The Internet of Things is 'fundamentally about economic value'

Everything and anything will be connected to the Internet -- and each other. So what? Industry experts discuss at the second annual Techonomy Detroit conference.
Written by Andrew Nusca, Contributor
Left to right: Bloomberg's Emily Chang, Cisco's Vishakha Radia, Bitponics' Amit Kumar, Progressive Policy Institute's Michael Mandel, GM's Greg Ross. (Photo: Andrew Nusca)

DETROIT—Self-driving vehicles, intelligent refrigerators, stoke-detecting gadgets that everyone wears: the idea of an "Internet of Things" is all the rage in the technology industry today.

But what does it really mean? And is there substance beneath all that hype?

That was the topic of discussion during Tuesday's Techonomy Detroit conference, at which experts from the technology, automotove, agriculture and political sectors gathered to debate how this concept will affect their businesses—and ultimately, the U.S. economy.

First, a definition. The "Internet of Things," a term coined in 1999 by technologist Kevin Ashton, describes a world in which everything—from a living, breathing you to the inanimate objects around you—has a digital identity, to enable computers to organize and manage them. Add to that the notion that each entity could be actively connected with a radio or modem (allowing two-way communication and real-time manipulation) and suddenly the potential for new application explodes, such as "smart" objects that use sensors to understand the environment around them and data collection for things that have never been digitized before, from your morning run to the hundreds of machines on the floor of a massive manufacturing plant.

Is it possible to quantify the potential of the Internet of Things? Radia said that her company estimates the opportunity to be worth $14.4 trillion.

"When we think about the Internet of Everything, it's really about four things: people, process, data, things," said Vishakha Radia, director of the Customer Business Transformation team in Cisco's Consulting Services group. "It's fundamentally about the economic value—what it will do for business and individuals and organizations."

Sounds great—but in a place like Detroit, still the premier hub for the U.S. automotive industry, how does that translate?

Michael Mandel, chief economic strategist for the Progressive Policy Institute, said that the most potential lies with the industries that are not as digitized today.

"The Internet has mostly transformed information-intensive industries like journalism, entertainment, communications," he said. "It becomes much harder to use the Internet to transform physical industries; it's much more complicated. You need a lot of sensors, big data capability to process it, ways of getting it to people to make decisions. Physical industries, like manufacturing and transportation, haven’t been affected that much."

And certainly the automotive industry. Greg Ross, global director for the Product Strategy and Infotainment group in the Global Connected Consumer division of General Motors, said that connectivity allows vehicles to "get smarter and smarter and more personalized" as the driver uses them.

"Self-driving cars...[are] certainly part of the future," Ross said. "But we can already improve the way your car functions today. We can already improve the way your vehicle ownership works by how the car knows when it needs maintenance done, when it needs fuel. It can help make your day more convenient and make your car last longer by helping you get those things doesn't when you need them done. Simple things like that, we can help you connect your car to your insurance provider, if you want to share that information, to help get usage-based insurance. 

"We're finding a lot of opportunities."

For Amit Kumar, chief executive and co-founder of the hydroponic gardening startup Bitponics, connectivity is both core to his company's eponymous product—a "personal gardening assistant"—and the development process that produced it.

"This maker movement, around open-source hardware...[it is] possible to build intelligent gadgets and physical things a lot easier than you could before," he said. "But the difficulty from getting to a prototype to an actual, finished, shippable product—there are a lot of new issues that you encounter."

And let's not forget cities, which are complex systems that could be greatly improved by a little connectivity (and a lot of collaboration).

"Delivering local services like sanitation, environment, disaster relief," Mandel said. "You are...offering better services to people more cheaply, and so it is not necessarily that hard. It's just a matter of getting your workforce retrained to sort of understand that this is going to help them do better...you're talking about remaking your whole economy to work to be able to deal with this new information that you didn't have before, to make better decisions."

Is it possible to quantify the potential of the Internet of Things? Radia said that her company estimates the opportunity to be worth $14.4 trillion—a figure that nearly matches the nominal gross domestic product of the entire United States.

A small sliver of that, about four to five percent, is represented by the auto industry. Here in Detroit, where America's three major automakers are still finding their footing after a period of unprecedented economic distress, the topic is top of mind.

"We have to make it easy for our customers to use the devices they bring into their cars and we have to do that competitively; but we also think the car is a device, too, and it has its own needs and value to be connected with the rest of the system," Ross said. "Being connected allows us to do things...that are not as easily done just with your phone."

He added: "One of the most frustrating things about those built-in navigation systems is that the information is out of date shortly after you purchase the car…you're going to see significant changes. You're not going to need to carry all the data around with you; the data will always be fresh because you're always connecting to it. Not only that, but you'll be contributing data, too. There will be a lot of incentives, such as where to find available parking. You'll create things you didn't know you could create by mashing together different data sources."

Despite the tendency for technology to make an economy more efficient, Mandel said that overall, the U.S. economy stands to benefit from an information-intensive auto industry.

"As the car delivers more value, people will buy more cars. As people buy more cars, they will create more jobs," he said. "As the innovation spreads out from the tech sector and to other areas of the economy, what you are going to see is job creation rather than job destruction."

The future is clear, Radia said.

"We can clearly see the Internet of Everything as the next huge market transition," she said. "That's a whole ton of things not connected that are going to get connect, and the network's going to be key."

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