In part 1 of our discussion with Scott MacDonald, co-founder of McRock Capital, the first venture capital fund focused exclusively on the Industrial Internet of Things (IIoT), we talk about the differences between the consumer and industrial Internet of Things (IoT). Stay tuned for further highlights of our conversation with Scott, which covered the IIoT landscape and what stage it’s in; misconceptions and challenges of the IIoT; opportunities and who’s succeeding in this emerging industry; and what to expect from the 2014 McRock IIoT Symposium.
Wendy Toth: How do you define the difference between the consumer and the industrial IoT?
Scott MacDonald: The consumer IoT is about connecting devices to people. Prime examples are the Nest thermostat; August Smart Lock, where you use your phone to control entry to your front door; and FitBit and other wearable devices. The industrial IoT happens in industrial markets, such as oil and gas, building energy management, advanced manufacturing, and infrastructure, including water networks and power grid automation.
The IIoT is about machine-to-machine (M2M) connectivity and software analytics and all the value that comes out of it, from non-consumer devices. In general, the industrial areas are ripe for sensors and analytics that lead to smarter decisions and increased efficiency.
TOTH: There’s a lot more talk about consumer IoT applications than about industrial IoT applications. Why is that the case?
MACDONALD: Think about going to a cocktail party. On one side of the room, a group of people is talking about thermostats you can program from your phone, or bracelets that tell you how many calories you burned and your oxygen consumption during your workout that day. Across the room, someone else (probably me) is talking about substation automation. Which conversation will sound more sexy?
Still, if people understood the potential for IIoT markets, their perspective might change.
TOTH: Do you think the huge popularity and emphasis on companies like Nest is helpful or harmful for helping people understand the IIoT potential?
MACDONALD: I think Nest has been very positive for the industrial side—as long as you don’t get caught up in the valuations and associated hype, which are incredibly lofty for a thermostat. But Nest and similar products are important for causing a spark of interest, and to show that these types of connecting devices have real potential.
Cisco put the difference in potential into perspective recently by saying that there are about 2 billion people already connected to the Internet, which is a huge number. But when you think about the 50 billion devices soon expected to make up the IIoT, it’s just massive what has to happen for all those connections to take place. And a large number of those devices will be located in industrial settings.
TOTH: Are there technological differences between the consumer and industrial IoT?
MACDONALD: Lots of the underlying technologies are similar. As for technology adoption, consumer markets always lead compared to industrial spaces.
TOTH: Are there any technologies of particular significance in the IIoT?
MACDONALD: Cloud computing is so important to the IIoT space. It’s really everything—how you compute data from any device, how you do it economically. Companies no longer have to scale up huge IT infrastructures. They can rent what they need as their business grows.
People don’t understand the magnitude and importance of cloud computing for the IIoT. We’re talking about shifting the fundamental economics of trillion-dollar markets. It doesn’t get much more exciting or worthwhile than that!
IIoT Talks is a conversation between industry luminaries and Echelon Corporation about the opportunities of the Industrial Internet of Things (IIOT) market. Echelon's Chief Marketing Officer, Wendy Toth, will share highlights of these conversations via the company blog. If you are interested in participating, please send an email to [email protected].