According to one definition, it represents the combination of devices and software systems, connected via the Internet, that produce, receive and analyze data with the aim of transcending traditional siloed ecosystems of electronic information in order to improve quality of life, efficiency, create value and reduce cost.
Put simply, the IoT vision is to connect many of the previously 'unconnected' devices in the world to the public internet, with the intent to capture large amounts of 'data' that can be used to accomplish a goal(s) towards achieving a stated objective. Processing this abundant stream of 'big data' -- i.e. via automated software-enabled analysis and reporting -- will result in actionable insights.
As an example, imagine a scenario where electronic sensors are embedded in heating, ventilation and air conditioning equipment in commercial buildings. The sensors are used to monitor the operational efficiency of these HVAC systems, detect the need for routine maintenance, and identify potential problems that could negatively impact performance -- up to and including system failure.
Empowered by this practical IoT-enabled information, an HVAC technician can be proactively dispatched to work on the system -- thereby potentially avoiding the likelihood of expensive repairs or system replacement.
IoT Market Development Update
According to the findings from a recent market study by Juniper Research, it's now estimated that the number of IoT connected devices will number 38.5 billion in 2020 -- that's up from 13.4 billion in 2015, resulting in a 285 percent growth rate.
While IoT 'smart home' based applications tend to grab the most media attention, it's the industrial and public services sectors -- such as smart buildings and smart power grid applications, plus retail and agriculture apps -- that will form the majority of the installed base for these sensors.
This outlook is due to the compelling business case for these types of commercial applications. Besides, some of these more forward-looking applications could translate into noteworthy changes to the legacy business models of established multinational corporations.
Case in point: Michelin and John Deere have successfully transitioned their businesses towards becoming more 'service-based' companies through the use of IoT -- as opposed to their previous incarnations as traditional manufactured product vendors.
The Nascent State of IoT Evolution
The new Juniper research found that while the number of connected devices already exceeds the number of humans on the planet by over 2 times, for most enterprises, simply connecting their systems and devices remains the first priority.
"We’re still at an early stage for IoT," said Steffen Sorrell, senior analyst at Juniper Research. "Knowing what information to gather, and how to integrate that into back-office systems remains a huge challenge."
Additionally, interoperability hurdles owing to conflicting standards continues to slow progress. Nevertheless, there are signs that standards bodies and alliances are beginning to engage to overcome these hurdles.
That being said, the research findings also note that the IoT is ultimately only as effective as the sum of its parts. Mere connections create data; however, this does not become actionable information until it is gathered, analyzed and interpreted.
Therefore, the software analytics back-end systems of the IoT will form the backbone of its long-term success. Furthermore, many of the essential IoT software components will be based upon open source solutions that provide the foundation and framework of these industrial internet programs.
Additional findings from the market study include:
- The consumer segment (composed of the smart home, connected vehicles and digital healthcare), represents a high ARPU (average revenue per user) market segment.
- Meanwhile, the industrial sector (composed of retail, connected buildings and agriculture) will enable high ROI (return on investment) through IoT projects, owing to more efficient business processes.