The IoT economy: New models created by connectivity
When industries begin to connect greater parts of the supply chain, existing business processes become more efficient — and efficiency is key for any supply chain. However, it is even more exciting when this greater connectivity changes industries altogether and opens business opportunities. The internet of things allows the greater connectivity of objects that were otherwise “silent” to become their own economic driver. So, what are the new economic models that connectivity creates?
First, start with the consumer. The biggest impact on the IoT economy is driven by the “super computers” — our phones — that we all carry around with us. According to the UN, there are now more mobile connections than there are people on the planet. More than two-thirds of the planet have a mobile phone. The ubiquity of mobile, connected devices — aka personal IoT devices — has radically changed our economy with commerce, social, personal wellness … the list goes on and on. There are few, if any, businesses that can afford to live without a mobile strategy. It has already proven to be a massive impact on our economy’s evolution.
Speaking of the individual, our homes are seeing the impact of IoT as well. All one must do is look at the growth of digital assistants that permeate many of our homes — a market predicted to grow to $12 billion by 2020. We are also starting to see a rise in smart home devices — appliances, home security, door bells and even pet accessories. The impact on the IoT economy is measurable by the basic sales figures, but the underlying impact on the economy is how these devices might open greater data signals and insights that companies can take advantage of. The amount and type of data have a potentially greater impact on the economy than the money being spent on IoT devices.
The mechanics industry has also seen new economic opportunities. The well-known use cases are the likes of Rolls Royce and GE, companies that are connecting their airplane engines, allowing for greater predictive maintenance. This part of the IoT economy has already had massive impacts on our overall economy. For example, Rolls Royce, via IoT and the visibility offered by connectivity, can enhance its business offerings, such as “power by the hour.” The ability to add connectivity to parts of the supply chain that were otherwise dark has opened new business models that have great impact on the economy. Subscription business models, predictive maintenance and greater rental functionality are just a few of the impacts on our economy driven by IoT.
Furthermore, the biggest potential impact of the IoT economy is in healthcare. Smartphones are offering — for better or worse — an increased amount of personal wellness functionality. iOS and Android phones are not only simply tracking the number of steps one takes, they are now measuring heart rate and asking to track reproductive cycles, weight, blood pressure and more. Privacy remains a major issue with this direction, but the genie is out of the bottle. Apple is already touting the warning value its devices will offer for health issues. This connectivity at the individual level is not new, as we already have connected pacemakers and other medical devices. The greater integration of health functions within our mobile phones is the greater democratization of connected health. This connectivity has the potential for a major impact on our economies.
When we think of IoT, we need to look at two aspects of how it impacts our economy. First, it is important to understand the direct impact on spending and investment of the actual IoT devices. Next, we must look the consequence on the economy and what business models it opens up. That is where our focus should be.
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