The Internet of Things is not a futuristic fantasy – it already exists today.
- The Internet of Things will have an enormous economic impact – According to McKinsey Global Institute, the industry could create an economic impact ranging from $2.7 to $6.2 trillion annually. Business Insider expects $1.7 trillion to be added to the world’s economy in 2019.
- It will be the largest device market on the globe – McKinsey estimates that 1 trillion machines could be connected across major industrial sectors. The growth of sensors has increased by 70% annually since 2010, and that growth will only continue.
- Software revenue will outstrip hardware revenue – Business Insider expects hardware to make up less than 10% of the Internet of Things revenue.
- Efficiency will be the main driver for the new market – In the past 5 years, we have seen a 300% growth in machine-to-machine (M2M) connections, along with an 80-90% decline in micro-sensor production costs, according to McKinsey.
- Slow adoption of industry standards will hinder growth – However, by 2020, half of all businesses will have adopted M2M technology.
- Machine-to-machine connections will triple in the next few years – McKinsey estimates 100 million M2M connections across sectors such as health care and transportation. Vodafone estimates that M2M devices will grow from 4.4 billion this year to 10.3 billion by 2018.
- A third of revenue will come from the Asia-Pacific – Ovum expects most of the growth to occur in the Asia-Pacific, the Middle East, and Africa.
- The Internet of Things is all about business – A survey at ZDNet and TechRepublic revealed the majority of those sites’ readers feel the Internet of Things is about creating a competitive advantage for their businesses.
The Internet of Things at a Glance
The Internet of Things has been labelled hype by some but world-changing by most. The idea is that every object in the world around us has a digital identity – everything is connected to the internet or to other machines. The M2M connection allows objects to utilize sensors in a way that has never been possible before.
All business sectors, from commercial to industrial, will see massive shifts that increase efficiency and disrupt the way we currently do business. Physical industries have yet to see the impact of this technology, but as the M2M world evolves, the potential cost-savings will undoubtedly cause major disruptions.
Self-driving cars are only one example of M2M technology that could shift the foundations of an industry. When cars are automated, driverless taxi services could shift the very way we get around. According to Robin Chase, founder of Buzzcar and co-founder of Zipcar, 80% of cars have people driving alone, yet cars can soak up almost 20% of a person’s income.
When a driverless car can pick you up and drop you off, which would be the more cost-effective solution?
McKinsey estimates that M2M technology can cut costs drastically by 2025.
Here are just a few industries that could be affected:
- Healthcare could use remote monitoring to cut 10-20% of the costs of chronic disease treatment and reduce 80-100% of counterfeit drugs.
- Precision fertilizer application and irrigation could cut 10-20% from current agriculture budgets.
- Urban infrastructure could see 10-20% reduction in travel time through traffic control, a 10-20% reduction in water consumption, and a 10-20% reduction in waste handling costs.
- Crime could be reduced up to 5% with improved surveillance technology.
- Up to a quarter of vehicle damage costs could be eliminated with collision avoidance technology and increased security.
Of particular interest to readers of the CodeFuel blog, of course, is how this technology will affect marketing and advertising.
Impact on Marketing and Advertising
Marketing, advertising, and monetization will also be disrupted, particularly by the influx of new data. Troves of data gathered by the Internet of Things’ sensor network will enable insightful predictive marketing that will change the way we advertise.
For instance: the Apple Watch is more than just an innocent smartwatch. It incorporates M2M technology that allows it to monitor highly specific information about the wearer’s physical activity and health.
By coordinating location information with iPhones and other Apple devices, the smartwatch knows how much time the wearer spends sitting, standing, walking, working out, running, and so forth. An altimeter can track how much time a person spends in an elevator or on the 40th floor of a skyscraper.
The Internet of Things represents a groundbreaking shift in the way that we live our lives and the way that we do business. Though we aren’t always aware of it, M2M technologies are already beginning to proliferate, and will soon affect every sector of business. For advertisers, it is wise to pay attention to the Internet of Things as it impacts every industry, particularly those that will impact the marketing and advertising industries, such as smart devices and wearable technology.