Internet of Things
The Internet of Things (IoT) is a hot new buzzword. Its purpose and definition are grossly misunderstood. When some people hear the term IoT they immediately associate it with a refrigerator reminding us to order milk or our Fitbit wearable device tweeting how we just ran 4 miles. Neither of those uses are very compelling to most of us which makes it hard to fathom how experts can predict that by 2020 there will be greater than a one trillion dollar market that vendors will be trying to claim a piece of.
The problem with IoT is a lack of education, marketing and PR. The majority of people have not been informed on what use cases are driving these astounding revenue predictions. Sure we have all heard of connected cars, wearable devices, and appliances with sensors, but what has not been marketed enough is the real business value that these “things” create.
To further the cause of promoting awareness to the future impact of IoT, let’s answer these three key questions:
- What kind of data are these devices collecting?
- What are the different types of “Things” or categories that are getting connected?
- What are the different use cases that are driving the revenue predictions?
There are a wide variety of data types that IoT can capture. One of the most common is location aware data. Location based information typically comes from wearables like Google Glass and Fitbit devices or from the location based technologies installed on our phones, tablets and GPS devices. This data informs systems of where the device is located. Sensors report on conditions such as temperature, humidity, moisture, motion, velocity, activity, sound, and much more. Sensors also can report on the health and conditions of machinery and measure things like pressure, torque, load, and even measure chemical compositions. As you can see, there is much more at stake here than what’s in your refrigerator.
The IoT addresses a broad spectrum of business functions and opportunities. Some of the most common categories are supply chain management, location tracking, real time financial analysis, remote monitoring and maintenance, energy efficiency, business process automation, and health and wellness.
IoT Use Cases
The use cases that most people are familiar with are the ones targeting the home consumer. These range from smart self-adjusting thermostats like Nest to IP connected appliances that self-report maintenance information. While some still view these types of IoT devices as a luxury rather than a need, the real value comes when you leverage these use cases with business processes.
For example, as a frequent traveler I spend a lot of time in hotels. When I check in I always find the room freezing cold with the temperature set in the mid-60s. I think about all of the vacant rooms in all of the hotels across the world that are wasting electricity by excessively cooling rooms that nobody is in. The electrical bills for these hotels must be astounding. In addition, it annoys me as a customer to spend my first hour in a hotel room freezing my butt off. As a loyal Marriott customer, I already have a profile set up with my preferences such as non-smoking. What if I could set my preferred temperature at 72? When I land at the airport, Marriott detects that I have arrived in town through the Marriott iPhone app with location aware technology. I get a pop up reminder to check in and enter my arrival time, thus saving me from the line at the front desk. The connected systems are now aware that I will be checking into room 205 in 1 hour and my preferred room temperature is 72. An event is sent to the thermostat in room 205 and the temperature gets adjusted. When I arrive, the room is exactly the temperature I want and the hotel has saved money on electricity by not cooling the room to arctic levels. Now multiply the number of rooms by the number of hotels and the amount of energy saved is astronomical. This should drive down costs that Marriott could then pass on to their customers allowing them to offer better prices than their competition. Hey Marriott, hurry up and implement this before I patent it.
The category where I think IoT can do the most good is in health care. One of the challenges that doctors face when treating older patients with diseases like cancer, heart disease, kidney disorders, and other various rehabilitations is that many find it challenging or prefer not to travel to the doctor’s office as often as they should. This poses a problem as people with life threatening diseases need to be frequently monitored. There are a number startups that have surfaced in the last few years aimed at addressing this problem. Using connected devices, health related information can be sent to doctors, family members, or other caretakers so that the patient’s health and wellness can be evaluated in real time. Some websites even have the intelligence to counsel the patient and make recommendation with diets, exercise, or other lifestyle changes based on the information collected.
Assisted living is another area where IoT is helping our elderly. The cost of nursing homes can be too much for some people that require assistance and monitoring to get through each day. There are technologies in the market place today that monitor the health and activity of the person inside their own home and can alert family and emergency care when issues arise. This is where the connected refrigerator and other appliances would thrive. Imagine if an elderly person’s refrigerator could identify when certain products were due for replenishing. The system would generate a shopping list that the person could update and automatically place an order to a home delivery grocery service. Each week the person would have their groceries delivered to them and their refrigerator would make sure that they are receiving the right products at the right time. That is not luxury; it is necessity for those unable to care for themselves. It is use cases like this that can extend the quality of life for an elderly person so they can maintain home ownership and reduce the pressures to move into assisted living facilities if they don’t want to.
IoT devices and processes that allow us to move goods and people more efficiently will save millions of dollars and make our lives better. By now we have all heard about GE’s smart jet engines that transmit over one terabyte of sensor data per flight. When the plane lands, the airline already knows if any maintenance is required and can expedite the process, saving time and money while decreasing the risk of engine issues in flight.
Connected cars is another hot topic. Again, many people see this as a luxury but when you connect smart cars to smart cities you can start to see the value. Big cities tend to have many traffic bottlenecks. Long commutes impact the quality of life and can have a negative impact on commerce. In cities like San Francisco, 20-30% of all traffic congestion is caused by people searching for parking spots. Some cities are embedding sensors in parking lots so that commuters with an app on their phone can be notified of where an available parking space is, allowing drivers to save time and create more efficient roadways.
These smart cities are utilizing sensors to save money and optimize processes in many ways. Here are just a few:
– Smart Lighting – optimize use of street and building lights based on current conditions
– Traffic monitoring – monitoring and analyzing traffic patterns to reroute drivers
– Waste management – optimizing waste pickup by measuring container levels
– Security & emergency detection – detecting radiation, gases, and other hazardous conditions in real time.
AGRICULTURE AND MORE
I have even seen a startup that utilizes sensors to monitor the health and weight of livestock and uses the data to optimize the feeding and caring process for pork and beef farmers. By measuring certain attributes of the livestock each day, farmers can issue the appropriate amount of food and water to each specific animal as well as administer any necessary medications. In addition, they can accurately forecast the weight and ship date of each animal, while weeding out the under producing animals and the sows that create them. This use case blew my mind and made me realize how diverse IoT can be.
We are just beginning to scratch the surface of what is possible with the IoT, and the use cases are seemingly limitless. It will take time and education before the general public catches on to the real value of IoT and sees it as more than a way to track your steps with Fitbit, have your car schedule an oil change, or have your refrigerator order your milk. Once the general public starts getting exposure to use cases like the ones I mentioned above or these 50 others, I believe the term IoT will be taken more seriously. We are heading towards a world where everything is connected and better decisions can be made in real time. If you are an investor, you should analyze this space closely because the next Google, Facebook, or Amazon might be born in the Internet of Things.