Padmasree Warrior, Cisco’s chief technology and strategy officer, describes how the exponential growth of connectivity between people and devices, both mobile and network, will change commerce, business systems, and individual behavior. Despite two decades of increasing connectivity between people and devices over high-tech networks, only 1 percent of what could be connected in the world actually is, argues Padmasree Warrior, Cisco Systems’ chief technology and strategy officer. As the level of connection swells over mobile and other platforms during the next decade, she expects sweeping changes in how consumers shop, businesses handle data, and individuals grapple with the data available about themselves. This interview was conducted by McKinsey’s Rik Kirkland in Davos, Switzerland.

What follows is an excerpt from an edited version of Warrior’s remarks. Please click here to read the complete article and watch a video of the conversation.

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Connecting everything

We believe that today only 1 percent of what can be connected in the world is actually connected. As an industry, it took us about 20 years to connect 1 percent of the world. And in the next ten years, we believe that number will go up dramatically. We’ll make significant progress in connecting the 99 percent that’s still unconnected. That will be people, that will be devices, and that will be a lot more information on the network.

So when we say “the Internet of Everything,” we mean an intelligent way to connect processes with data and things. Not just the Internet of Things, not just connecting the devices onto the network, but how can you use the information that’s being collected to drive better processes, better decision making for businesses, and better lifestyles for users and consumers? And we mean more efficient ways to analyze that data through analytics from the network—which is our expertise—to make every single vertical (manufacturing, retail, transportation) significantly different than what it is today.

So if I drill deeper into this, one of the things that I think we find to be inevitable is that there will be a lot more connectivity, and there will be two kinds of connectivity. One kind of connectivity will deliver very rich media experiences to us, through video. Video will be much more prevalent than it is today.

There will be another set of data or implications, which is all of these sensors that will connect— not necessarily high bandwidth data, but low bandwidth data, continuous streaming of low bit-rate data. And the patterns in these two kinds of data and applications are going to be very different.

Think about retail, for example, how people shop today. Now, that’s dramatically changed with the mobile platform and the e-commerce platform in the first evolution of the Internet. In the last 20 years, with the Internet, and now more recently with tablets, the data actually now says that people shop more on a tablet than they do on a smartphone or on a PC. And so the commerce and how we make purchases and the shopping experience in the entire retail vertical has changed, and it will continue to change. And how might it change? This is perhaps an example of the “Internet of Things.”

If we can enable location for people, when you walk into the store, we will know which aisle you are going to. We know you were in this aisle, but you didn’t purchase something. And so if we can analyze that data and tell you when there’s a sale going on, that benefits you as a user as well as the retailer. And so that could be an example where there may be sensors. There will be sensors for indoor location (think of it as GPS for indoor location) and knowledge of your preferences.

So it’s really a combination of a recommendation engine, or a preference engine, of a coupon or a discount engine, and a loyalty program, combined with indoor location. So it’s a combination of all these things—which today are very discreet applications—that will make retail a very different experience in the future.

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To read the complete transcript, please click here.

Padmasree Warrior is the chief technology and strategy officer of Cisco Systems. This interview was conducted by McKinsey Publishing’s Rik Kirkland.