The Internet of Things had been creating a lot of waves with more and more companies coming up with new products they believe would be viable in a connected world. Analysts are also making huge speculations on the future of IoT while issues such as security, data privacy, and the role of artificial intelligence are constantly being scrutinized. However, the economic aspect of these futuristic technologies seemed to be an evaded topic.
In order to bring a clearer picture of the IoT's real dollar amount, researchers from the McKinsey & Company's Global Institute have decided to release a report of the global IoT's estimated potential value. The group reveals that IoT has the potential value ranging from $3.9 to $11.1 trillion by 2025.
"Our bottom-up analysis for the applications we size estimates that the IoT has a total potential economic impact of $3.9 trillion to $11.1 trillion a year by 2025," said McKinsey. "At the top end, that level of value - including the consumer surplus - would be equivalent to about 11 percent of the world economy."
In other words, IoT can potentially make up around 11 percent of the total economy in the world. However, the researchers added that IoT has to be engineered in such a way for it to reveal any true value.
"To realize the full potential from IoT applications, technology will need to continue to evolve, providing lower costs and more robust data analytics," stated the report.
According to McKinsey, the speculated value can be maximized only when there is interoperability between IoT systems. The average requirement is estimated at 40 percent across IoT applications and almost 60 percent in some defined settings.
The company has identified at least nine of these settings. These include vehicles, cities, outdoors, retail environments, work sites (construction, mining, oil and gas), homes, factories, offices and human.
Among all these settings, it is believed that factories will be the strongest driving force behind the generated value by the IoT. McKinsey's report has estimated it to reach up to $3.7 trillion.
Smart cities, which include public health and transportation, will contribute up to $1.7 trillion in the IoT by 2025. This is followed by the health and management organizations which have an estimated value of $1.6 trillion while retailers with $1.2 trillion estimated value comes next.
"Business-to-business (B2B) applications can create more value than pure consumer applications," stated McKinsey. "We estimate that B2B uses can generate nearly 70 percent of potential value enabled by IoT."