When your toaster is connected to the Internet it will also be connected to your bank. Photo: LifetimeStock
A key component of our vision of the Internet of Value is the Internet of Things. In digitizing the physical world it will make sense for devices to not only communicate with each other but also to be able to pay each other. In fact, it’s likely that device-to-device payments will eventually surpass the human sort.
It’s not that surprising then that many of the key findings from McKinsey’s Internet of Things report for 2015 align with themes from the Internet of Value.
In order to leverage potential value from IoT systems, they need to interoperate—which is why we believe open protocols like ILP will play a key role.
In our analysis, of the total potential value that can be unlocked through the use of IoT, 40 percent of this value, on average, requires multiple IoT systems to work together. In the worksite setting, 60 percent of the potential value requires the ability to integrate and analyze data from various IoT systems. Interoperability is required to unlock more than $4 trillion per year in potential economic impact from IoT use in 2025, out of a total potential impact of $11.1 trillion across the nine settings that we analyzed.
Focus on businesses and infrastructure will create more value than consumer applications.
Consumer uses of IoT technology have garnered a great deal of attention, thanks to media coverage of fitness monitors and home automation. While these applications do have tremendous potential for creating value, our analysis shows that there is even greater potential value from IoT use in business-to-business applications. In many instances, such as in worksite applications (mining, oil and gas, and construction), there is no direct impact for consumers. A great deal of additional value can be created when consumer IoT systems, such as connected consumer health-care products, are linked to B2B systems, such as services provided by health-care providers and payors.
But that’s OK because it’s the end customer that will capture most of that value over time.
As in other technology markets, the end customer ultimately captures the most value, we find. Eventually, we estimate that customers (such as factory owners using machines guided by IoT technology, operators of transportation fleets, and consumers) will capture upwards of 90 percent of the value opportunities IoT applications generate. In many settings, customers will capture value in both direct and indirect ways, such as being able to buy more efficient machinery that is designed using IoT data from older products in use. Of the value opportunities created by the Internet of Things that are available to technology suppliers, in general the largest share will likely go to services and software and less will likely go to hardware.