Whenever I have tried to explain the complexities of the Internet of Things (IoT) to people in the past, it has always been difficult to fully convey the impact it will have. Pointing out that a thermostat can automatically adjust temperature, a fridge can order its own food or light switches can turn themselves off are great inventions, but are unlikely to change the world.
It has always been within the Industrial Internet of Things (IIoT) that the true impact is going to be felt.
We have previously discussed how it is going to have an impact on mining, oil refinery and the automotive sector, but the reality is that these are all simply case studies and the true impact that it will have is almost impossible to quantify. However, one thing that is certain is that those aiming to become the leaders in the industry are ramping up the arms race and 2016 has been the year when acceleration has begun in earnest.
Investment is huge because the growth in the area is expected to be significant, with a yearly growth rate of 15% predicted until 2021. This will see 2.5 billion devices connected to the IIoT compared to 1.2 billion in 2015, creating a predicted market of between $123 billion and $151 billion. This is essentially an unexploited market with no clear favourites to become the big players, meaning that many companies are making their opening moves to maximize their chances.
One company who seem to have a slight edge at the moment is GE, who has been making headlines through their investment in the area.
Firstly it has invested in a 'digital foundry' in Shanghai, designed to help spread the IIOT throughout the largest manufacturing nation in the world. Given that the country now has the largest number of 'things' connected to one another, it seems like a strong move. GE is looking to gain a foothold in a market valued at $193 billion last year, but is likely to expand to $361 billion by 2020 according to IDC Research. China itself is also set to make the most of this change given that an Accenture report predicted that through adopting IIoT China could increase its GDP $736 billion by 2030.
One main drive of this is attempting to persuade companies to use its Predix, its IIoT specific software, which has already had some large clients including China Eastern Airlines and China Telecom sign up. To further push this along they are partnering with both Huawei and Microsoft in an attempt to push themselves further into pole position in the industry.
The Huawei partnership seems to concentrate on the actual connection of devices through the development of new connection techniques, which they have been working on in their open narrowband IoT lab, started alongside Vodafone in Newbury, UK. It has had some success so far and has some promising results through connecting low-powered devices through the narrowband technology, creating the potential to connect a larger number, and variety, of devices to a central network.
Microsoft's partnership focusses on integrating the GE Predix system onto the Microsoft Azure cloud for businesses. Given that Microsoft already has a significant historical advantage in adoption of its software in the industrial space, it will be a huge coup for GE and a major boost in pushing its services towards a larger number of businesses.
However, GE is not the only company making moves in the market, with SoftBank making a surprising move for ARM, the British chip maker. The sale itself may well be more a smart business decision as opposed to development, although this remains to be seen. This is because, ARM have a huge 80% market share in 32-bit micro-controllers in industrial and medical applications and 50% in microprocessors. With the IIoT market set to grow 15% year-on-year and these elements being central to the connectivity of devices, it may be a strong moneymaking decision. However, there has been some considerable backlash amongst employees at the company, with many employees and UK citizens begging shareholders to block the $24 billion deal. This is partly because of the importance of the company to the UK economy and future development of tech within the country. The other being that SoftBank is reported to already have a significant debt ($100 billion in November 2015 according to Bloomberg) and many are wary of whether it can stay afloat with the many acquisitions made in the past 2 years.
Regardless of whether this deal goes through or not, what is clear is that there is a huge push for IIoT across the globe with GE in particular making real inroads into what will be a significant growth industry. Given the huge potential the industry has and the partners already working with GE it is clear that others who are looking at the potential growth of the industry will soon be making moves to make sure they also get a slice of the IIoT cake.