How much is the Internet of Things worth to the global economy?

With all the hype surrounding the Internet of Things (IoT), IoT Analytics recently issued an article listing the 10 most popular IoT applications. The list was composed based on what people search on Google, talk about on Twitter, and write about on LinkedIn. The top 10 are listed as follows:

- Smart homes (Examples: Nest thermostats, smart appliances)
- Wearables (Apple Watch, FitBit)
- Smart cities (better traffic management, reduction of noise and pollution)
- Smart grids (the digitalization of our electric infrastructure to enable improved efficiency, reliability, and more engaged consumers)
- Industrial internet (smart factory, better asset management)
- Connected cars (Google self-driving cars)
- Connected health (smart medical devices and connected healthcare systems)
- Smart retail (proximity-based advertising)
- Smart supply chains (smart tracking)
- Smart farming (smart agriculture and livestock tracking/monitoring)

This list does not surprise me as it aligns quite perfectly with how each of the applications enters the mainstream consumers’ consciousness. Given that consumers often witness firsthand the experiences (and benefits) of a smart thermostat or an Apple Watch, the smart home and wearables categories, respectively, are by far the most popular.

We should not, however, equate popularity with real, tangible benefits. Arguably, some of the not-so-popular IoT applications such as smart grids, smart cities and industrial internet, have much greater potential to deliver tangible benefits to consumers, society and the planet. According to a McKinsey study, the smart grid has the potential to deliver more than $130 billion annually in economic benefits in the United States alone by the year 2019. Extrapolating this number globally equates to approximately $520 billion annually in economic benefits. Another study by Gartner predicated that the industrial IoT is the application with the highest overall potential in delivering tangible benefits, yet, its popularity currently does not reach the masses the way smart home and wearables do.

The smart grid is another example. Although it has massive potential in transforming the way we generate, deliver and consume energy for the better, it only has 41,000 Google searches monthly (compared to 61,000 for smart homes) and 100 tweets a month. You may ask, what is a smart grid? A smart grid is essentially the application of IoT technology (smart sensors, two-way communications and analytics) to our electric grid infrastructure to enable better energy efficiency, improved reliability (less blackouts and outages), the integration of more renewables and distributed energy resources (solar panels, electric vehicles, battery storage), reduced emissions, and a more engaged and empowered consumer.

Neil Armstrong, the first man on the moon, once led a committee for the National Academy of Engineering, to choose of what to be the greatest human engineering achievement of the 20th Century. Do you know what they chose? They did not choose the space programme. Neither did they choose the automobile or the splitting of atoms to make nuclear bombs. They chose the electric grid. And yet, this greatest human engineering achievement of the 20th Century has not been modernized to be able to handle the challenges, and opportunities, of the 21st Century.

As someone who has been in the industry for more than a decade, I believe the non-consumer IoT industry needs to do a better job in articulating the benefits and value propositions of their applications (such as smart grids, smart cities, industrial IoT) to the mainstream consumers and policymakers. When I go to industry conferences, discussions tend to be esoteric and insular among industry insiders.

One way the industry can move forward as a whole is to make smart grids, smart cities and industrial IoT more mainstream and less esoteric. Instead of talking about kilowatt hours, explain to consumers and policymakers how a smart metre will empower them to better manage their energy usage and give them control to use energy when they need it.

Instead of talking about SAIDI/SAIFI (industry terms to measure duration and frequency of power interruptions), explain how the applications of smart technology will help utilities to safely and quickly restore power during outages, resulting in economic savings in the tens of billions of dollars for consumers and society from avoided lost productivity. Instead of talking about demand response or energy efficiency, explain how smart technology is enabling consumers to become “prosumers” (consumers and producers of electricity) with their solar panels and electric vehicles.

Instead of talking about ageing infrastructure and retiring workforce, focus on how the spirit of innovation is alive and well in the smart energy industry and how we are educating the next generations with 21st Century skills and ingenuity. One company which seems to do this well is Tesla. While other automakers tend to focus on the what (the facts and figures) and the how (the value propositions) of their plug-in hybrid or electric vehicles, Tesla focuses on the why (the higher purpose) for the consumers and society.

As an industry, we are in the midst of a once-in-a-lifetime transformation, to transition our electric grid from the 20th to the 21st Century. To do this right, we must get ahead of the challenges, be agile, and embrace the opportunities. As the IoT is really the intersection of smart technology, smart business models, and smart policy, to make real progress, all stakeholders - industry, policymakers and consumer advocates - must collaborate to create a comprehensive, long-term framework that enables new business models to form and thrive. For the most part, the technology works, it is the business models and policy that we need to succeed. And in order to do that, we as an industry need to do a better job in articulating the benefits and value propositions of our IoT applications in simple language that mainstream consumers and policymakers can understand.