In light of the snowstorm and artic cold blast that parts of the United States experienced recently, I would say that the No. 1 item on my Internet-of-things (IoT) wish list is quite practical. I want a self-propelled, wireless snow blower. Electronics is making it possible, components distributors can facilitate it and all I need right now is a design engineer willing to take a job at Deere & Co. (NYSE: DE) to make this clearly plausible dream come true by next winter. I’ll get to the rest of the items on the wish list in a minute.
Picture this. A January winter storm dumps 12 inches of snow on the driveway overnight but I sleep through it all knowing the remote controlled snow blower is fully charged, ready to go as soon as I get up. In the morning, I remotely fire up my personal drone – only this isn’t a missile-packing Department of Defense aircraft but a snow blower. The garage door opens, wirelessly, and the snow blower trundles out and into the driveway, scooping up, churning and discharging the snow on the lawn as I watch, still in pajamas. I cradle a fresh cup of chocolate set to brew daily at 6.00 a.m., press a button on my smartphone to draw up the blinds and let in the early morning lights and, as I dress, a barely audible humming sound tells me the car has just started itself and is heating up to my pre-set temperature level for the drive to work. Hello world!
The internet of things (ioT) has been described variously by many writers. Many see it as facilitating the collation, monitoring, transfer and analysis of data from industrial and household equipment. That description misses the point of this major transformation that’s about to hit the global economy. What it represents is an opportunity for some companies, a calamity for others and the next big thing with the potentials to shred the barriers that currently exist between various segments of the economy, massively disrupting and creating a new set of winners and losers.
For the electronics industry and all players in the supply chain it is probably the single most important factor ahead that will universally boost the total addressable market and usher in a new transformative stage in the history of the market. Where your company finds itself would be determined by whether the management can envision the opportunities being created, exploit and lead it. IoT will be disruptive and the impact will be massive simply because few segments of the economy will be insulated from its effects. It is a huge opportunity potentially not just for the manufacturers of high-tech devices that will carry data from one equipment to another but also for the extended supply chain.
The potential size of the market is staggering. John Chambers, CEO of Cisco Systems Inc. (NASDAQ: CSCO), believes the IoT market could be worth $19 trillion within years while analysts at McKinsey forecast it could range from $14 trillion to $33 trillion. This isn’t wishful thinking: The technology that will underpin the expansion already exist. We just have to start injecting them into daily use equipment all around us. And, the majority of that technology and the infrastructure will require electronic components, distributors that can help suppliers reach new OEMs and contract manufacturers as well as design engineers willing to leap into the unknown. (See: Cisco CEO at CES 2014: Internet of Things is a $19 trillion opportunity).
Let me describe scenarios that I believe all of us can relate to. We already have toilets that flush themselves and faucets that know when to turn on and off. In automotive, chairs adjust to positions pre-specified by users and keyless doors have long been the norm. These devices are being readied for the mass market. I would like to have one of those self-flushing toilets at home but go to a household goods store and you mainly see the same manual flush devices that have been in use for decades. Toilet manufacturers focus on water conservation rather than ease of use enabled by technology sensors, for example.
That’s about to change. Wireless lighting, sofas that recognize and adapt to the owner, remote controlled lawn mowers and other connectivity enabled devices will become the norm within a decade. The internet-of-things is an opportunity for your business but it also represents grave danger. Because the opportunity extends into all segments of the economy it will lead to the creation of new and unexpected rivals. The classification in manufacturing of household goods, industrial, machinery, furnishing, high-tech and electronics are set to become quaint and irrelevant as manufacturers infuse their products with intelligence.
New alliances will be formed and old ones will simply varnish. Legions of new OEMs will be added to the customer database at electronics component suppliers – the lighting market is a precursor. Contract manufacturers will find themselves assembling more than smartphones and medical equipment. Design engineers, electrical engineers and component engineers should see employment opportunities opening up in unorthodox places. More supply chain experts will be needed to coordinate the mayhem.
Electronic component distributors will thrive in this new dispensation. They will help push semiconductors into new markets and offer system design, subassembly and other critical services to small and medium firms that cannot afford their own internal resources. This isn’t pie in the sky stuff. As noted already, the technology already exist. If we can develop drones that take off, land, fire missiles and take pictures on their own, we certainly can build remote controlled snow blowers. There’s a customer for it already. Me.