Who is already ahead of the curve in the Internet of Things?
October 28, 2015
The Internet of Things is making headway in many market segments. But where exactly have the smartest business models been launched? And who will benefit the most in the future?
Digitalization accounted for approx. 40% of economic growth in Germany last year, says a recent study by the Berlin Institute for Innovation and Technology (iiT) and the Association of German Engineers (VDI). The digital revolution cannot be stopped! And yet, regarding the Internet of Things and digitalization in the manufacturing industry, Germany's small businesses and mid-sized companies in particular are still acting with great reluctance. A number of studies show why: a deluge of new information, high investment costs and safety concerns are the biggest barriers to the introduction of Industry 4.0. And while the product life cycle for machinery and plant constructions often exceeds 20 years, information and communications technology is evolving at light speed with new applications and services. Add to this companies from other industries that are challenging many established corporations and traditional enterprises with their disruptive approaches. However, customized and automated production steps, the introduction of so-called Physical Systems, networking of the value-adding chain and intelligent evaluation, and use of sensor data have so far only made small inroads into the world of manufacturing companies.
It is mostly Predictive Maintenance that is now the focus in the development of new business models. Critics claim that at the moment this is the only application the German manufacturing industry feels sufficiently confident about to try. Maybe that's the reason why mid-sized companies are still stuck on the sidelines. But, of all the corporations, it is none other than Thyssen Krupp, a company steeped in tradition, that is setting an example of new IoT services!
In its Elevator Division, the corporation uses cutting-edge sensor technology and links it to the Cloud to ensure high reliability of its elevators. In an age of population increase in big cities, this is a business model with huge potential for the future.
While the manufacturing industry is still looking for new business models and a new innovation boost, a genuine digital revolution has been happening on farmland and in tractors - and for years now! Be it Fendt, Claas or John Deere, the leading tractor manufacturers have long discovered the potential in data analysis via the Cloud. Assisted by software companies and innovative service providers, these rolling high-performance computers feature a variety of sensors that are networked through software applications. The benefit for farming is obvious since the higher the precision in planning and working the field, the higher the yield. You can optimize seeding and the consumption of fuel and fertilizer and analyze the properties of any given patch of farmland with precision. Unfortunately, real-time calculations via the Cloud are still hampered by a lack of bandwidth in rural areas. It is true that more and more tractors are equipped with LTE interfaces but the roll out in the countryside has not been completed yet by far. In addition, many farmers – agricultural entrepreneurs that is – still have to be convinced to entrust their company data to the Cloud.
Wearable Devices / Healthcare
The monitoring and intelligent evaluation of a person's vital data has been a huge trend over the last few years with no end in sight. Smaller and smaller devices capture more and more data in real-time. Apps evaluate them live in order to send up-to-date status feedback to the user, physician or dietician who can then remotely recommend a specific course of action.
Such data may include:
- caloric intake
- heat rate
- activity level (typically with a step counter)
- blood pressure
Devices are already available allowing for the tracking of blood sugar levels, eye motion (to recognize fatigue) and body posture. These devices become smaller and easier to use, e.g. stick-on patches or smart fibers in clothing.
Generali Insurances is leading the way by using devices for their own business operation. Shortly they will introduce a "Vitality Account" for their customers that awards credit points for a healthy life style. The insured can save up such credit points by eating healthy or exercising. This account can be managed using an app while the Wearable Devices offered by selected manufacturers are tasked with recording data. This creates an eco-system that allows for completely new rates and business models. The question is: do users have to be afraid of sanctions for refusing these tracking methods? Concerns about privacy issues have also not yet been put to rest.
Since the devices in the Wearable World do not speak the same language, a common platform is still needed. Moreover, these devices eat up a lot of energy and require frequent re-charging; a fact that many a user may find inconvenient.
Wearable Devices / Industry
For many pundits, the future lies in smart watches and data glasses. While Apple, with its iWatch, and others have only recently started to have a go at the consumer business, it's the data glasses that have piqued the interest of the electronic gaming industry and the providers of industrial applications. With these miniature computers riding on their noses, workers in warehouses or workshops have their hands free while glancing at product information or manual instructions displayed on the screens, right before their eyes.
Even 360-degree projections and Augmented-Reality applications are now within the realm of possibility, since the required radio frequencies and the devices themselves are becoming more and more powerful. But it is only with the new network generation "5G" – the focus of current global research – that these industrial applications are going to really take off. They can make the so-called tactile Internet a reality with very low latency and data transmission rates exceeding today's rates by orders of magnitude. This will lay the foundation for reliable and smart Machine-to-Machine applications.
Connected Cars are one of the major trends in digital business in 2015 and 2016. As this trend progresses, the functionality of the connected services is changing step by step. Until now, providers have focused on embedding the Internet into the car – because today’s users take a seamless connection to news and music or their social networks for granted. They want to have information at their fingertips and stay online at all times, be it in their own cars or car sharing vehicles. Here, customers expect digital innovations and Internet connectivity not only in the premium sector but also in mid-sized and smaller cars.
However, the future will be all about making the car a part of the "Internet of Things" and integrating it as a node in the global data network. Key to these new applications is connecting the car's on-board network with the backend of the manufactures, i.e. establishing a back channel. One way to a secure Internet connection between the on-board networks and various backend system is "Acon". Carmakers can install this solution during production or retrofit their cars at a later point in time. They can use their own box or one from Acon as needed. Here, Acon is a very agile solution – meaning, it is flexible and can be adapted to a changed environment. The Projekt Audi unite in Stockholm is already using Acon.
Generally speaking, data connection to the backend allows a host of completely new services that not only benefit the customer, but also the car manufacturer. Via control instruments – that can be retrofitted at a reasonable cost – software updates can be fed automatically to the vehicle. Thanks to this technology, image problems due to time-consuming recalls will be a thing of the past. And car owners won't have to be contacted for regular check-ups or asked to take their cars to the shop for servicing. Predictive Maintenance will take care of that and report faulty control instruments to the system itself to be repaired, replaced or overhauled. Many of these applications will develop over time, but only if the technical infrastructure in cities or between connected automobiles advances (Car2X/Car2Car) and autonomous driving becomes a reality. Before this can happen, however, some legal issues such as data sovereignty have to be settled.
The main building of the Frauenhofer Institut in Munich alone is equipped with more than 3,000 sensors measuring humidity, temperature, CO2 levels and evaluating this data with the help of software programs. Many facilities are then optimized on the basis of this information. Granted, the Frauenhofer Institute is an exceptionally huge "smart home", but even on a smaller scale, more and more tech enthusiasts are retrofitting their home environment with hardware and software that, for instance, control energy consumption or allow operation of window shutters or safety features via smart phones from a remote location.
These so-called smart homes are brimming with a variety of standards and interfaces used by connected devices for communication. This is why it will still take some more time before Zigbee, KNX, Enocean, Z-Wave, and other sometimes proprietary systems such as Qivicon and RWESmarthome, can be interconnected via a uniform Smart Grid. One solution could be the EE bus – a linking element and "translator" for diverse solutions/applications. More than 50 German and international manufacturers belong to an initiative of the same name.
As soon as this barrier has been removed, new eco-systems and business fields might be created around Smart Home and IoT. Even today you can already find alliances being forged, e.g. between REW and Samsung for a SmartCam for remote monitoring. However, studies show that consumers still feel insecure and unfamiliar with Smart Homes and ask themselves if, for instance, they have the right to install devices in a rented apartment. This requires information and some convincing from the provider's side.
In a completely interconnected world, the Internet of Things that is, contact points with the customer will multiply. This holds immense promise for marketing and commerce. Where in the past ad campaigns had to tout their products all over the world with a one-size-fits all approach, today the unique and very individual needs of the customer have moved into the foreground. The commerce specialist Amazon and its "Dash" button – available only for premium customers in the US – is probably the best case in point to demonstrate this mechanism. So far this product has only been available in the US, but it is leading the way for things to come: the connected switch or button attached to any household appliance is supposed to trigger the purchase of a product when pushed. This requires the activation of the button via an app; then the order is placed per WLAN.
Even today, we can already see how the mobile use of smart phones and tablets for shopping is skyrocketing. In connection with local and context-based recommendations, e.g. via Beacon technology and the appropriate apps, specific offers can be displayed to selected users. Yet Beacon still faces many technical limitations and might run the risk of flooding the customer with irrelevant messages. But development shows that personally addressing customers offers many opportunities.
Augmented or Virtual Reality will also offer customers a new shopping experience. Here, chances open up for stationary business /commerce where customers are whisked into a virtual world using Cloud applications and in-store displays or data glasses. With the right software, it is possible to lay out a broader product range or to develop an individual design together with the customer.