The Internet of Things and Industry 4.0
In 2012, Stephan Ferber, Bosch Software Innovations‘ VP of portfolio strategy, described how the Internet of Things, or the fourth industrial revolution, will drastically improve everything from engineering to life-cycle management. “By connecting machines, warehousing systems, and goods, we can create smart production systems that basically control each other without requiring any manual intervention,” he wrote. Deutsche Telekom and SAP recently said they are partnering to develop new standards for Industry 4.0, “giving Germany’s local manufacturing industry a much needed boost in advancing technologies, innovation and IoT-related infrastructure.” That is a timely reminder of the pivotal importance of the Internet of Things in the history of technological transformation.
New Industrial Revolution or Not?
The various technological waves throughout history are well known: The first industrial revolution, powered by the steam engine, started around the mid-eighteenth century. The second revolution, lighted up by electricity, can be traced back to the end of the nineteenth century. The first commercial uses of computers marked the third industrial revolution, ignited in the 1960s.
However, Robert Gordon, a professor of social sciences at Northwestern University, in thought-provoking essays in 2012 and 2014, argued that “technological change is slowing down, not speeding up.”
Careful of not stepping “into the trap of predicting that innovation will come to an end,” he nevertheless wonders about the limited impact of the latest inventions, e.g., “the marginal utility of a wrist device compared to the existing smartphone sinks into the insignificance of small things.”
In essence, Gordon does not envision a fourth industrial revolution, at least in the near future. He believes “attention in the past decade has focused not on labor-saving innovation, but rather on a succession of entertainment and communication devices that do the same things as we could do before, but now in smaller and more convenient packages… These innovations were enthusiastically adopted, but they provided new opportunities for consumption on the job and in leisure hours rather than a continuation of the historical tradition of replacing human labor with machines.”
(Gordon is not the only skeptic around. See, for example, the current debate among economists on secular stagnation and highlighted at the last annual meeting of the American Economic Association, held last January).
And yet, there is this enthusiastic, steadfast belief in an impeding fourth industrial revolution (Industry 4.0) brought about by the Internet of Things!
In order to understand the potential revolutionary force of the Internet of Things, we need to grasp what it is and what makes it so important that in some countries, such as China and Germany, it has risen to a national priority. German Chancellor Angela Merkel, at the national IT Summit in Hamburg in October 2014, was unabashedly clear: “Connecting digital technologies with industrial products and logistics—Industry 4.0—Germany has a chance at taking the lead,” she said.
What Is the Internet of Things?
Nicholas Carr, who has written extensively on the dangers of automation, describes the excitement surrounding the early vision of the Internet of Things in his 2014 book The Glass Cage—Automation and Us: “In the 1990s, just as the dot-com bubble was beginning to inflate, there was much excited talk about ‘ubiquitous computing.’ Soon, pundits assured us, microchips would be everywhere – embedded in factory machinery and warehouse shelving, affixed to the walls of offices and shops and homes, buried in the ground and floating in the air, installed in consumer goods and woven into clothing, even swimming around in our bodies. Equipped with sensors and transceivers, the tiny computers would measure every variable imaginable, from metal fatigue to soil temperature to blood sugar, and they’d send their readings via the internet, to data-processing centers, where bigger computers would crunch the numbers and output instructions for keeping everything in spec and in sync.”
Commenting on the manufacturers that are “hoping to spearhead the creation of an ‘internet of things’ and “rushing to develop standards for sharing the resulting data,” Carr adds, “even the faintest of the world’s twitches and tremblings are being recorded as streams of binary digits.”
On the Cusp of a New Paradigm
Whereas the “Internet of People” is well accepted and intuitively understood—after all, at its very beginning, the Internet was designed for people and was envisioned as “a globally interconnected set of computers through which everyone could quickly access data and programs from any site”—this is not the case for the Internet of Things, which offers new challenges.
Some solutions (in the home, for instance) deemed to reside in the Internet of Things do not use the Internet, and there is not a unique definition for the “things” that interface with the physical world at the border of the Internet of Things. Also, very importantly, there is not an Internet solely dedicated to things (at least for the time being). Therefore, the term “Internet of Things” is best understood as an image, a telling picture of a radical change. It is not, as such, a new science or technology.
Since things can communicate between themselves or with people, the Internet of Things is more or less composed of two subsets: 1) the Industrial Internet of Things or enterprise IoT, (or machine-to-machine [M2M] communications), for which there is no or limited human interaction, and 2) the Consumer Internet of Things, for which human interaction is central to the solution. The delineation between the two, which have a codependent relationship, is helpful since the issues, purpose and scope are different. The Industrial IoT (M2M) has been around for quite some time and is a critical enabler of the Consumer IoT.
However, a definition is no substitute for an explanation.
The sheer massive number of the new denizens in the communications space certainly hints at a revolution, but there is more. The Internet of Things will transform the dimensions of the economy and society on a scale not experienced before. Nothing will be forever fixed. Inert will become active; delayed, instantaneous; offline, online; and static, dynamic. The IoT will give rise to a pulsating environment.
How will the world evolve if everything manufactured contains a reachable Internet Protocol (IP) address and intelligence capabilities? What if devices of any shape or form can be universally and remotely measured, monitored, tracked and controlled? What then will happen to traffic congestion, pollution, health, safety, infrastructure integrity and overall operational efficiency? How will production and consumption cycles be impacted?
As enthusiasm grows, so do concerns.
Utopia or Dystopia?
The European Union and the United States have projects and initiatives to comprehend and harness the rising security and privacy issues. The U.S. Federal Trade Commission (FTC) announced in March the creation of an Office of Technology Research and Investigation, that will probe IoT technologies related to all facets of the FTC’s consumer protection mission. Also this year, Congress launched an Internet of Things Caucus; the Senate Committee on Commerce, Science, and Transportation committee held a hearing on the IoT; and the Senate unanimously approved a resolution calling for “the Internet of Things to promote economic growth and greater consumer empowerment.”
How the IoT will play out in the labor market is also very much a matter of debate. Are the skills and education necessary for the implementation of the Internet of Things readily available? Will the IoT induce a net gain of jobs, or will it reduce employment in the long run and generate technological unemployment? In 2013, research conducted by Carl Benedikt Frey and Michael A. Osborne at the University of Oxford provided a dismal view of the impact of computerization on 702 occupations in the United States, estimating that 47 percent of total U.S. employment is at risk.
In his 2014 article, Gordon cites “a contradiction between the actual macro data on productivity growth and the techno-optimists’ predictions of accelerating growth.” At the very least, he says, the uprising of a new industrial wave is not self-evident, and we must be cautious in trying to chronicle the stages of a revolution foretold.
However, groundbreaking innovations with far-reaching repercussions can erupt unexpectedly. The introduction of the HP35 calculator in the 1972-’75 timeframe precipitated the demise of the well-entrenched slide rule industry. The destruction was so complete that the slide rule rapidly became a relic. In 1976, the final slide rule made by K&E was donated to the Smithsonian Institution.
At the core of the Internet of Things is a complete transformation of society’s production and consumption processes. It is a fertile new field whose crop is yet to be known, let alone harvested. The development of Industry 4.0 leans heavily on so-called cyber-physical systems or CPS—that is, the tight integration of physical, computation and communication processes into a seamlessly orchestrated production-consumption continuum. This is an ambitious project, a novel disrupting approach that might stretch out over several generations.
New ecosystems will spring up. Some jobs will disappear, while others will be created. Marketing will be reshaped by IoT technologies. Old business models will become irrelevant. Along the way, training and education adapted to the emerging IoT landscape will need to facilitate and support the move from the old to the new.
Time and effort will have to be directed toward promoting the benefits of the Internet of Things while insulating society from its misuse—for example, the implementation of acceptable and effective levels of security and privacy. New laws and regulations, including the development and use of standards, are needed to protect fundamental individual rights and, at the same time, safeguard the road to entrepreneurial creativity and innovation.
These non-trivial long-term challenges, issues, risks and uncertainties will take time to be thoroughly researched, understood and addressed. The Internet of Things is for the long haul. The secular transformation molded by the IoT will be marked by incandescent thinking, daring enterprise and rebelling invention. It is already underway.
Alain Louchez is the managing director of the Center for the Development and Application of Internet of Things Technologies (CDAIT) at the Georgia Institute of Technology. The views and opinions expressed are of the author and do not necessarily represent the position of Georgia Tech, the University System of Georgia or the State of Georgia.