The Future of the Industrial Internet of Things
In the digital age, we’re constantly on the lookout for the next big thing in technology – whether for personal use or to invest ahead of the curve.
But having the keen eye to spot that Unicorn before the rest of the world takes tremendous insight.
Many believe that the Internet of Things (IoT) is tech’s new frontier, with an ever-expanding horizon.
The Internet of Things describes the network of physical objects in our lives that are embedded with electronics, sensors, software, and connectivity that allow these objects to collect and exchange data.
A lot of Wall Street’s focus and, therefore, its headlines have highlighted the consumer end of the IoT. But that market is likely to be dwarfed in size by the Industrial Internet of Things (IIoT) as more and more of our material wares become “smart.”
So said General Electric Co. (GE) CEO Jeff Immelt last autumn, when he stated, “The industrial internet will be much bigger than the consumer internet.”
The Rise of the Industrial IoT
So what exactly is the Industrial Internet of Things?
Microsoft Corp. (MSFT) CEO Satya Nadella explained that the IIoT will turn everyday manufactured goods into what he calls “systems of intelligence.”
By 2020, revenues generated from the IIoT market will be about $225 billion, according to General Electric. In comparison, GE forecasts the consumer IoT will only generate about $170 billion by that time.
The venture capital world has taken notice of the IIoT’s potential for massive growth. Last year, investment into IIoT soared by 76% to more than $1 billion, according to research by CB Insights.
At long last, the much-awaited convergence of the industrial and technology worlds lies just around the corner. And the question now is: What companies will emerge as the winners? And which will fall victim to obsolescence?
The Tech Push
With the IIoT focusing on software and big data, one would think technology companies have the upper hand – especially since the industrial software market will be a big part of the IIoT. GE forecasts the software market alone will reach $100 billion in size by 2020.
Microsoft’s interest then makes a lot of sense – as does the interest of other big technology names.
The IIoT is the reason behind the $1.4 billion purchase of Jasper Technologies by Cisco Systems Inc. (CSCO). Jasper is involved with the connectivity aspect of the IIoT.
Another tech company with big plans for the Internet of Things is Amazon.com Inc. (AMZN). It announced a big push into the realm last October.
Amazon Web Services (AWS) also revealed a new platform to make it easy for any device – cars, turbines, light bulbs, refrigerators, etc. – to connect to AWS. Data can then be stored and analyzed using AWS Analytics.
But, these won’t be the only big names making the effort to stay relevant during this tech revolution, they’re simply the first on the frontlines.
The Industry Won’t Be Left Behind
Speaking of Amazon, in fact, another industrial giant has picked up a few pointers from the company.
Bill Ruh, the Chief Digital Officer at GE, admitted to the Financial Times that he has “learnt from and watched [Amazon]” as they have evolved over the years, while always staying ahead of the marketing curve with innovations and implementations.
GE has come up with its own technology platform to manage the process of data gathering and analysis. But, a la Amazon, it’s leaving the door open to independent developers that come up with ideas for making use of all the data that emerges from the industrial equipment.
General Electric is being smart about it, too.
As pointed out by Louis Basenese, our Chief Technology Analyst here at Wall Street Daily, cyber security and protection from hackers is a major impediment to the rollout of the IIoT.
Nightmare scenarios could include hackers shutting down major parts of industry without the proper provisions.
Sid Snitkin, of research firm ARC Advisory Group, told The New York Times that the market for industrial data security products and services is already valued at $2 billion and growing at a rate of 15% annually.
GE bought Wurldtech, an industrial online security start-up, last year. And it’s hired a bevy of software engineers and data scientists for its team. So many, in fact, that Immelt promises that his company will be a “Top 10 Software Company” by 2020.
The Scramble for Supremacy
Of course, GE isn’t the only industrial company making a major push to be a frontrunner of the Industrial Internet of Things.
Honeywell International Inc. (HON) also aims to be at the cutting edge and is certainly in good company. The number of entrants into this space will only continue to grow as more businesses reveal their ideas and plans for the future. If innovation isn’t within reach, emulation is always a popular option.
There will likely be only a few winners, however.
Think smartphones: Apple and Google rule the scene despite countless imitation products on shelves right beside their products.
Think cloud computing: Amazon and Microsoft are the two major players in that realm.
As Bill Ruh said, “It’s winner takes all. A cloud-based platform to connect machines and build applications into it and have global scale… you’re only going to have a few of those.”
Who will rule the Industrial Internet of Things? That’s still unknown as we’re still in the early stages of what will be a battle for market supremacy.
I, for one, will be keeping my eye on GE. They’ve been the leader in the industrial sector for many decades and won’t give up a chance at the tech throne without a fight.