Believe it or not the Internet of Things isn't an idea that's years away, it's here now, and it's already transforming how companies do business. Over the coming years, the Internet of Things (IoT) will only grow bigger, incorporating more industries and changing the way we do business and experience life.
So, how exactly is IoT changing the game? We need to look no further than healthcare, transportation, and the public sector for our answer.
Connecting our health to the Internet
Microsoft (NASDAQ:MSFT) already has Internet of Things-based software to connect medical devices to the Internet for remote monitoring and diagnosing. Healthcare IoT systems help companies cut down on patient wait times and increase the time they spend with doctors. They also allow companies to reduce the time it takes to diagnose medial equipment problems, which in turn reduces costs.
Why does this matter? Because the average American employee spends about $4,823 on healthcare coverage every year, and the total U.S. spending on health is expected to reach $4 trillion by next year -- 20% of nation's GDP. It's no guarantee IoT healthcare systems will lower premium costs for Americans, but it could be a step in the right direction. General Electric (NYSE:GE) estimates that if the healthcare industry improves its efficiency by just 1% using IoT, it could save $63 billion over 15 years.
But healthcare IoT is more than just efficient software and devices. Google is (NASDAQ:GOOG) (NASDAQ:GOOGL) working on nanoparticles that enter the bloodstream and alert patients and doctors of impending heart attacks and strokes, or even to identify cancer.
These nanoparticles enter the body through a pill, then use light or radio waves to send back biochemistry information to a wrist-worn device for diagnoses. While this system won't be available any time soon, it represents the type of IoT possibilities that could save lives and cut costs.
Public sector management
In the public sector, cities are looking to the Internet of Things to save energy and money, and more easily manage municipal systems. Sierra Wireless (NASDAQ:SWIR) supplies wireless modules for connected lights in Prague, London, and Rotterdam. These IoT lights allow the cities to remotely control lighting in specific parts of the city, manage outages, and collect valuable data. In many ways, Sierra's leading the IoT and machine-to-machine revolution, as the company makes up 34% of all embedded wireless modules worldwide.
San Diego tapped Intel earlier this year to help create a connected city environment, using sensors to monitor air pollution, increase traffic flow, and improve water quality. Chicago recently jumped on the smart city bandwagon and is adding sensors around the city to collect data. Meanwhile, China already has 219 cities signed up for smart city programs and uses sensors to monitor streetlights, sewer covers, and noise pollution.
Cisco Systems estimates cities will generate about two-thirds of IoT civilian benefits, and the company expects the Internet of Things to save the public sector $4.6 trillion over the next 10 years.
Moving transportation ahead
The National Highway Traffic Safety Administration (NHTSA) proposed new rule standards a few months ago that would make future vehicles required to communicate with each other on the road. This vehicle-to-vehicle (V2V) communication would ultimately allow cars to tell each other how fast they're going, where they are in relation to each other, and in what direction they're likely to move in.
For now, the NHTSA is considering V2V requirements where cars gather information from each and determine whether its safe to turn left in front of traffic, or enter an intersection. The agency calls these communications Left Turn Assist and Intersection Movement Assist, and believes they could prevent 592,000 traffic accidents and save more than 1,000 lives every year. This would require wireless communication devices embedded in cars, along with new sensors to collect data.
One company already using a massive amount of sensor data is General Electric. The company uses low-cost sensors to track fuel flow, oil pressure, air temperature, vibrations, and other things in its jet engines. As a result, GE can anticipate and fix problems before they happen. Sticking with its "power of 1%" campaign, the company says a jet fuel savings of 1% would equal $3 billion in savings for its airline customers.
In a similar way, CalAmp is saving companies money by tracking industrial assets. The company's wireless routers keep track of Caterpillar's large industrial equipment and report potential problems before they become major issues.
Though IoT innovations are already moving ahead quickly, we're still at the early stages of what the Internet of Things has to offer. There are plenty of other industries already being changed by IoT, and more are sure to be upended in the near future.
Big companies like GE have their own focus in IoT (through software and data management), while smaller companies like Sierra Wireless are building niches around hardware. I think investors need to take hard look at the smaller companies that have lots to gain in the IoT spectrum. Research firm IDC expects the Internet of Things' worldwide market to be worth $7.1 trillion by 2020. With IoT already changing how companies do business, the time for investing in these new technologies is now.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, CalAmp, Google (A shares), Google (C shares), Intel, and Sierra Wireless. The Motley Fool owns shares of Apple, General Electric Company, Google (A shares), Google (C shares), Intel, Microsoft, and Sierra Wireless. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.