Internet of Things... first coined in 1999... a century ago, or 16 years anyway. While much of the electrical industry has been occupied with the absorption of technology to ensure a robust generation of information, the IoT world has been dutifully focused on creating the software and information systems to accommodate the explosion of data forecasted over the next several decades.
It is estimated that the world had 15 billion sensors at the end of 2015 and that we will have 1 Trillion sensors by 2025. The placement of sensors is ubiquitous; from food to transportation to process industries to retail... most Things will be tied to a sensor. Once tied to a sensor, then those Things create data; which become aggregated and sorted and analyzed to reveal far more information than we comprehended just a few years ago. So IoT is real; it's growing faster than Moore's Law which places the traditionally staid electrical industry at a crossroads of change.
There will be unlimited competitors and/or occupiers in the IoT. First step is the battle for geography: what devices are equipped with which sensors and what type of information is needed to be measured and sensed. I see this battlefield emerging in the lighting industry due to its perceived hegemony of geography... the hardware of lighting fixtures is everywhere, so therefore it's natural to think that if we equip every fixture with a sensor network, Lighting will become the Baron of the IoT. Not so fast... while I do believe many lighting applications will become robust purveyors of aggregated data; such as retail stores and street lighting, there is limited expectations that lighting will be dominant over other prominent physical devices; such as security, HVAC sensors, asset management systems, factory automation devices and more.
The electrical industry at large is well-positioned as a significant player in the IoT as it supplies power and occupies every electrified structure in the world. The IOU players have already been staking out their role in smart grid systems that can be further enabled with additional sensing devices to detect security, motion, sound, temperature, etc. across their distribution network. With the strong relationship between IOU's and municipalities, the growth of smart technology will be a natural extension for IOU"s to add into their service packages. SaaS approaches that will enable smaller communities to implement security systems, secure communication networks and of course... smart street lighting.
So the challenge for the electrical industry becomes analogous to the challenge of absorbing other new technologies, like LED and controls. The issues are complex, but creating SaaS solutions or becoming an adjunct security provider requires new talent; new ideas, new approaches and new skills to create and implement those concepts into an industry that has largely been a laggard to technology absorption. Here are just a few challenges ahead:
- Talent. Who will become the innovators inside companies that are primarily populated with traditional adhesions; channel partners, legacy incentive programs, structured sales roles and limited internal resources to develop the software systems to support new technologies? Which legacy companies have committed to making the investment in talent to push technology into the market? E.g. how many lighting companies have a VP of IoT? (I know of 4)
- Training. New products have always relied on the manufacturing community to train their channel partners; counter day events, lunch/learns, factory visits, etc. Training customers in products or systems that are technologically advanced is a tall order for manufacturers to accomplish. The traditional players in technology, such as Rockwell have a very rigid relationship with their partners and formal training programs that are very costly to create and maintain. Such training would represent a huge investment by traditional players in the lighting industry and may be challenging to spur rapid adoption of those approaches.
- Investment. I believe many legacy companies will lag their investment into a premise such as SaaS until the concept is fully developed into a proof of concept. You can see the vision of Acuity with their investments in software companies, but how far into the organization will they invest to ensure the success of creating software solutions for end-user benefits?
The challenge is to balance the continuance of legacy relationships while molting into a new company that views lighting as an entry point into tech. It will be a remarkable several years as the electrical industry comes to grips with solutions for problems that no one knew was a problem. The industry is poised perfectly to command a significant share of the IoT market (which for purposes of this discussion is the monetization of connected, smart devices). But being well positioned doesn't ensure success in taking a concept to the market.
The electrical industry is changing rapidly; we can see evidence of significant players lining up their resources to compete in a market that didn't exist 15 years ago. GE with Predix, Acuity with their 4-5 most recent acquisitions, Leviton and Flextronics move into Lighting... the market is changing rapidly. And at the end of the day, every distributor is happy to have sold another 100 20 amp breakers to their favorite contractor... with no mention of the IoT. But it's here....
