High-tech companies focus so much on discovering “the next killer applications” they too often miss tectonic shifts already taking place around us. 2014 has been such a deceptive year. The global economy is tracking sideways and manufacturing pace has slowed down in China, Germany and other key production countries. That doesn’t bode well for end-of-year sales – except in the United States where the economy is heating up – but the high-tech industry will ride this wave too as it has ridden other seasonal weaknesses in the past.
The relative weakness of the global economy shouldn’t be the main worry it has become, however. What we should be paying closer attention to is a different wave that is only beginning to build: the Internet of Things (IoT). Now, that’s a phrase some doubt would ever live up to the hype. Anyone taking this position is in for a rude surprise. It’s not “The Next Big Thing” because it’s not one “thing”. It’s an avalanche of “things” and they will impact your business and all sectors of the global economy. Like any avalanche, though, the buildup is going to be less spectacular than the actual occurrence. That’s why we must prepare the design chain and the supply chain for one of the more defining events of the 21st Century.
More and more devices are being “electronified” – that’s another way to describe IoT. Everything around us now seems to have the potential of being transformed with electronics. General household appliances, lighting and industrial equipment of all shapes and sizes, and devices used in automotive, aviation, medical and other economic transactions are going “high-tech.” Everything is getting a processor brain and this development is really what will separate the winners from losers in the immediate future.
The market for the intelligent device will be huge. Few will dispute this. The supply chain that will support it will be even bigger as the multiplier effect of each dollar sale of components, production, software, logistics and other services becomes exponential for the industry. The design chain will be critical here because engineers must now help manufacturers figure out what to make, how to make them, what they should look like and how the devices will communicate with other equipment and fit into network systems.
In this new world, the electronics supply chain that we think is already complex will become even more complicated. We’ll need new ways of thinking to anticipate growth and assure its efficiency. Companies that are repositioning and retooling their operations to serve this new world stand a better chance of thriving than those that continue to be merely product focused. This is a world where PCs, servers, notebooks, tablets, smartphones, navigation systems, medical equipment, etc., quickly become less important than they are currently. OEMs will crisscross product boundaries and new ones will sprout from economic segments that nobody has ever associated with electronics.
This isn’t a world that’s decades away. It’s already happening. The world electronic vendors play in is fast changing. Design engineers that cut their teeth at companies like HP, which now plans to lay off more than 50,000 employees, may end up at the most unorthodox enterprises, doing things nobody ever thought were possible 20 years ago and creating new market opportunities. Distributors, contractors and component makers will tap this new vein. This next big thing is going to be bigger than all of the “Big Things” that ever came before. Get Ready.
A version of this article was first published in the November/December edition of Electronics Sourcing North America.
Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at email@example.com.