MONEY

Everything will be connected to the Internet

Regular readers of this space know I’m an engineer wannabe, so forgive me for writing a column not about what to do with your money today, but about the technology of tomorrow.

In January, I attended the World Economic Forum in Davos, Switzerland.

Much of the talk among economists and business leaders focused on austerity, inequality, and other anxiety inducers. There was, however, a set of more optimistic conversations going on that can be summed up in three vowels: IoE, or the Internet of Everything.

Networking giant Cisco Systems CISCO SYSTEMS INC. CSCO 0.5634% estimates that in 2000 there were about 200 million “things,” mostly computers, connected via the Internet. Now the number is about 10 billion, from smartphones to climate-control systems to sensors on truck pallets.

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As cloud storage, mobile computing, and data analysis expand, Cisco CEO John Chambers argued at Davos, we’ll experience an even bigger transition in how many “things” are connected to the Internet — nearly everything — and in how they work.

Imagine a city water system that detects leaks, redirects flow, and dispatches a repair crew; or smart clothing that monitors a heart patient and talks to his doctors; or a congestion, accident, and weather-monitoring system that connects all the cars on or approaching an interstate.

Cisco, of course, promotes IoE because it builds what connects “things” to the Internet, but chip manufacturer Qualcomm QUALCOMM INC. QCOM 0.2371% , industrial giant GE GENERAL ELECTRIC CO. GE -0.1153% , and Cerner CERNER CORP. CERN 1.1579% , a leader in health care automation, are among those that say universal connectivity is crucial to the future.

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Take medical records. Cerner chairman and CEO Neal Patterson, in recent testimony before a federal advisory panel, argued that while patients may have access via the web, they can’t be expected to manage the data flow among providers. What’s really needed, he maintained, is a system for consumers “to automatically feed all of their health information to the organization accountable for their health and care… a model we think is much more realistic in the next five to 10 years.”

At Davos, Cisco released a study that attached a dollar figure to IoE: $14.4 trillion. That’s the “value at stake” for business over the next 10 years in lower costs, higher growth, or revenue captured from competitors.

I can’t tell you now which companies will do the capturing, but let me leave you with two thoughts.

First, businesses that fail to capitalize on IoE will fall behind.

Second, Cisco estimates that a quarter of IoE’s benefit will come from improved “customer experience.” For example, a retailer you like might gain a bigger share of your spending, or get you to spend more, by analyzing your purchase history from multiple sources and then customizing its offers. Keep that in mind, lest IoE comes to mean “Increases Our Expenses.”

Ali Velshi is the chief business correspondent for CNN and the host of Your Money.

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