The internet of Things today
The Internet of Things is still in the early stages of growth. Every day more machines, shipping containers, infrastructure elements, vehicles, and people are being equipped with networked sensors to report their status, receive instructions, and even take action based on the information they receive. It is estimated that there are more than nine billion connected devices around the world, including smartphones and computers. Over the next decade, this number is expected to increase dramatically, with estimates ranging from 25 billion to 50 billion devices in 2025.
Defining the Internet of Things
We define “the Internet of Things” as sensors and actuators connected by networks to computing systems. These systems can monitor or manage the health and actions of connected objects and machines. Connected sensors can also monitor the natural world, people, and animals.
For the purposes of this research, we exclude systems in which all of the sensors’ primary purpose is to receive intentional human input, such as smartphone apps where the data input comes primarily through a touchscreen or other networked computer software where the sensors consist of the standard keyboard and mouse.
Our goal and methodology
MGI undertook this research to develop an updated perspective on the potential impact of the Internet of Things across the entire economy. We wanted to understand how and where the use of IoT technologies could create value and to isolate the sources of that value. We also wished to understand how IoT can create value up and down value chains.
After reviewing IoT applications, we concluded that using only a conventional approach to sizing the potential impact, by examining how the applications might reduce costs or improve quality only through the lens of individual industries or sectors, would not be adequate. However, by viewing IoT applications through a “settings” lens—that is, within the context of the physical environments in which systems can be deployed—we can capture ways in which they create value for all parties in that setting (companies, consumers, workers).
Notes on sizing
- These estimates of economic impact are not comprehensive and include only direct impact of applications sized in our research.
- These estimates do not represent GDP contributions or the value of revenue generated by sales of IoT products and services; they are estimates of potential economic impact, including consumer surplus.
- Relative sizes of impact by settings should not be considered rankings, since sizing is not comprehensive.
- We do not quantify the shift of value among companies or between companies and consumers.
- These estimates are not additive, due to partially overlapping applications and sources of value across applications.
- These estimates are not fully adjusted for risk and probability.
Finally, applying IoT technologies to human activities is already showing potential for massive change in people’s lives. From giving people with chronic diseases new tools to manage their conditions to increasing fitness to avoid disease, the Internet of Things is beginning to demonstrate its potential to improve human health. Across the uses of IoT technology that we document in this report, people are the major beneficiaries—reducing their commuting times, offloading domestic chores to machines, saving money on energy, getting greater value from retail offers and in consumer products designed with IoT data, and enjoying life in safer homes and cities.