TE Connectivity’s Rob Shaddock took to the podium at the Executive Conference of the Electronic Components Industry Association to talk about the Internet of Things—specifically, the “hype versus reality” of the IoT and how it is shaping the business-to-business world.
There is no denying the hype: A quick search for the term or its acronym will yield a plethora of news headlines from consumer as well as B2B media outlets, not to mention the how-to’s, and product and service offerings you will find from a range of technology companies.
There is also no denying the potential of the IoT. As Shaddock explained to the distributors and manufacturers of electronic components in attendance at the ECIA event, the volume of IoT products and applications and their accompanying revenue projections are large and headed in the right direction: Gartner Research estimates that there will be more than 6 billion connected devices by the end of 2016, a number the firm expects will grow to more than 20 billion by 2020. Revenue projections are staggering as well: Shaddock pointed to an estimated $50 billion in IoT revenue this year, which is projected to jump to $250 billion by 2020.
Such figures are fueling the hype surrounding the IoT, as consumers and business leaders alike struggle to get a handle on its potential to change the world in which we live. Shaddock echoed those sentiments at the ECIA event, held in Chicago this past fall, and pointed to the greatest potential market for IoT technologies today: the business-to-business environment, particularly utility, energy, manufacturing, and other industrial settings that are ripe for “connecting.” There are challenges, to be sure, particularly in manufacturing environments where there is a need for standardization so that equipment and systems can talk to each other. But the potential for productivity gains and cost savings is likely to outweigh such concerns, he says, as organizations of all sizes begin to sense and connect a wide range of products and equipment.
“These are the real opportunities now,” Shaddock told audience members. “You need to establish connections first, and B2B is where much of those connections start.”
Some of the most recent industry research bears this out, at least for the near-term. Gartner Research said this past fall that although consumer uses will continue to account for the largest number of connected devices—4 billion in 2016, rising to 13.5 billion in 2020—businesses will spend the most on IoT technology. The researcher says enterprise IoT spending will reach $868 billion next year, with consumer spending coming in at $546 billion. Looking at enterprises in particular, Gartner points to two classes of connected devices: generic or cross-industry devices such as light bulbs, HVAC, and building management systems used mainly for cost savings; and vertical-specific devices, including specialized equipment used in hospitals and tracking devices used in container ships, among others. The latter is the largest category today, but by 2020 Gartner says cross-industry devices will dominate the number of connected things in businesses worldwide.
This presents a large and growing opportunity for manufacturers and distributors, who serve as the pipeline for delivering the products and services necessary to make those connected devices work. Many of them are embracing this role and stepping up their capabilities in the IoT realm. Here are four key ways those efforts are making a difference:
Delivering Information, Education
Distributors have long been information providers, and as the IoT gains speed that role is accelerating. A recent survey by Global Purchasing and Penton Media revealed that staying up-to-date on the newest IoT products and services is a key challenge for buyers of electronic components, as 72% of purchasing managers listed this as a top concern in 2015. Distributors should embrace this role of educator and information provider, says David Hofer, executive director and board member of Intercomp USA, an independent distributor of electronic components based in Florida.
“The challenge for many companies is that they need to stay on top of this technology—and they need seasoned expertise,” explains Hofer. “You’d be surprised, but the buyer on the client side often doesn’t have the understanding [of these products]. We have the knowledge and expertise to advise them on the right products and the right mix.”
Intercomp USA supplies hard-to-find and obsolete electronic components to original equipment manufacturers and contract manufacturers, and also offers design and bill-of-materials management services—all of which are increasingly in demand in the IoT age.
“We’re trying to get closer to our customers through engineering innovation—collaborating with design [engineers] and even offering engineering staffing on a project-by-project basis,” explains Hofer. “More companies are downsizing … and we’re kind of a relief valve [so they can] concentrate [on their core business] and not worry about other things.”
Sensors are a key focus area today, he adds, pointing to distributors’ ability to deliver the most current information on sensor trends.
“There’s going to be a tremendous explosion of sensors just in home automation and automotive industries alone,” Hofer says. “The sensors in these IoT devices are what make them smart in the first place.”
Access to Products
Sagar Jethani, global head of content for distributor element14, agrees that advances in sensors and greater access to them is driving much of the IoT craze and allowing manufacturers, distributors, and design engineers to develop more life-changing products and services.
“We have had Internet data and sensors for years. What’s new now, I think, is that the falling price of sensors is enabling [design engineers] to use them in ways that make it bend around our everyday lifestyles,” Jethani explains. “[The Internet of Things] is really making us rethink how we interact with information.”
Customer projects are a key window to this trend, and Jethani points to element14’s online community as place where much of the change is occurring. The community hosts design challenges that ask customers to solve problems in fields such as health care, the environment, the smart home, and farming, to name a few, using products and services the company provides. As one example, a combination of sensors, development kits, and other components allowed one element14 customer to design a pollen and allergen sensor that would help him better manage his own severe allergies. Using a sensor to sample the air quality outside, the product then runs calculations based on a range of factors and sends a message to the user’s iPhone detailing the pollen and allergen levels in the air. The idea is that users have instant access to information that can help them make decisions about their day: Should they avoid going outside? Work from home that day? Or perhaps take other steps that could help stave off an allergy attack? What once took a few steps to determine is now available instantly.
“That’s something people are very focused on—making sense of data,” Jethani explained. “This pollen detector stood out as a creative application for IoT [because] it make a tangible improvement to [this designer’s] life.”
Jethani points to an even bigger example of the life-improving capability of the IoT: Digital India. In this rapidly modernizing country there are still places where basic services such as clean, healthy drinking water are scarce. As part of the Digital India plan, Prime Minister Narendra Modi has committed to delivering Internet connectivity to rural areas across the country to serve as a hub for a variety of IoT-enabled, embedded devices. A device at the bottom of a well that can gauge water quality is one example.
“It’s bending the technology around, in this case, a very traditional way of life,” Jethani explains. “[Narendra Modi] is looking at this IoT revolution as a way to alleviate poverty and improve the health and hygiene of [millions of people].”
Jethani notes that such projects are not necessarily big growth areas for manufacturers and distributors today, but he says the long-term potential is huge—especially for companies that suppy the products and services that make it all possible. He also points to the excitement of being part of such life-changing technology.
“We’ve been living with some very big problems for a long time,” he says, pointing to pollution and other environmental issues that make life difficult for so many people around the world. “Now we can easily measure [these things] and start to change them.
“The IoT in the U.S. is almost seen as being a little bit of a luxury, but when you see how the rest of the world looks at it, it’s not seen as a luxury at all.”
Stepping Up Support
Providing access to the latest products and services is paramount for global distributors such as Avnet, a company that is stepping up its efforts to provide support across its wide-ranging capabilities. Those capabilities include everything from providing sensors and other electronic components to IT hardware, embedded products, and cloud-based software and services. The idea is to support customers from “the edge to the enterprise” as Alex Iuorio, senior vice president, supplier marketing for Avnet Electronics Marketing, explains.
“If you think of it ‘from sensors to servers,’ that’s a big part, but it only speaks to the functionality, and IoT is much, much more than that,” says Iuorio, pointing to Avnet’s long-held expertise in both electronic components and information technology solutions. “The IoT is also information management, it’s a connected world—so all of those things are important. [Thinking about the IoT] as ‘the edge to the enterprise’ lets you know that it’s more than just the parts.”
That’s why Avnet is leveraging its ability to provide additional services such as data analytics and supply chain management to meet customers’ need to manage their IoT projects. This means supporting customers’ components, embedded products, technology, and supply chain needs across one IoT offering. The strategy involves introducing existing customers to new services and keeping an eye out for start-ups that may have been off the radar screen for a variety of reasons. Iuorio points to start-ups in the wearable electronics space in particular, many of whom may be looking for a supply chain partner that can provide access to all of the services Avnet offers.
“What we really believe is that we’ll be one of those companies that is uniquely positioned, where a customer could enter anywhere along that continuum, move up and down, and get support at any point,” Iuorio explains.
At Home in B2B
Electronic components distributors are smack in the middle of the business-to-business environment, where most of the IoT connections are being explored and implemented today. Avnet’s Iuorio points to energy management, agriculture, and transportation industries as hot markets for IoT projects, in particular.
“The applications are mind-boggling in terms of their volume,” he says, pointing to projects surrounding asset tracking, plant and factory management, and smart cities as a few examples of what Avnet EM customers are working on.
IoT services are a large and growing part of the issue as well, and services are dominated by the professional category, according to Gartner Research. IoT services are those in which businesses contract with external providers to design, install, and operate IoT systems. The category is expected to rise 22% in 2016 to $235 billion.
“IoT services are the real driver of value in IoT, and increasing attention is begin focused on new services by end-user organizations and vendors,” Jim Tully, vice president and distinguished analyst at Gartner, said in a statement announcing the new IoT research last fall.
The research underscores the message from Shaddock, of TE Connectivity, at the ECIA Executive Conference. Pointing to examples in manufacturing, logistics, and transportation, he advised electronic components manufacturers and distributors to start thinking about how to enable IoT technology across the B2B world.
“This is where … there is a lot of opportunity,” Shaddock said.