IoT implementations have taken a hit. One pre-COVID-19 forecast predicted US$524 billion in total IoT revenue for 2020. This was revised downwards by 7% to US$487 billion in the post-outbreak forecast. The trend has continued into 2021. Report after report points to a contraction in IoT markets. A key reason is the shift in priorities triggered by the COVID-19 pandemic. Organizations are, correctly, busy in building resilience into their systems by digitizing their processes end-to-end. They are applying Analytics, Machine Learning, Artificial Intelligence (AI) and bumping up their Automation strategy on a war footing. IoT, with its array of smart sensors and devices, has been relegated to the back-burner. This could actually be good news. In the long-term this will work in favor of IoT. The underlying ubiquity of Analytics, Automation, AI and intelligent networks will improve the capacity to deploy IoT at web-scale. And web-scale is the future of IoT.
We need not argue for IoT or justify the technology. It has already begun to deliver incredible outcomes in healthcare, manufacturing and in the transport and logistics industries. The technology is helping control costs — patients need not travel to hospital as often as before; it is improving system uptime in manufacturing by making predictive maintenance possible; and we already know all about smart cars that would not exist were it not for IoT. Soon, we will see incredible advances in, for example, the way IoT is used in transportation. Imagine the massive change possible in road safety as vehicles are integrated with traffic management and law enforcement systems. Without IoT, such a future would be unthinkable. Ergo: The current dip in IoT will see a quick course correction.
Some exciting areas for IoT
Industries such as agriculture, retail, energy, engineering and construction and hospitality will be next in line to adopt IoT. I am especially excited by the opportunities to use IoT widely in agriculture and in the construction space. Both industries have seen slow and rudimentary deployment of even basic IT.
The sluggish pace of technology transfer to rural areas has hindered the adoption of IoT in agriculture. I do understand that the bigger challenge in the agriculture sector is overcoming the resistance to technology itself. The agriculture sector has traditionally demonstrated tremendous pride in its innate knowledge of nature and its respect for physical labor. IoT threatens that culture. However, research shows that improved rural connectivity coupled with IoT can add US$500 billion to the global gross domestic product by 2030. That would spell a massive increase in returns for famers while bringing down incidents of global hunger by making the industry more productive.
The construction industry has also been unhurried in adopting technology. It has too many moving parts — planners, buyers, users, governments, architects, surveyors, equipment, material and man power providers, regulators, environmentalists…the list is endless. This has made working as a single, integrated, industry a challenge. Understandably, this also makes the use of technology several fold more attractive. In the US, for example, the government has committed US$2 trillion to upgrade the nation’s infrastructure. US President Joe Biden has called it a “once in a generation” investment (and this is just public sector investments). There are around 3,800 tech startups in the construction space today. About a thousand have attracted US$11.8 billion in funding. This should give you a sense of the IT opportunity in engineering and construction. We are already witnessing the emergence of IoT in this space: Property access controls, sensors that track power and water consumption along with equipment health, smoke alarms, motion detectors, and sensor-rich elevators are becoming smart and connected.
Making it better with 5G
As 5G networks are rolled out, we will see many more industries harness the power of IoT. This is because latency has been a major barrier to unlocking the real power of the data generated by IoT devices. The value of the data can be multiplied several times over if it can be analyzed fast enough. Here is just one example of what IoT coupled with 5G can do for consumer in the energy sector. Entire communities could bargain collectively on the price of the power they consume. The price they pay would be dynamic, depending on not just their demand, but the demand of neighboring communities on the same grid and the price the neighboring communities will pay. This means the price of power could vary from hour to hour. But it all depends on how quickly investments are made in IoT.
The most compelling application of IoT however will be in the areas where it helps improve capacity utilization. The world needs systems that reduce wastage, bring down carbon footprint, and create more transparency. I am convinced that IoT will lie at the core of the solutions to address these planet-scale challenges.