The IoT tipping point: everywhere
The IoT tipping point: everywhere

The IoT tipping point: everywhere

The Internet of Things (IoT) has permeated so many industries, it even acquired a new name – The Industrial Internet (IIoT). Marc Annunziata, Chief Economist at General Electric, metaphorically described it as the marriage of minds and machines – a union between intelligent machines and advanced analytics, fueled by people’s creativity.

IIoT is an industry worth more than $700 billion, yet most people have a hard time nailing down the concept. So, what exactly is the Industrial Internet of Things? Is it a market or just a movement? How does it work and where can businesses find use for it? Let’s answer each question one by one.

How IoT empowers Artificial Intelligence to take action

Simply put, the Internet of Things is about taking any number of devices and connecting them to the internet and to each other. It’s about making devices take the pulse of the physical world through sensors and send their observations for interpretation to other places – e.g other devices, storages, applications. Such devices are not ordinary, they are smart. Because they gather information and communicate with other parties to send through and receive the collected data.

So, the power of smart devices lies in collecting highly specific information through sensors and sending it through internet connection to intelligent machines that take action upon it. The other smart thing about interconnected devices is that they don’t have to embed a super storage or a super-computer. They only need to connect to one. And that’s where Artificial Intelligence (AI) takes over, analyzing and understanding the received data, making intelligent decisions based on it.


If we imagine IoT as an omnipresent extension of our body in the physical world, AI can easily fit in the picture as a highly capable extension of our mind. Due to the sensors of interconnected devices, IoT provides AI with senses. It enables it to connect to the physical world in a meaningful way. For example, camera sensors make it possible for AI to see the world. Microphones let it listen to what’s going on. Accelerometers or gyroscopes allow it to get a good feel of events. Chemical sensors help it trace smells, so on and so forth. Every IoT sensor in a pool of 100 types can feed AI with huge amounts of data.

IoT devices are extremely valuable because through sensors they allow for many more sensory inputs that humans are capable of. For example, infrared sensors detect temperature by intercepting a portion of emitted infrared energy of an object or substance; they can sense its intensity and can be used to measure temperature of solids and liquids. That’s not something humans can do on their own. So, when it gains simultaneous access to data gathered by such a wide variety of sensors, AI outpaces human intelligence. IoT acts like the body that gives AI’s brain the ability to calculate probabilities, evaluate options, plan, strategize and make smart decisions. We’re looking at a great pair. AI can’t do as much without IoT, and vice versa.

IOT’s transition from Consumer to Industry

According to Gartner, by 2020, we will have approximately 20 billion connected devices. That’s almost 3 IoT devices for every person on Earth. Hence, the total global spending on IoT devices and appliances for work and home, which in  2016 was worth a whopping $737 billion, is likely to reach up to $1.4 trillion by 2021.

However, for quite some time now, IoT has left the threshold of our smart homes and cities, and set out in the world – solving even more of our problems. As reported by McKinsey Global Institute, IoT is projected to have an economic impact of somewhere between $4 to $11 trillion on the global economy by 2025, when factoring in industries like manufacturing, health, retail, transportation and energy. But before we get to the industries with an accelerating IoT adoption rate, let’s just do a quick recap of how we got here.

First smart living

First we used the Internet of Things to hand over some of our household responsibilities to a standalone, automation system.  Hence, we equipped our houses with smart appliances, smart security and energy management setups.

We started with connected-home devices including Wi-Fi-connected light switches, Bluetooth-connected speakers, Z-wave-connected locks and such. Then we gradually switched to home “hubs”. Because we wanted to control home devices (light bulbs, door locks, smart plugs, etc.) from a single point and enjoy a more comprehensive experience that requires as little effort on our side as possible.

The latest generation of always-on hubs like Amazon Echo offers standalone benefits through intelligent voice interfaces. In Amazon’s case, that would be Alexa. Through simple natural-language voice commands, Alexa can take care of basic requests like:

  • setting alarms;
  • playing music;
  • reading audiobooks;
  • answering trivia questions;
  • starting the coffee machine;
  • calling Uber;
  • making reservations;
  • turning switches on and off;
  • dimming the lights up and down;
  • locking house doors;
  • opening and closing garage doors;
  • arming and monitoring the house security setup;
  • adjusting the room temperature, and many more.

And now, there are so many things around the house that we can deal with in a smart way that we’ll soon forget we ever went about them differently. That’s how much IoT is already bettering our living experience. And we’re not even talking about house robots – not yet. Although that’s something that people expect to see in the next 20 years.

Naturally, we wanted to emulate the smart living experience in the workplace and on the road. As a result, more and more of us are working in intelligent offices and driving connected cars

Then smart everything

In less than a decade, the IoT space became huge. And it doesn’t seem to slow down. So, here is a quick glimpse at the industries where IoT is a real game-changer.


Healthcare IoT market size: Expected to grow from $41.22 billion in 2017 to $158.07 billion by 2022.

Use cases: An IoT solution such as the wireless pill bottle helps people with medication-dependent conditions stick to their prescribed treatment. This internet-connected device works like an electronic nudge. The bottle can hold a long-term charge and can alert patients via call, text or by blinking whenever they need to take their medicine. The sensors in the bottle detect when the cap is twisted off and how much medication is removed. 


Transportation IoT market size: Expected to grow from $135.35 billion in 2016 to $328.76 billion by 2023.

Use cases: IoT devices “tell” intelligent systems about traffic conditions and events in real-time. The benefits? Reduce traffic congestion, improved driver/passenger safety, increased mobility and emergency response. Interconnected devices also help shipping services track cargo and prevent theft and product damage; they optimize car park utilization, also known as smart parking.

Operations & Manufacturing

Manufacturing IoT market size: Expected to grow from $12.67 billion in 2017 to $45.30 billion by 2022.

Use cases: In 2017, 60% of global manufacturers stated that they would use analytics data tracked using connected devices to analyze processes and identify optimization possibilities. Manufacturing is one of the industries with the widest range of IoT scenarios: inventory management, quality control, digital factories, plant safety and security, packaging optimization, logistics and supply chain optimization, production flow monitoring and facility management. IoT-based systems also connect factory assets into single screen operator views, perform real-time asset monitoring and predictive diagnostics of assets. Combine, analyze, and deliver insights from disparate and diverse silos of assets, operators, and enterprise systems.


Agriculture IoT market size: Expected to grow from $5.18 billion in 2016 to $11.23 billion by 2022.

Use cases: Smart farming enables us to do precision agriculture, i. e. to raise livestock and grow crops in a more controlled and accurate way. For instance, CropMetrics is a precise agriculture organization that optimizes irrigation through soil moisture monitoring. Ground and aerial based drones are used agriculture for crop health assessment, irrigation, crop monitoring, crop spraying, planting, and soil and field analysis.

Oil and gas industry

Oil & gas IoT market size: Expected to grow to $30.57 billion by 2026.

Use cases: Coupled with machine learning and cloud services, IoT helps managing remote facilities and tank collection sites. Interconnected devices provide real-time data from extraction and drilling equipment, transport systems and refineries.


Aviation IoT market size: Expected to grow from $5.92 billion in 2016 to $14.23 billion by 2021.

Use cases: The IoT technology enhances aerospace predictive maintenance and streamlines condition-based maintenance. For example, every component of Virgin Atlantic’s Boeing 787 – including engines, flaps and landing gear, is connected to a wireless airplane network and provides real-time information to ground staff on performance and required maintenance. KLM airlines implemented Mendix smart apps to digitally enable their engineers and transform their aircraft maintenance operations. Such implementations translate not only in significantly lower operational costs. With fewer maintenance-related delays, customer enjoy a better experience. IoT also makes airports agile and smart. Case in point – the Helsinki Airport uses Wi-Fi and i-Beacons to track passengers and offer location-based services.

Impact of IIoT

IIoT has the capacity to generate enormous amounts of data at an unprecedented rapid pace, and that is great. The downside is that companies need to redesign their data and analytics systems. Moreover, they need to adopt new data management technologies and platforms to be able to handle such large volumes of data.

Many of the same data management infrastructure tools and technologies applied to more-traditional use cases can be leveraged in some fashion to support IoT.

Ted Friedman, Gartner analyst and vice-president

The ubiquitous Internet of Things (IoT)  has rapidly grown into a confident Industrial Internet (IIoT), because industries picked up on the huge potential of adopting IoT.

Here’s a quick overview of IIoT’s impact on global economy:  

  • According to a report from Oxford Economics, in 2015 the Industrial Internet represented 62% of the Gross Domestic Product (GDP) in the G20 countries. At that time, the most conservative estimates predicted that the revenue of IIoT would reach $500 billion by 2020. More optimistic predictions from back then anticipated that IIoT would increase the global GDP by a whopping $10.5 trillion by 2030 .  
  • A 2016 Forbes forecast predicted that by 2025 the Internet of Things would create a total value of $11.1  trillion on yearly basis, with 70% of it being captured by B2B solutions; the consumer IoT is expected to fall behind reaching only $3.5  trillion on a yearly basis.
  • A more recent report from Grand View Research states that the global industrial IoT market size exceeded $100 billion in 2016 and is presumed to grow at a CAGR of over 25% from 2017 to 2025.  

Judging by the numbers, we are looking at a revolution that is moving at full speed. Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, calls it the Fourth Industrial Revolution. Others refer to it as Industry 4.0. Whichever the name, IIoT is undoubtedly a major component of the physical – cyber systems, i.e. the smart systems at the core of the new industrial age. In this regard, Kai Goerlich, idea director of thought leadership at SAP, believes that IIoT will lead to a “total redefinition of how markets run and economic production without humans.”

IIoT and the new era of productivity

The term Industrial Internet was coined in 2012 by General Electric – the first digital industrial company, which also founded the Industrial Internet Consortium. The industrial version of IoT stands for a huge network of interconnected devices feeding data to intelligent systems that can monitor, collect, exchange, analyze, and deliver valuable new insights for industries. It can be anything from manufacturing, retail, energy and agriculture, aviation, healthcare and the automotive industry.

The sensors of interconnected devices provide companies with data about every aspect of equipment and processes. Billions of sensors gather huge amounts of environmental and operational data that AI can sort, analyse and turn into actionable insights. As a result, industrial companies make smarter, faster business decisions.

The hyper-connectivity of machines and equipment, along with the emerging technologies that make them smart, open a new era of productivity.

To better understand the dimensions of the IIoT phenomenon, here are some insights from General Electric on how it benefits productivity and operational costs:

  • 1% aircraft engine maintenance efficiency can reduce costs by $250 million annually.
  • 1% reduction in operating ratio could result in $600 million savings for North American railroads every year.
  • 1% fuel savings in power generation could add $4 billion to the global economy annually.

End-devices like robots, drones and industrial machines can act upon many IoT-enabled insights and decisions. Therefore, because of the massive productivity it brings through automation, IIoT equally feels like a threat to the workforce. People are showing resistance because they’re worried about losing their jobs. But what they’re really scared of is the unknown. Will automation kill our jobs? Will it redistribute them? Will we have to upgrade our skills? We don’t know it yet, because we’re walking an uncharted territory.

What we do know for sure is that the Industrial Internet allows for data and analytics to drive value for enterprises. That, with the help of IIoT and AI, we get to tell machines what to do from far away. And that’s a huge step ahead.

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