McKinsey: Get Ready For Sensor-Driven Business Models  

Posted by Big Gav in ,

Read Write Web has a post on a new report from McKinsey on the "Internet Of Things" concept that Bruce Sterling used to spend a lot of time popularising, focusing on the "new sensor-driven business models" this enables - McKinsey: Get Ready For Sensor-Driven Business Models.

McKinsey sees two categories for emerging applications: "information and analysis" and "automation and control." Many of the applications listed are for large companies or specialized industries (for example automobile manufacturers). But consumers should take note too, because there will be a lot more data about us flowing onto the Internet.

McKinsey defines Internet of Things as "sensors and actuators embedded in physical objects [...] linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet."

In the "information and analysis" category, McKinsey firstly lists tracking behavior. An example is insurance companies installing location sensors in customers' cars, allowing them to base the price of policies on "how a car is driven as well as where it travels." Another example is Tesco's use of sensors to capture shoppers' profile data via membership cards. According to McKinsey, this "can help close purchases by providing additional information or offering discounts at the point of sale."

On the B2B side, McKinsey points to companies using sensors to track RFID tags placed on products moving through supply chains. We've written before about IBM's activities in this market.

The next information and analysis application is enhanced situational awareness. This is when large numbers of sensors are deployed in infrastructure such as roads and buildings, in order to report on real-time environmental conditions such as weather or temperature.

Sensor-driven decision analytics shows how revolutionary sensor technologies could be, without most consumers even realizing it! The report explains that some retailers are presently studying ways to gather and process data from shoppers as they flow through stores. Sensor readings and videos will be able to "note how long they linger at individual displays and record what they ultimately buy," data which McKinsey says "will help to increase revenues by optimizing retail layouts."

The second major category for Internet of Things apps in this report is "automation and control." By this McKinsey means "converting the data and analysis collected through the Internet of Things into instructions that feed back through the network to actuators that in turn modify processes."

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