Tomorrow’s Internet

IoT to be the next big thing

Approximately 3 billion human beings are connected, in one way or another, to the internet, with more than twice that many devices involved. Many of these are mobile devices connected through cellular networks.

All manner of things are now being directly linked to the internet, from security cameras and alarm systems to smart power meters, fridges, traffic lights and cars. Clearly, the “internet of things (IoT)” is growing at an explosive rate.

According to techno-consulting firm Gartner, by 2020, there will be 20.8 billion connected things in the IoT space. In 2016, 5.5 million new things will get connected every day. Other estimates are even higher. KPMG estimates that about 28 billion things will be connected by 2020. As per Juniper Research, the number of IoT devices will hit 38.5 billion in 2020, up from 13.4 billion in 2015, while Statistica puts it at around 50 billion.

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Some of these differences are due to the different definitions of an IoT device. But even baseline conservative estimates imply very high growth rates. IoT will significantly change the ways in which the global economy works. It will create big new opportunities but will also cause disruptions.

Again, the estimates of economic value vary widely. But even the most conservative estimates suggest that the economic impact of IoT will be huge. Gartner estimates the current value of IoT at $1.4 trillion and assumes that by 2020, it would reach $3 trillion. According to chipmaker Intel, IoT’s market value could be $6.2 trillion by 2025. McKinsey, on the other hand, estimates that the economic impact could range from $3.9 trillion to $11 trillion by 2025.

For reference, the global GDP was around $78 trillion in 2015, and the size of China’s economy is about $11 trillion. India, with a GDP of about $2 trillion currently, can hope to contribute at least about 5 per cent to the IoT economy. India’s National Association of Software and Services Companies (NASSCOM) targets an opportunity of about $15 billion by 2020 in a global IoT market of at least $300 billion.

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At one level, IoT must surely lead to improved industrial processes. The continuous tracking of all machines should reduce repair and maintenance costs, since problems can be dealt with before they lead to actual failure. IoT will also lead to reduced downtime in factories and much higher efficiencies across supply chains as it will allow inventories to be continuously monitored at every point in the supply chain.

Apart from factories, organisations like Indian Railways  benefit from continuous IoT monitoring, which helps in better and safe track management. In addition, IoT will lead to efficiency gains in areas such as health care and life support, as well as defence and security applications. The “smart city” concept will also drive the adoption of IoT and clearly, a better quality of municipal services could be provided via IoT.

At another level altogether, IoT will lead to a much better understanding of customer behaviour in various spaces as connected devices can report typical usage patterns. It may, for instance, be possible to collate really granular details such as the exact patterns of AC usage or the amount of fruit consumed in every family. We can only guess at how collecting and analysing such data will help transform businesses.

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IoT also opens up the possibility of smart devices being made available as a service. For example, Uber is an on-demand web-based taxi service. But we may soon see smart autonomous vehicles being made widely available via IoT. In that case, it is possible that vehicle ownership will drop, even as vehicle usage rises.

Such possibilities will also lead to the development of new business models empowered by IoT. There are already case studies being cited by management theorists in this regard. For example, Michelin, a tyre manufacturer, is delivering transport fleet management solutions, which help monitor truck tyres, etc. through IoT, maximise efficiency and minimise downtime for commercial vehicles. John Deere, which makes smart tractors and other smart agricultural equipment, has started offering comprehensive smart farming solutions via IoT.

While this will mean a large number of new opportunities, businesses must reorganise to fully exploit IoT. A lot of data will be generated through IoT and businesses must capture and analyse that data intelligently to discover new solutions. For optimal functioning, IoT will also need interoperable components, which means different sectors must agree on the same standards.

In addition, strong data security systems and protocols need to be developed in this space as every IoT item is potentially an entry point for hackers. In fact, there have already been instances of smart refrigerators being hacked to send out spam. Far more damaging breaches of security than this could occur, once everything from power grids to cars, planes and earthmoving equipment are on IoT.

Businesses must also find ways to address privacy concerns on the consumer side. If IoT provides such an intimate picture of a citizen’s life, then the individual must have more control over where and how that data is used. For example, tracking an individual’s smartphone to offer location-based services is common. This segment could grow quickly since IoT is hitting an inflection point. But some cellphone users may not wish to be tracked. Or, they may wish to be only selectively tracked to control those choices. A review of privacy legislation by policymakers will also be necessary.

India is gearing up for the IoT experience. There are already quite a few Indian firms working on IoT applications. The Department of Electronics and Information Technology (DeitY) released a draft policy on IoT in 2015. NASSCOM has a Centre for Excellence for IoT, which was established as a joint initiative by DeitY and ERNET (Education and Research Network). This is expected to help develop a favourable ecosystem for IoT in India. As per the draft released by DeitY, the government would set up projects using IoT and would either reduce customs duties or even allow full exemption on imports of required raw materials. Raw materials purchased from the domestic market will be entitled to excise duty reimbursements. This will be in addition to existing incentives on IoT products in the Modified Special Incentive Package Scheme policy. The draft talks of giving priority to start-ups in domains such as memory, processor, sensors, low-power devices and solar electronics.

The key focus areas for IoT projects include smart cities, smart water, smart environment, smart health (for remote health management), smart agriculture, smart safety, smart supply chain and logistics, and smart manufacturing. The draft also envisages cross-border cooperation by inviting overseas experts to provide training for IoT-related programmes. At the state level, the Andhra Pradesh government has approved a first-of-its-kind IoT policy, which aims to turn the state into an IoT hub by 2020.

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There is already a fair amount of IoT penetration across sectors such as health care, transport fleet management, industrial manufacturing, power, mining and exploration. The telecommunications industry, of course, has a big role to play, both as a user as well as an enabler of IoT. The National Telecom M2M Roadmap lays down extensive guidelines for the technical requirements of IoT.

In health care, IoT devices could enable new areas of preventive care by monitoring people with chronic conditions such as diabetes or asthma, as well as facilitate remote telemedicine. The quality of health care for older people who are on their own can also be enhanced by the use of IoT devices such as wearable fitness bands that can monitor the individual’s condition and call for help in emergency situations. This has obvious applications in the insurance industry as well.

In oil exploration, IoT is already being used significantly. Any oil rig platform has over 30,000 sensors, for instance. Moreover, pipeline maintenance is helping drive IoT adoption.

Moreover, fleet management of trucks, ambulances and buses using GPS will help improve movement efficiency. These applications are already popular in India. A modern telecom network also depends on smart devices that collect data on many technical parameters such as signal strength and voltage fluctuations. A smart power grid needs similar embedded devices to monitor and maintain the grid, while industrial complexes also have specialised needs for IoT.

IoT can provide a boost to the Indian economy in many other ways. In agriculture, a primary benefit arises from better weather prediction based on enhanced data collected through IoT. Apart from this, “smart farming” using IoT can help monitor soil pH factors, temperature, moisture, nutrients, presence of pests, smart tractors and irrigation equipment, etc., which would lead to enhanced yields and reduced costs.

Disaster management can also be undertaken by IoT. In floods, cyclones, landslides, earthquakes, etc., it could help save lives or enable better evacuation and relief measures. Intelligent real-time transport management will be enhanced by IoT, which will help gather data from traffic cameras, commuters’ mobile phones, GPS-enabled vehicles and road sensors. We are already seeing versions of this, with commuters using geospatial maps that graphically display traffic volume, speed and density. A more centralised system with a higher number of IoT devices will dramatically improve traffic management measures.

Specific to the telecom sector, IoT development would require scalable and flexible networks to manage the flood of data that will be generated. Moreover, as different devices communicate and machine-to-machine communication becomes common, new standards will have to be developed and agreed upon. Robust device management platforms will be needed and backward compatibility with existing applications and databases must be developed.

All these use cases just touch the surface of what might become possible. The contrasting estimates are typical for a nascent industry. However, everybody agrees that the key factor is that IoT is already huge and it will get exponentially bigger over the next decade. It will be critical to managing future urban growth and infrastructure.

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