Many commentators have touted the Internet of Things as being the next big revolution in terms of the total number of computers, exceeding that of the whole body of modern mobile devices today, smartphones and tablet computers. That is true. However, there is an implicit message contained in such statements that is not true.
It has been understood that smartphones have tremendously eclipsed the sales of desktops and laptops, not just in number of units sold, but also in tons of hardware sold annually and annual revenue in U.S. dollars. Similarly, people spend enough time accessing the Internet on mobile devices such that the total network traffic coming from such devices rivals that of desktops and laptops. Essentially, not only do the number of mobile devices eclipse that of desktops and laptops, but also the revenue and Internet traffic eclipses that of desktops and laptops.
So, this is where the distinction has to be made. We know the computers by the numbers of Internet of Things could easily exceed that of mobile devices, but what about the money? Is the Internet of Things market even that lucrative at all? For the year 2018, we can probably safely answer “no.”
One of the reasons why smartphones are such a lucrative market is because they sit very close of the physical person who uses them. They are always within easy physical reach, so the decision to keep the device or replace it with a new one is, matter of fact, a physically easy action. Smartphones, by their virtue of being physically small, are also easy to purchase and throw away. As an unfortunate consequence, smartphones have a despicably low recycling rate and are one of the fastest growing waste streams in the world. Why take the extra trip to get to your nearest electronics recycler when you can just drop a smartphone in the trash right next to you?
The only way for Internet of Things to be as lucrative or more lucrative than smartphones, in terms of revenue, is to essentially enter the market of fast-moving consumer packaged staple goods. That is not what we are seeing in the year 2018. Instead, we are seeing Internet of Things devices predominantly in slower-moving, fixed infrastructure areas such as routers and IP cameras. Especially, consider the case of IP cameras. IP cameras are located in physically difficult to access places like on high edges of walls, ceilings, roofs, street lamps, and in the middle of nature preserves. These devices are not going to be replaced on a whim, simply due to the labor needed to replace such devices. Also, where’s the motivation to replace the device if it is not immediately in your hand? So, even though Internet of Things network traffic may continue to grow to eclipse that of modern smartphones, chances are very slim that the revenue of Internet of Things will exceed that of smartphones, unless Internet of Things (IoT) devices can make inroads into faster-moving consumer goods.
If every shoe, sock, shirt, water bottle, and food package contained an embedded IoT computer, maybe. However, consumer adoption of such smart devices hasn’t been very strong in the present day, so greater adoption would likely only happen if the manufacturers somehow “forced” the decision by citing other technical requirements or advantages as to why an embedded computer must be included. Yet, even this is hard: In the case of the food industry, profit margins are already very thin, such that many attempts to introduce more high-tech systems have failed due to marginally running over cost limits, which multiplied into bankruptcy-inducing losses. Also, smart water bottles have, at best, been laughed off as unnecessary by most people. So, suffice it to say, it’s unclear if Internet of Things can become commercially lucrative, although we know for sure that it will continue to grow in devices and network traffic generated.