed public equipment like street lighting or infrastructure)
- Building automation: this integrates in IOT the long existing notion of ‘smart building’ (since the 1980s) that automatically adjust environmental conditions based on learned usage patterns (turn on the heating 30 minutes before people get in the office) and/or on physical occupation of the rooms
- Health: with remote monitoring of patients and emergency notification systems.
What you will note is that all these uses are based on IOT applications to infrastructure (vehicles, systems monitoring, and maintenance) and individuals (health). But the market for these is considerably lower than for the ‘all singing and dancing’ vision of IOT, and probably not sufficient to mitigate the impending crisis in the silicon industry.
Ask yourself: do you really need your light bulb to e-mail you it needs replacing? Your milk carton to tell you its contents are curdled? Honestly? Maybe not, but it’s coming anyway…