Every euro spent on IoT solutions could yield up to 12 euros in productivity gains, purchasing power, and time savings.
This latest study conducts a rigorous analysis of IoT to determine the value it offers to the EU28.
Key findings from the study:
• IoT value creation potential in Europe by 2025: €940 billion impact on GDP
, €430 billion in productivity gains
, €300 billion in increased consumer purchasing power,
€210 billion in available individual time
• Capitalizing on the opportunities offered by IoT requires connecting more than 25 billion objects in the EU28 alone. This would represent an annual opportunity of €80 billion for six categories of IoT solution providers: €
22 billion in systems integration
; €18 billion in service and platform aggregation; €
15 billion in cloud, analytics, automation, and security services;
€15 billion in connectivity network access;
€10 billion in components and modules;
and €1 billion in systems and management software and programs.
Europe is a leader in productivity and innovation across various sectors, with an adaptable regulatory framework to support the IoT and a citizenry accustomed to navigating the digital world. Potential candidates to form the core of a vital IoT ecosystem in the future include telecommunications operators, healthcare providers, utilities, automotive, transportation, financial institutions, private security, and industrial machinery.
• Europe can become more involved in standardization to have an impact on IoT governance. Although some private consortia are already relatively advanced in developing standards applicable to businesses in their dealings with consumers, the EU must create its own, especially in the areas of manufacturing, smart grids, healthcare, and data privacy.
• Despite current European advantages, its position within the IoT sector itself is not without its challenges. Companies that manufacture components, devices, software, and solutions will only develop their position by persevering.
In the next decade, the number of connected devices will increase dramatically. Innovations are moving toward convergence, with examples such as:
• Advances in the operation, miniaturization, and energy efficiency of sensors and actuators, and falling prices for microelectromechanical systems.
• Compact and low-cost data processing and storage power.
• Introduction of IPv6, the latest version of the Internet protocol, with capacity for 340 billion new Internet addresses.
• A wide variety of connectivity solutions capable of supporting both high-speed (5G) and low-power, low-energy (LPWA) applications.
The IoT, combined with network architectures and big data algorithms, offers an unprecedented source of value creation.
“Sectors such as healthcare, financial institutions, transportation, and automotive are vitally important to the IoT, and vice versa,” says Javier Navarro, partner in charge of Telecommunications at AT Kearney. “Using the IoT will make them more innovative and cost-competitive, creating a huge export opportunity. Furthermore, given their strong global position in these sectors, they can lay the foundation for a European IoT ecosystem. If they leverage what they have learned in terms of uses and solutions, they can become global leaders.”
Policies for a Level Playing Field:
The IoT has the potential to boost Europe’s high-tech industry and improve the competitiveness of its sectors. But as with other technological revolutions in the past, achieving such ambitious goals will require bold moves from policymakers to create the right conditions for IoT development in Europe. Our analysis identifies eight priorities:
1. Liberalizing regulated sectors such as healthcare and basic services like energy and water;
2. Funding and maintaining future large-scale platforms to localize value;
3. Directing public investment toward the IoT;
4. Ensuring Europe plays a key role in standardization
; 5. Protecting privacy while still supporting innovation;
6. Enhancing data security;
7. Supporting investment in telecom networks and promoting universal access to the IoT;
8. Redefining the social contract and supporting labor market transformation.
“The network effect of digital business models should promote the development of new major platforms in the IoT. When this same thing happened during the first wave of the internet, none of the top 20 leading companies were based in Europe, which ceded the spotlight to American and Chinese companies,” comments Javier Navarro. “If this situation were to repeat itself, not only would employment suffer, but also the eurozone's trade balance, as it would be deprived of the R&D funds needed for future innovations. Having internet giants in the EU would offer an unparalleled opportunity to consolidate startup hubs, due to the funding they attract for their new projects.”.
