The Internet of Things – interconnecting objects, data, processes and people – long ago ceased to be merely a future vision, and is now a reality. IT company Cisco estimates that products and solutions relating to the Internet of Things today already generate sales of some 613 billion US Dollars worldwide.
Yet despite those impressive numbers, the Internet of Things is very much in its infancy. It is estimated that currently just one percent of all machines have online capability. The remaining 99 percent – some 1.5 trillion machines of various kinds – remain to be connected. That represents an enormous market potential. The market analysts at IDC predict that by the year 2015 the Internet of Things will comprise 15 billion intelligent machines. Cisco’s forecast of 25 billion interconnected machines by that time is even more optimistic; and by 2020 the number is expected to rise to 50 billion. According to the Cisco Internet of Everything Value Index, the biggest drivers of value growth through the Internet of Things this year are logistics (158.8 billion Dollars) and services (145.3 billion Dollars).
The rapid growth offers major opportunities for manufacturers of the machines and components concerned. At the heart of the technology is machine-to-machine (M2M) communication, and consequently that is where particularly strong demand is being seen. According to British analysts Machina Research, communications technology is dominated by two sectors: consumer electronics and building automation. Near-field communication is playing a key role in developments. More than 70 percent of machines are interconnected by technologies such as Wi-Fi. But mobile communications technology is also set to grow strongly. Machina Research predicts that by 2022 it will be providing around 2.6 billion machine connections. By comparison, the 2011 figure was 146 million. The key sector for these wide-area mobile networks is the automotive industry, which is forecast to account for some 60 percent of all such connections.
Manufacturers of sensors and microprocessors will also profit from the Internet of Things, too, however. One of the by-products of the boom in “intelligent” components and machines will be huge growth in global data volumes. This “Big Data” will in turn demand appropriate hardware and middleware solutions to enable it to be utilised efficiently and productively.
International mobile communications industry association GSMA estimates that by the year 2020 revenues from sales of network-connected machines and associated services will total 2.5 trillion US Dollars. At the same time, the Internet of Things will cut business costs by a further two trillion US Dollars, through direct savings, as well as based on more efficient services.
So we are at the threshold of a new market trend which offers enormous potential. In order to share in it, market players will need innovative electronic components as well as specific know-how relating to the Internet of Things.
The interconnected world
