2015 may have been the peak of hype for the Internet of Things, but hype drives investment. We expect that 2016 will see even bigger and broader investments in IoT, as well as a land grab amongst IoT solution providers.
Big Boys Building Out Their IoT Portfolios in Big Ways in 2016
In 2015, there were major IoT announcements by Amazon (AWS IoT), Google (Brillo, Weave, Google Cloud), Microsoft (Azure IoT Suite), Salesforce.com (Salesforce IoT Cloud, Thunder), Intel (Intel IoT Platform), EMC/IIC (INFINITE), IBM (IBM IoT Foundation, Watson Internet of Things), and others. All of these players come to the table with hundreds of millions and in some case billions of lines of existing code from the platforms they have already built. Their IoT strategies are all designed to leverage those existing assets, such as Amazon’s AWS, Google’s Cloud Platform, IBM’s Watson, and Microsoft’s Azure; and thereby their IoT platforms functionality reflects their legacy. Much of the new IoT functionality announced is more about connecting, extending, and making the core platforms available for IoT uses. But all of these players are sinking big investments and we expect deeper and more substantive and innovative new platform functionality from them during 2016.
Analytics Takes Off
Much of the focus to date has been in building up the platforms to manage the devices, collect the data, and build the applications. However, much of the value will be unlocked through analytics. While there have been a number of analytic platforms and applications already introduced, we expect 2016 to see an explosion of new IoT analytic products, companies, applications, and use cases.
Massive IoT Data Storage in 2016
Many IoT solution providers, especially in the area of IoT analytics, use historical data combined with machine learning to make continually better predictions and learn increasingly optimal responses to varying conditions and circumstances. For a number of these solution providers, the light bulb went off and they have been collecting and storing massive amounts of all kinds of public and private IoT and related data (e.g. traffic, weather, crop yields, etc.) with the understanding that this repository of historical data will have increasing value over time, the richer and more complete it gets. We expect that same light bulb to go off for many more solutions providers and for providers of IoT enabled products and services, as well as the end users of those products. Thus in 2016, there will be a huge uptick not just in the amount of IoT data generated, but even more so in the amount of IoT data that is stored. As noted, this is not just about the machine-generated IoT data, but all kinds of correlated data streams that analytic engines may use in their particular domain or problem set. For smart agriculture it could be weather, commodity prices, crop yields, and other data; for IoT in Logistics it might be traffic, port congestion and delays, storm tracks, and so forth. Considering the enormous volumes of data to be stored, not just the IoT data, but also all this related data, it’s no wonder the EMCs of the world love IoT.
Manufacturers Get Serious
2015 was a year of awakening for many manufacturers realizing that this IoT thing is more than just a buzzword. Reports like Heppelmann and Porter’s HBR piece, How Smart, Connected Products Are Transforming Competition and The IoT Impact: Finding Your Company’s Role in the New Smart Connected World and many other publications and presentations have opened manufacturers’ eyes to how IoT is changing the definition of what a manufacturer does, as well as the very structure of their industry. Leading edge companies like GE have been leading the IoT charge for years, but now the masses of manufacturing companies (not just OEMs, but Tier 1 and 2 suppliers as well) are waking up and realizing they need to figure this thing out and what it means for them. 2016 will be a year of experimentation, strategy-building, trying out services, and for few manufacturers, broader rollouts of IoT-enabled products and services. This is a huge learning process, involving changes in skillsets, business models, pricing, channels, service offering … just about everything a manufacturer does and is. So, this transformation won’t happen in a year, but 2016 is the year when many manufacturers will get serious about IoT.
Smart Cities Moving at Very Different Paces
Unlike poorly run companies, poorly run cities generally don’t disappear1 (at least not quickly). Thus we find a much bigger range of stages of development for cities when it comes to adoption of technology like IoT. We have already seen some progressive cities implementing self-contained2 IoT projects like smart connected trash cans and smart connected lighting. The big bold vision of highly interoperable smart city systems has a long way to go. As many manufacturers woke up to IoT in 2015, some city planners and managers are awakening to the possibilities of IoT, but not with the same urgency and speed. Therefore, we expect 2016 will see continued modest expansion of IoT experiments and self-contained rollouts in a few cities who have forward-thinking managers and populations, but not necessarily a tidal wave of adoption this year.
Logistics, Steady as She Goes
Logistics providers and users have been using forms of IoT for decades, including using GPS to track the location of trucks, ships, trains and other conveyances, as well as to optimize routes and more recently to enable better security. Modern engines and hydraulics are increasingly loaded with sensors and microprocessors, though much of that data has been trapped for local use by mechanics plugging into a port or more recently reading with a local wireless reader. Even these non-real-time data can have huge value in helping identify mechanical problems that need fixing and/or driver behavior issues like hard braking and accelerating. In 2016, we will see the continued increasing connectivity of vehicles, but more importantly the maturing and sophistication of logistics providers in understanding and implementing all of the things they can do with these capabilities (such as leveraging much more granular real-time visibility and more precise ETAs). For more, see The Internet-of-Things in Logistics.
Other Industries on the Move
In industry after industry, 2016 will bring accelerated strides in IoT adoption and sophistication. Mining continues to be a leader, with autonomous vehicles and remote controlled sites (How IoT is Transforming Mining). Adoption of connected healthcare is being driven by moves to outcome-based medicine and payment policies, as well as cost pressures. Precision agriculture is taking hold in high-labor cost countries, especially for crops which see good financial results using these machines (e.g. cotton). The use of RFID in apparel retail continues to grow at over 30% per year. In 2016, some retail stores will experiment with connecting many different sensors and devices to create more of an integrated store, though we expect those to still be mostly pilots and trials. Utility providers move at the pace that utilities do, but we will see steady increased adoption of remote sensing and monitoring, especially in the power grid.
What’s Real for IoT in 2016?
If you are interested in hearing more about what is real in 2016, where IoT is being adopted at scale, you should consider attending MIT’s Connected Things 2016, on April 5th at the MIT Media Lab. In any case, we will continue to write throughout the year on this critical topic, as 2016 proves to be a pivotal year for the Internet of Things.
1 Poorly run cities may shrink, struggle to attract businesses, and in some cases become insolvent and be placed into receivership, but they continue to exist as geographic and governmental entities. -- Return to article text above
2 By ‘self-contained,’ we mean projects that can be implemented without having to integrate with, disrupt, and/or change many other municipal processes, procedures, and systems. -- Return to article text above
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