In building out the Internet of Things (IoT), the world is undergoing a transformation where nearly everything will be connected explains PK Agarwal, Regional Dean/CEO of Northeastern University-Silicon Valley and former CTO, in EE Times. The early Internet was a collection of documents. Websites served as online brochures or billboards. The second wave was an Internet of commerce when companies such as eBay and Amazon landed tens of billions of dollars in online sales. With the arrival of social media, the third wave became the Internet of people in which Facebook, for example, connects roughly a third of humanity to generate hundreds of billions of dollars.
Now, we are embarking on the fourth wave, the IoT which promises to dwarf every phase that came before it. The IoT can be defined as a network of physical devices including appliances, vehicles, buildings, warehouses, pipelines and other infrastructure fitted with sensors and actuators that enable the objects to collect and share data with a central controller.
IoT investments will top $6 trillion over the next five years, and some 24 billion IoT devices will be installed by 2020, according to Business Insider. Just this year alone, enterprises will spend $232 billion on initiatives to build out the IoT, according to International Data Corp.
Such market momentum is causing organizations to view IoT as increasingly strategic to their business growth. Yet developing a comprehensive IoT strategy still remains the biggest challenge for industry adoption, according to 46.3 percent of 200 IT professionals surveyed by Northeastern University-Silicon Valley at the recent Sensors Expo & Conference in San Jose, California.
Increased efficiency is the main reason that businesses are investing in IoT development, according to 38.3 percent of respondents, followed by the pursuit of a competitive market advantage (28.4 percent). Other drivers for IoT investment include market share growth (15.9 percent) and cost savings (14.9 percent).
Agarwal believes the best IoT strategy for organizations in the near term is to start with small pilot projects to gain some needed experience with IoT systems until specific business cases can be established and understood. In other words, start small and be prepared to fail, but then learn quickly from setbacks to fine-tune your approach to IoT.
With this in mind, let’s see what a couple companies that people do not historically associate with the Internet or Silicon Valley are doing. The first one is GE. GE is selling off its division that makes refrigerators and microwave ovens. It is now focused on electric power generators, jet engines, locomotives, and oil-refining gear. More importantly, it has made a significant bet on developing software to connect these devices to the Internet. GE believes its opportunity lies in what it calls the Internet of Really Big Things.
In the past five years, GE has hired hundreds of software developers, created its own operating system, and fashioned dozens of applications that it says will make planes fly more efficiently, extend the life of power generators, and allow trains to run faster. GE’s plan is to sell this software to other manufacturers of really big industrial things and to be a top 10 software company by 2020. The company says it had software sales of $5 billion in 2015, a sign that the Internet-of-really-big-things approach should be taken seriously.
Besides GE, Ford is serious about leveraging the potential opportunities IoT offers. Something of a pioneer in connectivity – back in 2012 it devised a system whereby cars could recognize and read out text messages via Bluetooth – the automotive giant has set up a dedicated wearables facility at the Ford Research and Innovation Center in Dearborn, Michigan. The researchers and engineers at the lab are looking into ways for vehicles to exploit data collected by wearable technologies and thinking how drivers can interact with connected devices.
Gary Strumolo, global manager for vehicle design and infotronics in Ford Research and Advanced Engineering explains, “The potential in this [IoT] space is endless. We’re evaluating many different wearable devices and applications – everything from helping to keep Ford drivers healthier and more aware behind the wheel to offering an enhanced customer experience at our dealerships.”
Creating an IoT strategy definitely is new territory for companies. Although it is new territory, companies believe that the potential of IoT beckons for them to put strategies in place. GE and Ford are prime examples.