Imagine a future where you ask your smartwatch to order a driverless cab for your ride home. As it arrives, it ‘talks’ to your watch and unlocks the doors. On the way back, you switch on the lights and heating and run a bath. Welcome to the Internet of Things.
It sounds like science fiction, but it’s fast becoming science fact – and if you invest wisely, it could make you very rich.
Depending on who you believe, by 2020 there will be anywhere between 20 and 30 billion connected devices controlling almost every aspect of modern society.
At home, you will be able to unlock your front door with your phone and see at a glance who’s been in the house, while the heating and air conditioning will sense how hot or cold you are via sensors in your watch – or even under your skin.
If you have a medical condition, doctors will know instantly if your health telemetry gives cause for alarm. If someone elderly has a fall, the emergency services will be immediately alerted.
If your children aren’t home from school on time, you will be able to see at a glance where they are and what they are doing.
In short, the Internet of Things (IoT) is the ability of almost every device – from phones and watches to vehicles, domestic appliances, heating, lighting and even tiny sensors – to communicate with each other.
In industry the implications go even further than in the home, as the IoT, in tandem with advanced robotics, takes over, and the need for human intervention becomes less and less important.
Embedded chips are already used in the logistics industry to monitor deliveries, and allow firms to automatically re-order when stock are running low. The IoT will also enable companies to run maintenance routines and fine-tune manufacturing processes in real time, as well as gaining data from chips built into their products to see how they are performing once they leave the factory, and why and how they break down.
Aircraft manufacturers and airlines will know instantly if vital parts are at risk of failing, helping to prevent accidents.
In agriculture, more food will be produced as giant agricultural companies such as Monsanto help farmers gain detailed, field-by-field data on climate, soil condition, pesticide and fertiliser use to allow them to fine-tune planting for optimum yields the following season.
‘Smart cities’ will allow public transport to be integrated much more closely, with realtime information on congestion and delays that will not just help travellers, but provide vital feedback for technicians and planners to improve road and rail systems for the future.
According to the Boston Consulting Group (BCG), by 2020 companies around the world will be spending £220bn over and above their normal IT budget every year on IoT.
Back in 2011, Cisco’s chief futurist Dave Evans said the Internet of Things would “change everything – including ourselves”.
He said it represented the “next evolution of the internet” with its ability to “gather, analyse, and distribute data that we can turn into information, knowledge, and, ultimately, wisdom”.
Wisdom may take a little longer, but so far Evans’ prophetic vision is rapidly coming true.
IoT business as an investment opportunity
The IoT businesses will change our lives out of all recognition in the next 20 years. So where do the biggest business opportunities lie – and with them, the biggest investment opportunities?
All types of tech companies involved in the IoT business are expected to achieved a compound annual growth rate of at least 20% from 2015 through 2020, according to BCG’s 2017 report, Winning in IoT: It’s All About the Business Processes.
But some types of tech firm have much higher growth potential than others. BCG says IoT’s real value is in the top two layers of the technology ‘stack’ – services, and IoT analytics and applications.
BCG expects that by 2020 these two layers will have captured a staggering 60% of the growth from IoT.
The rest of the technology stack – identity and security, the IoT hardware backbone, communications, and connected things – are seen as “enabling components with lower growth potential”.
If all this sounds a little too much like Orwell’s 1984 for your liking, then you’re not alone. Writing in a 2015 paper The Internet of Everything is the New Economy, senior Cisco IT engineer Plamen Nedeltchev cites concerns about security and privacy.