iot

The Internet of Things

The term ‘Machine to Machine’ (M2M), which in the past has been used to refer to any direct communication between devices, has come to more commonly refer to communication specifically through the Internet of Things (IOT). While in and of itself it does not seem a novel concept, the increasing usage of machine to machine devices has incredible economic and spatial potential.

The specific advantage of M2M is its ability to cut out the middleman, the human element that in most cases today must exist in order for the machines to operate. This would allow a sensor or other data collecting machine to directly transfer its data to a machine that can utilise the data. An example of this occurs whenever you use a wireless network to connect to the internet on your phone. The internet itself is an example of global machine to machine network, which illustrates how far reaching the application of this concept is.

Without getting into the complexities at the forefront of this technology, the concept is being used today by companies worldwide, in all sectors. Given the breadth of its application, forecasts now show that the future of IOT is inextricably linked to the future of the world. According to the Mckinsey global institute’s paper The Internet of Things, IOT and M2M have the potential to expand the global economy by $11.1 trillion by 2025.

This compares to the current value of the global economy estimated to be approximately $80 trillion (nominal), which means that IOT has the potential to increase the value of the global economy by 10% in over just 10 years. We are now on the cusp of a major technological revolution. Forecasting from BI intelligence in 2015 detailing take up of internet devices worldwide shows a growth rate of take up that increases over time, with the main component of growth expected to come from IOT devices.

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It is easy to consider the micro benefits(51) that come to labour efficiency and individual lifestyles as a result of IOT innovations – ubiquitous highspeed internet, driverless vehicles, and autonomous factories amongst others will have a world changing effect on both the firm and the individual; however it is equally important to consider the way in which
these developments may affect the person, firm or family, but how it may impact society and city structure.

The best way to generate a visual take on how things may change is to consider the possibility of a fully automated road network, which has the potential to significantly reduce travel times by streamlining the travel routes of vehicles on the system to minimise traffic. Traffic automation alone is estimated to have a global impact (saving) of between $400m and $800m annually by 2025.

The interplay between these variables and others that will develop as a result of IOT will come to have a massive effect on city structure within the next twenty years, with perhaps its greatest effect being the flexibility it will lend to the future of city planning. The city of the future may not be bound by the requirement for centralised areas or business ‘clustering’ in the same way that it is today thanks primarily to the greater access to amenity and ease of movement that the development of IOT is likely to bring, although ‘face to face’ contact for complex deal making and demand for high density living seem to contradict this trend. This therefore does not mean that the CBD/polycentric city model is completely discarded, but that the future of city shape and structure may come to be determined by an entirely new set of principles centred on techno-urbanisation(52) generating new urban renewal, new spatial patterns of commerce and new techno-fringe city forms of urban and/or environmental living or new growth of regional city networks.

Footnotes:
(51) A micro benefit is the surplus of an action by an actor that the actor experiences itself, conversely a micro benefit is the surplus of an action by an actor that the actor does not experience.
(52) Techno-urbanisation is defined as the process by which areas that are not fully technologically activated (lack of: car automation, ubiquitous high speed internet, fibre
optic cables etc.) are renewed and activated.

[This is an extract from Chapter 9 of Destructive Cities by Brian Haratsis. Click here to purchase a full copy of the book.]


Brian Haratsis

Executive Chairman
E: haratsis@macroplan.com.au
P: 03 9600 0500 
Brian Haratsis is MacroPlan’s Founder and Executive Chairman. Brian is an economist and future strategist with over 30 years’ experience as an advisor to governments and major corporate clients throughout Australia.Brian commands an unparalleled, on-the-ground knowledge of residential markets across Australia, having worked extensively and regularly in all capital cities and key regional markets.
About MacroPlan
MacroPlan’s experienced and qualified economists align their understanding of macro-economic forces with micro-economic variables such as geographic and industrial characteristics, demographics, labour market shifts, resource demand and commercial realities.  Contact Brian Haratsis, Executive Chairman today to discuss your property research requirements.

 

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