MIT Tech Review: What did the GE-initiated IoT revolution bring?

In November 2011, General Electric (GE) CEO Jeffrey Immelt announced a $1 billion investment in software development to transform manufacturing. GE, which was the most valuable company on the planet until the early 2000s, fell to 13th place in the market capitalization rankings in March 2017, with a market capitalization of only $260.5 billion, compared to Apple's $753.7 billion. do not have.

The software industry now dominates the industry. GE has long assumed that it knew the most about the materials and physics of jet engines and medical scanners, and that no other company could threaten it with its deep understanding of industrial equipment. But companies like IBM, which excelled in data analysis, began to threaten GE. IBM can now understand under what conditions expensive equipment such as gas turbines can malfunction simply by analyzing data from gauges and vibration monitors.

Software companies like IBM have made their forays into industrial equipment in the form of data analytics. It's a big deal for GE, which has $60 billion in annual sales in its industrial equipment division. Industrial equipment maintenance and operation services are the most profitable, but a variety of software companies are now trying to cut into GE's biggest revenue stream.

In 2012, GE proposed the “Industrial Internet” as a countermeasure.

GE has changed the debate about the future of the Internet. Until 2012, other companies were talking about how to connect cars, human bodies and toasters to the internet. However, manufacturing accounts for a large share of the world's GDP. Immelt knew that "even if you could manage all your home appliances over the internet, the sales from the electronics business would be very small compared to the manufacturing of aircraft and medical equipment."

GE's problem is that it doesn't have access to all the data produced by its industrial equipment. Richard Solay, executive director of the Industrial Internet Consortium, an industry group established by GE in 2013, says that "the lack of ideas for connecting to the Internet to send and receive data" has slowed down the development of the manufacturing industry. Jet engines have hundreds of sensors, but they only take measurements once during takeoff and landing, and once during flight. A few years ago, GE's aviation division finally figured out how to analyze data from take-off to landing in a matter of days. “Believe it or not, we never thought about collecting data until now,” Sorey said.

GE says it's thinking about what to do to improve internet connectivity, use more computers, and add "new behaviors" to its industrial equipment. Bernie Anger, general manager of GE Intelligent Platforms, cites clustered wind farms where turbines work together to adjust the speed of each turbine to match changes in wind speed and direction. "I'm not doing big data analytics to be Google. I want to make a big difference in the manufacturing industry."

However, when you actually try to get the data at the factory, it is said that there will be a connection problem with the equipment. If all devices in the factory were connected by wired LAN, the facility would be cluttered with cables. If you connect over a wireless LAN, a lot of data eats up your bandwidth. GE's "Industrial Internet" is just a "big story" (meta-narrative) that has been put up as a flag, and it is impossible to implement it seriously.

⇒ GE's huge investment to netize the manufacturing industry

IoT exploded into the spotlight when Google acquired Nestlab for $3.2 billion in 2013. Google's staggering sum of money made everyone understand the value of connecting everyday objects to the Internet.

The system that started in Texas in May 2012 is interesting. Austin's municipal power company, Austin Energy, pays usage fees to Nestlab so that during the hot summer when wholesale power prices are Wholesale prices are determined by auctions held between companies based on the balance between supply and demand.In the case of Texas, the supply capacity cannot keep up with the increase in demand for electricity due to population growth. (Supply and demand conditions were tight, and wholesale prices continued to rise).

For electric power companies, such a demand response (demand response) is not to increase the amount of power supply by increasing the number of power plants, etc., but to change the power consumption on the demand side to achieve a stable supply. For example, there are methods such as changing the electricity price for each time period, guiding users to times when the load is low, and paying users according to the power reduction) has long been used as a smart grid. It has been considered a trump card for the realization of a next-generation power grid that optimizes the balance of power supply and demand through communication control. Reducing the supply of electricity during peak usage periods would avoid running costly and polluting backup power plants.

Nestlab thermostats start collecting data once they are installed in a home. It incorporates a motion detector and sensors that measure temperature, humidity, and light intensity, and an algorithm that learns the habits and preferences of residents and sets temperature and electricity usage. The data collection feature is just the beginning. Just as Google used user information as a bargaining tool with web advertisers, Nestlab is also trying to sell new services to electric power companies by taking advantage of the performance of its products.

Around 2012, Austin Energy began paying $85 to smart thermostat users who agreed to remotely control their air conditioning, not just Nestlab. The manufacturer pays $25 when a thermostat user subscribes, plus an additional $15 per thermostat annually.

According to Austin Energy engineer Sarah Talkington, more subscribers to the service are expected to save more than 13MW in demand response. Even if Austin Energy pays a total of $2 million in cash back, it would still be cheaper than building a new natural gas power plant.

⇒Evolved thermostats eliminate the need for power plants

How Alexander Millet, grandson of French international freight forwarding company Logfret and US sales director, books a shipment from China to the United States or from the United States to Europe. is much the same as when his grandfather, Jean-François Millet, founded the company in the 1970s. Leveraging its global network of agents, Logfret has extensive knowledge of the tariffs, taxes, penalties and port requirements of each country, while Millet negotiates prices with trucking companies, airlines and ship owners to We extract favorable conditions and return part of the savings to our customers.

Millet strives to provide customers with a quote within 24 hours, but in the freight industry, it usually takes a few days just to provide a freight estimate. The trillion-dollar global business of shipping goods and raw materials by rail, ship, and air has little in both transparency and speed the wave of computerization and cloudification that other industries have experienced. Meanwhile, well-funded and growing start-ups are pushing to transform the shipping industry.

For example, the online marketplace Freitos (headquartered in Israel), which entered in 2016, has acted as a cargo version of the travel information site Expedia, allowing senders to book online. Looking for a business opportunity, Millet realized that Freitos' fast quotes could be used as a way to find new small business customers. With Freitos, customers can get quotes from multiple carriers in seconds instead of days. Prices are often lower than offline quotes.

⇒There is a huge business opportunity for IoT in the shipping industry, a trillion-dollar industry

Insurers across the US are offering services to help install IoT devices. It has started offering home insurance discounts for those who install Internet-connected devices in their homes. Devices range from humidity sensors to video doorbells.

For example, insurers such as USAA and American Family recently launched bargain sales on tech products. State Farm Insurance, the largest property and casualty insurer in the United States, offers discounts on home insurance premiums if a home security monitor, Canary, is installed.

Liberty Mature Insurance (the second largest property and casualty insurer in the United States) is distributing free Nest Protect fire alarms with a selling price of $99. We offer discounted services.

Such services may promote the spread of smart home appliances, bring about major changes in the insurance business, and change the way homes are managed. In the future, for example, your insurance company may call a plumber before your home's water pipe bursts.

Some insurers want more. It believes that by encouraging customers to bring connected appliances into their homes, it will have a wealth of data that will benefit the company. Data from smart home appliances could be used to make traditional complaint handling operations more efficient while building new relationships with customers. With data provided by customers' homes, insurers could inform customers of home maintenance priorities and act on problems such as water leaks before they cause major damage.

John-Michael Cowall, assistant director of the USAA Innovation Division, says he wants to create something like "an engine warning light for the home." For example, humidity sensor data could allow insurance companies to warn residents when a water pipe is about to burst, or let them know if their kids got home from school on time. Maybe.

In Japan, the role of non-life insurance companies is somewhat different, so overseas cases cannot be used as a reference. However, research is underway to detect danger by monitoring aging water pipes and dams and accumulating data.

⇒Why do American non-life insurance companies discount insurance premiums by installing IoT devices?

In 1992, Hurricane Andrew hit the south coast of Florida, killing dozens and causing more than $25 billion in damage. The storm exposed a serious flaw in the way property and casualty insurers calculate damages from natural disasters. Many insurance companies suffered huge losses in the months following the storm, and some even went bankrupt.

Currently, insurance companies are trying to predict the possibility of cyberattacks from an economic perspective. Lessons can be learned from the 1992 disaster, but unlike natural disasters, it is also a very difficult problem to solve.

Insurers don't know what cyber risk is. It also remains unclear how to establish an insurance structure in which catastrophic losses do not endanger the insurance companies themselves.

⇒Why are non-life insurance companies struggling to commercialize cyber disaster insurance?

It is the botnet that has made it so large that it is impossible to calculate the estimated damage of a cyber attack. Today, the botnet problem is exacerbated by gadgets such as cheap webcams and digital video recorders, which are flooded with "IoT". Low-cost IoT devices typically have low security or no security in mind, allowing hackers to take over the device without much effort. So it's easier than ever to build a giant botnet that can take down multiple sites at the same time.

The most high-profile botnet activity is denial of service (DoS) attacks. Financially motivated groups use DoS attacks for extortion. Political groups also silence unwanted websites with DoS. DoS attacks will certainly become a common tactic in future cyber warfare.

⇒2017 Breakthrough Technology 10: Botnet of Things

The IoT, which GE created to compete with the software industry, goes beyond the network of general consumer equipment and connects the entire industry to streamline economic activities. This has led to the birth of a “botnet of things” that is so influential that the loss cannot be estimated.