How the Internet of Everything Will Enable the Digital Revolution

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How the Internet of Everything Will Enable the Digital Revolution

In our December 2014 issue, we described a world in which every “thing”—every device, every appliance, every car, literally everything—is connected to the Internet.1 That’s the vision of the “Internet of Things,” and it is accelerating rapidly. The number of connected things will reach 50 billion by 2020, according to projections from Cisco.2

According to new research by the McKinsey Global Institute, by 2025, the total economic impact of the Internet of Things is likely to range from $3.9 trillion to $11.1 trillion a year.3

Like so many technologies that depend upon “network effects” to generate economic value, the Internet of Things has had a slow ramp up to critical mass; but once critical mass is achieved an explosive economic chain reaction will occur suddenly, delivering enormous and transformative benefits. Those who are familiar with deployment of the World Wide Web in the nineties or the automobile eighty years earlier should not be surprised.

If the most optimistic projection in that range is accurate, the value created would be equal to 11 percent of the world’s GDP.

As we’ve discussed in previous issues, the Internet of Things is only now becoming a reality because several enabling technologies are now ready for adoption. These include:

  • cheap sensors
  • big data
  • the cloud
  • the almost ubiquitous availability of smartphones to connect users to all other devices
  • the increasing reach and decreasing cost of myriad networks including WiFi, MESH, NFC, Bluetooth, and others

Like so much of what is going to happen during the Deployment phase of the Fifth Techno-Economic Revolution, the Internet of Things will deliver value by changing the economics of existing industries.

The McKinsey researchers focused on nine environments or “settings” which the Internet of Things is expected to transform. These nine settings are:4

  1. The Human environment, including devices attached to or inside the body to monitor human health, manage diseases, improve fitness, and increase productivity, with a value of $170 billion to $1...

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