50 billion Things come online - profit potential

Profit potential:

The Internet of things is especially important for companies that sell network equipment, like Cisco Systems. Cisco has been enthusiastically predicting that 50 billion “things” could be connected to communications networks within six years, up from around 10 billion mobile phones and PCs today (see “Silicon Valley to Get a Cellular Network, Just for Things”). Another beneficiary is the $300 billion semiconductor industry. As Blaauw notes, “Every time there has been a new class of computing, the total revenue for that class was larger than the previous ones. If that trend holds, it means the Internet of things will be bigger yet again.”

But every shift promises pain, too. Large companies like Intel are already reeling from the rapid emergence of smartphones. Intel, with its powerful, power-hungry chips, was shut out of phones. So was Microsoft. Now both these companies, and many others, are groping to find the winning combination of software, interfaces, and processors for whatever comes next.

And it’s not just technology companies that must stay alert this time around. The reason, explains Marshall Van Alstyne, a professor at Boston University, is that as ordinary products become connected, their manufacturers may enter information businesses whose economics are alien to them. It’s one thing to manufacture shoes, but what about a shoe that communicates? Products could turn out to be valuable mainly as the basis for new services. “You might find the data is more valuable than the shoe,” says Van Alstyne (see “The Economics of the Internet of Things” and “The Light Bulb Gets a Digital Makeover”).