How important will the Industrial Internet of Things become for the economy and for suppliers around the world? Thanks to Visual Capitalist , now we can have a pretty god picture of it. The technologies shaping IIoT are set to generate an estimated 12 trillion USD in the global economy, or about the combined GNP of Japan and India, by 2030. These benefits will be shaped through new efficiencies in the economy.
IIoT is combining the power of ever-cheaper sensors, big data, artificial intelligence, the cloud and mobility, the Internet of Things is poised to transform mainly four main fields:
- Agriculture (smart farming)
- Energy (smart energy)
- Manufacturing (industry 4.0)
- Public services (smart cities)
The data contained in this infographic suggest that this transformation has the power to set in motion new trends that cannot be ignored neither by these industries nor by investors.
- A progressive ever growing concentration of manufacturing scale. Sensors are maybe cheap, but IIoT isn’t, specially combined with the rise of the robots in Industry 4.0. The need for investments -CAPEX- in new technology, new competence and the creation of network economies along a connected value chain will be massive. Small manufacturing players will therefore encounter important barriers to entry to adapt to changes.This will lead to an increased concentration of manufacturing firepower in the ever fewer hands of multinational companies.
- The invasion of the internet ecosystems. The internet ecosystems like Apple, Facebook, Amazon, Samsung and Google are moving rapidly into the business realm. Their expertise within Big data, Artificial Intelligence and cloud delivering XaaS put them in an excellent position to control the IIoT wave. This can be done alone or in collaboration with gatekeepers like IBM, GE or telecom operators. These partnerships can define the future of IIoT in an relatively short period of time.
- The rise of standards will define the speed of adoption. As it stands, the most probable scenario is the rise of a few standards «de facto» supported by a few major players. This is the same phenomenon we have witnessed in all emerging technologies from electricity to personal computers, telecommunications and smartphones. Again, internet ecosystems play with an advantage here.
- The IIoT industry will experience a rush of new hardware and system suppliers. Under the right financial conditions, new Unicorns may be created. However, few will be able to differentiate themselves with truly innovative products that sustain a competitive advantage, because most of them will rely on off the shelf technology connected to «de facto» standards from ecosystem players in the cloud or will lack scale to become relevant. Investors should carefully monitor those few able to create value both on the hardware and the service side, creating sustainable advantages and brand loyalty globally.
- The rise in efficiency will be amazing, but what about the jobs? Foxconn just replaced 60.000 workers with robots. Even Chinese factory workers have become too expensive in a world where competition is fierce and the purchasing power of consumers (because they are not needed any more as production tools) is still fragile. We are probably facing a social structural change like the one we experienced under the first years of the industrial revolution. New amazing fortunes will be made, but IIoT will make the inequality in society will persist or increase, even when standards of living eventually rise.
- We will eat safer and more nutritious food, live longer, live healthier and will be able of doing our tasks quickly and cheaply. Sensors will be pervasive and will give us the opportunity of having a healthier and better life… or alternatively pay higher insurance fees. Our health will be monitored in real-time and preventive diagnostics will it keep us away from the doctors.
- Much of the welfare state will be transformed or become irrelevant, but vendors should be cautious. In a world where welfare entitlements on health and pensions are not sustainable any more (and everyone knows it), states may ultimately try to use the possibilities within IIoT too. Not sure whether they will succeed. Megaprojects in public welfare (specially health) demand deep changes in technology, overhaul of legacy IT infrastructures and at the same rime challenge both the public social security model and the doctors’ careers. Failures and budget overriding will be common. Vendors and investors should be cautious of possible litigations with the state and assess carefully whether the departments that are their customers possess the necessary competence to secure a successful transformation.
- Finally, on the political side, the EU commission will dedicate ever growing amounts of money to projects related to IIoT. The EC has a long tradition of thinking that innovation can be created by executive order. Several new projects will therefore be launched across Europe within frameworks like Digital Agenda, Digital Single Market etc. This is already canalizing significant amount of money to vendors like in the case of the «Alliance for internet of Things Innovation«. This will again favor the biggest players with muscles to endure the associated bureaucracy.
The Industrial Internet of Things is a reality driven by the growing scarcity of resources and a global fragile economy. Vendors and investors should take into account these trends and incorporate them into their strategies. The future of the next generations may depend on it.