Ready or not, the Internet of Things is coming. In fact, it’s already here. Since 2007 we've had sensors in our car tires telling the central onboard computer when they are low on air. And that’s just beginning.
MIT Technology Review’s report on The Internet of Things is loaded with examples of how more and more things are getting wired up to networks and sending through data. Lots and lots of data.
Suddenly, everyone is in the software business whether they want to be or not. You make cars? You’re in the software business. Appliances? Software business. Tennis shoes? Trash cans? Light bulbs? Yup, yup and yup. Don’t take my word for it…
…in his annual letter to shareholders, Jeff Immelt, CEO of General Electric, the world’s largest manufacturer, told his investors that “every industrial company will be a software company.”
So what does this mean for manufacturers? For those who embrace it, it could mean new opportunities. Those who ignore it could be replaced by a competitor they never saw coming from a direction they never imagined. Take the Nest thermostat for example.
Nest, which was acquired by Google this year, has been clobbering rival thermostat makers. But now that it has a network of thermostats and can control them from afar, it’s starting to offer services to electric utilities. On hot days it can selectively turn down air conditioners, controlling demand. Nest’s tests with utilities are still small. But one day, with a few bits sent across a network, the company might put a power plant or two out of business.
To thrive in this new data-driven economy traditional manufacturers must change the way they think about product improvement.
Most companies compete by adding new features to products. They haven’t been in the business of thinking of how to add new communities or network effects.
GE got the message. The company recently hired 800 people, mostly programmers and data scientists, and invested $1 billion into their Silicon Valley research lab. Why?
“…it’s not because we want to become Google,” [Immelt] says. “It’s because we are dramatically evolving manufacturing.”
How will your business evolve to take advantage of The Internet of Things?
Download the complete MIT Technology Review report, The Internet of Things.