For every person on the internet doing work or being entertained, a multitude of machines are automatically reporting device location, temperature, speed and other status data online. About 4 billion people use the internet. But that number is dwarfed by the roughly 12 billion devices sending data over the internet, often with little or no human intervention.
And the movement is just getting started. Research firm IHS Markit expects the number of machines linked to the internet to more than quadruple, reaching 55 billion, by 2025. That leaves a lot more room to run.
“We’re just starting to move out of the pilot phase,” IDC analyst Carrie MacGillivray said.
Tech companies big and small are scrambling to make their mark in the still-emerging IoT field, which promises to be a huge financial opportunity. They range from chip companies selling sensors and processors for IoT devices to software firms that want to store and analyze data collected from those billions of devices.
Semiconductor firms making a splash in the Internet of Things include Intel (INTC), Microchip Technology (MCHP), ON Semiconductor (ON), Qualcomm (QCOM), Silicon Laboratories (SLAB) and STMicroelectronics (STM), to name a few.
Giant tech companies like AT&T (T), Cisco Systems (CSCO), IBM (IBM) and Microsoft (MSFT) also have staked a claim to the IoT opportunity with software and service offerings.
Companies often use consumer examples of the Internet of Things to explain the technology. Those examples include getting alerts about suspicious activity from home surveillance cameras and being able to control door locks, lights and thermostats remotely.
IoT Business Applications
But the much bigger opportunity is industrial and commercial IoT applications. The technology trend promises to help firms improve efficiency, productivity and profitability.
“Where we’re seeing the big uptake on the business-to-business side is manufacturing, transportation, smart buildings, as well as smart cities,” MacGillivray said.
Enterprises are deploying trackers and sensors to gain real-time visibility of their inventory and assets. They are using data from IoT devices to hone their manufacturing operations, supply chains and deliveries.
For most companies, IoT deployments are in their early days. They’re starting to install the technology to enable IoT, but full implementation is a ways off.
“People talk about Internet of Things as a movement, not a technology, and that’s definitely true,” IHS Markit analyst Matt Short said. “Most of what we see now are proof of concepts by individual companies, not things that are widely deployed.”
Internet Of Things Examples
One company already making a big business out of the Internet of Things is Zebra Technologies (ZBRA). Lincolnshire, Ill.-based Zebra sells systems for “enterprise asset intelligence” that track items using radio-frequency identification tags, bar codes and scanners.
“We’re leveraging Internet of Things to help our enterprise customers improve their businesses,” said Jeffrey Schmitz, chief marketing officer at Zebra Technologies. That includes improving productivity, customer service, regulatory compliance and even saving lives.
Its largest vertical market is retail but health care is its fastest-growing. It also serves the transportation and logistics markets.
To compete against e-commerce giant Amazon.com (AMZN), retailers need to know what items they have in stock at any time, Zebra Chief Financial Officer Olivier Leonetti says. Zebra offers technology to give retailers real-time visibility into their inventory.
In the health care industry, Zebra provides systems to track everything from available hospital beds to making sure the right patient gets the right medicine at the right time, Leonetti says.
Zebra’s data collection systems can reduce medical errors and increase the amount of time doctors and nurses spend with patients. For instance, nurses can spend less time looking for the right equipment, Schmitz says.
IoT Devices In Trucking And Football
In transportation, Zebra sells a system that makes sure truckloads are optimized by monitoring their contents.
“Most trucks ship 30% air today,” Schmitz said. More efficient loads would be closer to capacity.
To show customers what is possible, Zebra works with the National Football League. It has RFID chips attached to players, referees, first-down markers, end-zone pylons and even the ball. The RFID chips blink 10 times a second to provide real-time information, used for NFL game broadcasts. The teams get the data after the game.
The system provides data on player position, location, speed, acceleration, deceleration and separation from opposing players. The chip in the ball shows its speed and spin.
“Sports is a very small piece of the business, but it’s a really high-profile one,” Schmitz said. “That gives people an idea of the power of the technology and what we can bring to other applications.”
Spending on the Internet of Things is already significant as companies lay the groundwork for advanced data collection and analytics.
Internet Of Things Products: Market Forecast
IDC predicts that spending on IoT hardware, software and services will reach $1.2 trillion by 2022. That compares with $630 billion in 2017. IDC sees the market posting a compound annual growth rate of 13.5% over that period.
“It will reach critical mass by 2020,” IDC’s MacGillivray said.
Some niches are well into deployment, such as smart meter readers. Instead of sending out workers house to house to record water, gas and electricity usage, devices transmit that data directly to the company.
The basic building blocks of the Internet of Things are connectivity, distributed computing and platforms, IHS Markit’s Short said. Those building blocks are available today, but companies are still sorting out best practices.
“They’re not sexy to talk about, but they are legitimately transformative,” he said.
How IoT Works: Three Steps
Whichever companies can establish the leading software platforms and ecosystems will win the market, Short said.
IHS Markit is tracking over 400 different software platforms now covering connectivity, applications and data exchange. Customers are having to mix and match from a dizzying array of offerings to make complete IoT systems.
Short expects to see major players like Microsoft acquiring smaller software firms so they can build out their Internet of Things offerings and reduce the complexity of systems. Security for those systems also is a major concern that’s being addressed.
“Obviously there is going to be a lot of consolidation as those companies get bought up,” he said.
The way Zebra sees it, the business of Internet of Things involves three steps: sense, analyze and act. Sensors report the status of inventory or equipment, systems analyze the data and then businesses take action based on what they interpret from the data.
Putting AI In IoT
The next step for the Internet of Things will involve artificial intelligence and automation of responses to the collected data.
The exciting part of the industrial Internet of Things will come when companies start analyzing all the data they are collecting from IoT devices to garner useful insights to improve their operations, Short says.
That means going beyond simple asset tracking into data mining and simulations using artificial intelligence.
“When you start to implement multiple of these technologies is where you start to see the power,” Short said.