Here is an excerpt from an article by Frank Burkitt for strategy+business published by Strategy& (formerly Booz & Company). He explains why the digital interconnection of billions of devices is today’s most dynamic business opportunity. To read the complete article, check out others, learn more about the firm, and obtain subscription information, please click here.

Illustration by Lincoln Agnew

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Humanity has arrived at a critical threshold in the evolution of computing. By 2020, an estimated 50 billion devices around the globe will be connected to the Internet. Perhaps a third of them will be computers, smartphones, tablets, and TVs. The remaining two-thirds will be other kinds of “things”: sensors, actuators, and newly invented intelligent devices that monitor, control, analyze, and optimize our world.

This seemingly sudden trend has been decades in the making, but is just now hitting a tipping point. The arrival of the “Internet of Things” (IoT) represents a transformative shift for the economy, similar to the introduction of the PC itself. It incorporates other major technology industry trends such as cloud computing, data analytics, and mobile communications, but goes beyond them. Unlike earlier efforts to track and control large systems, such as radio-frequency identification (RFID), the Internet connection gives this shift almost limitless versatility. The IoT also opens a range of new business opportunities for a variety of players. These opportunities tend to fall into three broad strategic categories, each reflecting a different type of enterprise:

o “Enablers” that develop and implement the underlying technology

o “Engagers” that design, create, integrate, and deliver IoT services to customers

o “Enhancers” that devise their own value-added services, on top of the services provided by Engagers, that are unique to the Internet of Things

How will your company build value in this new world? That will depend on the type of business you have today, the capabilities you can develop for tomorrow, and, most of all, your ability to understand the meaning of this new technology.

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Here is a direct link to the complete article.

Frank Burkitt is Senior Executive Advisor at Strategy& (Formerly Booz & Company).