HALF MOON BAY, Calif. — As a McKinsey analyst, Christopher Thomas is paid to think out of the box. So in this time that is by all accounts the peak of the hype cycle for the Internet of Things, it's no surprise the co-leader of the firm's Asia semiconductor practice is something of an IoT skeptic.
“No analyst is saying IoT will not be huge, but we still have to take that with a grain of salt,” Thomas said at the Industry Strategy Symposium, where nearly every talk was peppered with upbeat references to the emerging Internet of Things. “What if the IoT is smaller or takes longer to arrive than expected?”
A very real challenge is that the IoT is not expected to generate short-term gains. Thomas cited a recent survey in which eight out of 10 C-level executives said they expect the IoT to account for less than 10% of revenue in 2017, and five out of 10 said it would represent less than 5% of revenue.
Another survey suggested the market for consumer IoT products may be narrow. The average annual income of a wearable device user today is a whopping $184,000. Users of smart home devices said their average annual income was $135,000 — miles above the global average household income of $7,000, he said.
All the talk about packing more silicon into tomorrow's connected cars may be missing a coming trend, he suggested. Today's cars are sprinkled with as many as 150 microcontrollers, but they are used inefficiently in distributed subsystems. “As designers restructure vehicles to be autonomous, they will become more efficient, and there will be a silicon integration play as they increase their programming content.”
The widespread hope for the IoT was just one of several assumptions he challenged in a talk that raised interesting questions about the future of smartphones, PCs, and China.
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