The Internet of Things, in which everyday items ranging from toasters to cars to buildings and factories are all connected to the Web, could be a multitrillion dollar market over the next decade.
That’s according to a report by the McKinsey Global Institute, which states that the value of that market could be worth anywhere from $3.9 trillion to as much as $11.1 trillion by 2025. As devices and sensors all increase functionality and interaction using the Internet as a common platform, the potential is there for companies worldwide to boost revenues, create new business and also make decision-making more effective.
Far-flung connectivity and information “makes it possible to monitor and manage operations thousands of miles away, track goods as they cross the ocean or detect changes in the blood pressure of a diabetic that might be the sign of a heart attack,” the report states.
And McKinsey, in studying the impact of current initiatives to increase connectivity, also noted that adding sensors to infrastructure — from bridges to buildings to light installations — could help improve environmental conditions. Those sensors can track changes in a given environment’s air quality or detect dangerous leaks.
“I think people are starting to understand all of the incredible impacts the Internet has had on business, their personal lives and the ways we can interact with government,” Michael Chui, co-author of the report and a partner at McKinsey, told The Huffington Post in an article published Friday (June 26). “We are extending some of the power, speed and scope of the Internet, not just to our online lives but to all of the physical things we do. It is transforming how we combine the physical world with online and bringing it all to new domains.”
The report cautions that companies that do not embrace the shift to IoT might get left behind by better connected competitors. And, of course, there is the need for interoperability for useful communication between hardware, software, networks and users. Chui told The Post that “if you look at all the estimated value created by the Internet of Things, not just for companies but improved quality of life or longer life, 40 percent of that potential required interoperability.” The McKinsey paper suggests that IoT users adopt open standards to be shared between software companies and the manufacturers that build devices, taking a page from standards that have been a hallmark of the energy industry.
And, The Post notes, privacy concerns could offer another challenge to IoT adoption, especially as data runs the gamut from an individual’s location to transactions and vital health stats. The public needs education, according to McKinsey, particularly on data collection and its ultimate use.
“Some of the most important risks are around cybersecurity,” Chui said in the interview with The Post. “No. 1, many, many more devices are connected, which means there are more ways to breach security and cause problems. No. 2, the consequences of a breach become more perilous. If you could hack a million driverless cars or control a chemical plant, those are risks for which the consequence of a negative incident are catastrophic. We need to invest appropriately and have a full dialogue. Awareness and understanding are the first step.”
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