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The Internet of Things has the potential to fundamentally shift the way we interact with our surroundings. The ability to monitor and manage objects in the physical world electronically makes it possible to bring data-driven decision making to new realms of human activity—to optimize the performance of systems and processes, save time for people and businesses, and improve quality of life.

From monitoring machines on the factory floor to tracking the progress of ships at sea, sensors can help companies get far more out of their physical assets—improving the performance of machines, extending their lives, and learning how they could be redesigned to do even more. With wearable devices and portable monitors, the Internet of Things has the potential to dramatically improve health outcomes, particularly in the treatment of chronic diseases such as diabetes that now take an enormous human and economic toll.

Customers will capture most of the benefits. We estimate that the users of IoT (businesses, other organizations, and consumers) could capture 90 percent of the value that IoT applications generate. For example, the value of improved health of chronic disease patients through remote monitoring could be as much as $1.1 trillion per year in 2025.

A dynamic industry is evolving around IoT technology. Like other technology waves, there are opportunities for both incumbents and new players. Digitization blurs the lines between technology companies and other types of companies; makers of industrial machinery, for example, are creating new business models, by using IoT links and data to offer their products as a service.

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Interoperability .

Interoperability between IoT systems is critically important to capturing maximum value; on average, interoperability is required for 40 percent of potential value across IoT applications and by nearly 60 percent in some settings.

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Why B2B

Business-to-business (B2B) applications can create more value than pure consumer applications. While consumer applications such as fitness monitors and self-driving cars attract the most attention and can create significant value, we estimate that B2B uses can generate nearly 70 percent of potential value enabled by IoT.