The Internet of Things: Sizing up the opportunity

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The semiconductor industry has been able to weather the fallout from the global financial crisis and realize several years of healthy growth in part because of the widespread adoption of smartphones and tablets, which created demand for mobile and wireless applications.
The industry’s average annual growth rate between 2010 and 2013 was about 5 percent. Could the same sort of growth result from widespread adoption of the Internet of Things? Many semiconductor players have been asking themselves just this question.
The Internet of Things refers to the networking of physical objects through the use of embedded sensors, actuators, and other devices that can collect or transmit information about the objects. The data amassed from these devices can then be analyzed to optimize products, services, and operations. Perhaps one of the earliest and best-known applications of such technology has been in the area of energy optimization: sensors deployed across the electricity grid can help utilities remotely monitor energy usage and adjust generation and distribution flows to account for peak times and downtimes. But applications are also being introduced in a number of other industries. Some insurance companies, for example, now offer plans that require drivers to install a sensor in their cars, allowing insurers to base premiums on actual driving behavior rather than projections. And physicians can use the information collected from wireless sensors in their patients’ homes to improve their management of chronic diseases. Through continuous monitoring rather than periodic testing, physicians could reduce their treatment costs by between 10 and 20 percent, according to McKinsey Global Institute research—billions of dollars could be saved in the care of congestive heart failure alone.
This connectivity trend is now recognised as a source of growth for semiconductor players and their customers. Here we consider the opportunities and constraints for components manufacturers.

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