The Internet Of Things
The Internet of Things, a term coined in 1999 by technologist Kevin Ashton, describes a world in which objects, animals or people are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. The Internet of Things has evolved from the convergence of wireless technologies, micro-electromechanical systems and the Internet. Networking equipment (for example, a simple SIM card or RFID chip) and wireless carriage have dramatically decreased in cost, and wireless coverage, speed, and capacity have increased, and we can now embed connectivity into the “things” we use in our day-to-day lives.
A thing, in the Internet of Things, can be a person with a heart monitor implant, a farm animal with a biochip transponder, an automobile that has built-in sensors or any other natural or man-made object that can be assigned an IP address and provided with the ability to transfer data over a network. [The Internet Protocol (IP) is the method or protocol by which data is sent from one computer to another on the Internet. Each computer on the Internet has at least one IP address that uniquely identifies it from all other computers on the Internet.]
So far, the Internet of Things has been most closely associated with machine-to-machine (M2M) communication. Products built with M2M communication capabilities are often referred to as being smart. In the transport and logistics sector, this means that pallets and packages are able to communicate their location, allowing for real-time parcel tracking. The same application of M2M also allows the public to gain real-time updates on how far away their train, ferry, or bus is. In the healthcare sector, M2M devices worn by patients enable real-time monitoring of vital statistics or the dispensing of medication. In retail, M2M provides better point-of-sale data, as well as better shopping experiences through personalised digital signage.
The Internet of Things is expected to be an $8.9 trillion market in 2020, according to International Data Corporation with an annual growth rate of 7.9% from now to then. According to IDC, the Internet of Things will change everything and be “a new construct in the information and communications technology world.” [IDC is a global provider of market intelligence and advisory services for the information technology, telecommunications and consumer technology markets.]
General Electric, Intel, IBM, Cisco and AT&T launched the Industrial Internet Consortium in March this year. The Industrial Internet is a term coined by General Electric and refers to the integration of complex physical machinery with networked sensors and software. The industrial Internet draws together fields such as the Internet of Things, Big Data and Machine-to-Machine communication to bring the physical and digital worlds closer together. GE estimates that the Industrial Internet could add $10 to $15 trillion to global GDP over the next two decades. Although there are already some 10 billion connected devices, they represent just 1 percent of what’s possible. That number will grow to 50 billion by 2020 according to Cisco.
Industrial companies that combine the digital and the physical open entirely new dimensions in the way they operate and in the value they can provide to customers and shareholders. But, combining deep expertise in both digital technology and industrial machines is not easy. Both fields require complex and sophisticated expertise, and are experiencing fast-paced innovation. Software development must be guided by the industrial machines’ purpose, potential and limitations—and vice versa. To achieve this combination, GE has established a new Software Centre of Excellence in San Ramon, Calif. With an investment of $1 billion in software and analytics over three years, GE has become one of the major software companies in the world with the San Ramon Centre and regional software centres in Europe and China. GE now employs 14,000 software engineers.
The new wave of innovation spurred by the Industrial Internet is bringing about an unprecedented transformation. As software-driven performance improvement reverberates through the world’s massive installed base of industrial machinery and gets embodied in new investment, it will reshape industry, reshuffling the competitive landscape. Mastering both the digital and the physical is the key to accelerating value creation in this new industrial world.
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