McKinsey, GSA study IoT challenges

May 19, 2015

The rollout of the IoT is fraught with challenges—from the technical to the legal. Technical challenges, described here, stem from the need of billions of smart devices incorporating microprocessors as well as mixed-signal and RF circuitry to operate on low power while being able to communicate over wireless interfaces complying with multiple standards. Legal issues, as outlined here, involve factors such as data ownership and confidentiality.

Now, McKinsey & Company and the Global Semiconductor Alliance (GSA) have teamed up to study the implications of the IoT for the semiconductor industry and the economy as a whole. The study involved interviews with 30 GSA member company senior executives in the semiconductor as well as adjacent industries plus surveys of 229 semiconductor executives at GSA member companies.

The study defined the IoT as “…a network containing all ‘smart’ devices with some sort of sensing mechanism that can communicate via the Internet with other smart devices or the cloud, without human interaction.”

The survey found that 48% of respondents believed the IoT would be one of the top three semiconductor industry growth drivers, with 17% ranking it first. To succeed, though, the IoT will need solid technology, a strong market, and a suitable ecosystem.

The study reports on six verticals: wearables, smart homes, medical electronics, industrial automation, connected cars, and smart cities.

Wearables fare well at this point, according to the study, with solid technology and a well developed ecosystem. Medical electronics needs work in all three areas:

  • Technology requires further development of chemical sensors and miniaturized implants.
  • The market requires work from a regulations and security standpoint.
  • Hospitals lack a well developed ecosystem/infrastructure to make use of IoT devices.

Across all application areas, the report cites a lack of consistency in connectivity standards, with Wi-Fi, 4G LTE, Bluetooth, ZigBee, and others all playing a role—offering tradeoffs among range, power consumption, and data rates. Consequently, the report recommends, “Given the current uncertainty, semiconductor players should pursue a hedging strategy—in other words, focusing on selected standards that are likely to gain widespread acceptance but planning for alternative scenarios.”

And finally, the study found that many GSA members believe they must move beyond a focus on silicon to embrace software, security, and systems integration.

You can read an executive summary of the McKinsey and GSA research here.

About the Author

Rick Nelson | Contributing Editor

Rick is currently Contributing Technical Editor. He was Executive Editor for EE in 2011-2018. Previously he served on several publications, including EDN and Vision Systems Design, and has received awards for signed editorials from the American Society of Business Publication Editors. He began as a design engineer at General Electric and Litton Industries and earned a BSEE degree from Penn State.

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