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A new report from McKinsey Global Institute values the economic impact of the Internet of Things (IoT) at a whopping $11.1 trillion by 2025 on the high end, and nearly $4 trillion on the low-end.
To reach those lofty figures, technology vendors will need to be on the same page. "Interoperability between IoT systems is critically important to capturing maximum value; on average, interoperability is required for 40 percent of potential value across IoT applications and by nearly 60 percent in some settings," stated the report.
The IT industry will also need to work on taming big data. "To realize the full potential from IoT applications, technology will need to continue to evolve, providing lower costs and more robust data analytics," said the report.
Companies will also be confronted not only with tough decisions on how to secure IoT data, but how to align their businesses with the insights provided by said data.
"In almost all settings, IoT systems raise questions about data security and privacy," McKinsey noted. "And in most organizations, taking advantage of the IoT opportunity will require leaders to truly embrace data-driven decision making."
And while the consumer-facing side of IoT is compelling, businesses stand that most to gain.
"Business-to-business (B2B) applications can create more value than pure consumer applications," McKinsey stated. "While consumer applications such as fitness monitors and self-driving cars attract the most attention and can create significant value, we estimate that B2B uses can generate nearly 70 percent of potential value enabled by IoT."
Factories will drive most of the value generated by the IoT, to the tune of up to $3.7 trillion. Recently, Gartner vice president Jim Tully revealed that manufacturers are leading the IoT charge.
Businesses that run factories and manufacturing plants have the lead in the number of 'things' with 307 million installed devices, followed by utilities with 299 million units. "This makes intuitive sense; control systems using sensors have always been an integral part of manufacturing and automation processes, and we certainly see a lot of smart meter deployments by utilities leading to energy efficiency improvements and operations like automatic billing, energy management and monitoring," Tully stated.
Smart cities will pump up to $1.7 trillion into the IoT market by 2025, McKinsey predicted. Health monitoring and management organizations are next with up to $1.6 trillion, followed by retailers with up to $1.2 trillion.
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.