The Internet of Things or IoT, as many of us famously call it, has become like a frequently occurring word in our tech news updates for the last few years. While we all might be aware of what the technology is all about and what all impact it is having on the tech world, we never really saw any concrete proof of what the technology was doing for the global economy. In order to provide us that concrete proof, McKinsey and Company, a consulting firm, has carried out a comprehensive economic study of the technology's much talked about economic potential benefits.
According to the study, the total economic benefit of IoT in the year 2025 could hit anywhere between $3.9 trillion to $11.1 trillion, with the high estimate equivalent of 11 percent of world GDP in 2025.
McKinsey & Company's Global Institute conducted the research with the motive of exploring the potential value of the much famous Internet of Things (IoT) on the global economy. The report, ‘The Internet of Things: Mapping the Value Beyond the Hype’, talks in detail about the potential surplus value gained by the consumers, as well as value generated from business applications.
Establishing its base on an earlier research done related to the IoT, the consultancy firm decided to analyse more than 150 potential applications of the technology globally. It then estimated the kinds of benefits and the economic value of the technology, using a bottom-up economic modelling approach.
The factors taken in consideration in order to estimate the value of the IoT included time savings, improved asset utilisation and productivity improvements. Further, it also included an approximate economic value for reduced number of accidents, deaths and diseases.
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Credits - Consultancy.uk[/caption]The analysis of the report revealed some startling figures. According to it, the technology will have a potential economic impact of between $3.9 trillion and $11.1 trillion per year in the year 2025.
Consumers are expected to be big gainers as the consumer value is expected to be at $2.6-7.6 trillion by the year 2025 and consumer surplus is expected to be at around $1.0-2.8 trillion.
The report further revealed that different segments will generate different kind of value. According to it, the health and wellness sector could create value anywhere between $170 billion and $1,590 billion. Retail environments, on the other hand, could experience economic gains between $410 billion and $1,160 billion. But, the report predicts, It is particularly industrial applications, or what is called industry 4.0 in the industrial world, that would experience the greatest economic benefit of the technology by the year 2025. The gains could be worth anywhere between $1,210 billion and $3,700 billion.
After the consumers, comes the cities. The report reveals that cities are expected to see the second largest gain from the introduction of the IoT. They're expected to benefit in the range of anywhere between $930 billion and $1,660 billion by the year 2025.
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