The following Guest Post was co-written by Nicolas Colin(@Nicolas_Colin), founding partner at TheFamily & Laetitia Vitaud (@VitoLae), teacher (prépa HEC & Sciences Po) and blogger.
Low-cost sensors, increased computer power, wireless connectivity and intelligent software have created new uses and possibilities in energy conservation, public transportation, health care, domotics and food distribution. New “smart” devices equip homes and factories and collect a vast amount of data on how people live and what they do. Connected to one another, these devices can “act as one” and increase efficiency and productivity in cities, factories and homes.
The “internet of things” or “Internet of Everything” (IoE) offers French companies new opportunities to grow to leadership positions and may help France create jobs and boost its economic growth. Numerous French startups have won world fame and a string of prizes at the last Las Vegas Consumer Electronics Show, where Withings unveiled its smart sleep system Aura, Medissimo its iMedipac, a smart pill box, and Netatmo, an intelligent bracelet called June, that tells you when you’ve been exposed to the sun too long.
The French government seems eager to actively support Internet of Everything based activities. Economy Minister Arnaud Montebourg announced in September of last year that 34 “industrial action plans” would be implemented to boost France’s industrial sector (and gross domestic product) by bolstering France’s most competitive and innovative industries. Connected devices were identified as a source of future wealth for the nation and are regularly promoted by the Ministry with special events called « Les objets de la nouvelle France industrielle ». Montebourg’s “New Industrial France” aims to combine the actions of public actors and private companies to help the emergence of future French innovation. Our manufacturing tradition as well as our engineering talents coud largely justify Montebourg’s faith in the future of an IoE industry based in France.
But cool devices do not an industry make. The same week as French startups won prizes in Las Vegas, Google bought Nest for $ 3.2 billion and thus got its giant foot in the door of the domotics market. So far the French have mostly generated prizes and medals while Silicon Valley companies keep piling up billions of dollars.
So the question that one needs to answer is whether of not French companies can turn these assets into industrial power, defined as the capacity to foster national leaders able to harness value worldwide and concentrate it in France. To achieve this, the ability of France’s capital markets to accompany the growth of these innovative companies will be crucial. Connected devices should be regarded as mere outposts to access users’ intimacy, collect data and develop ecosystems of app services. Without this, producers of connected devices and equipment risk putting themselves at the mercy of Google and being forced to continuously squeeze their profit margins to enrich the Silicon Valley, whose industrial giants harness all the value created worldwide.
It is therefore critical France do not ruin its assets by letting them become mere commodities. The Internet of Everything revolution can be divided into three main steps. The first one consists in getting more devices onto the network -which the French have been successful at doing so far. The second is to make these devices rely on one another to coordinate their actions without human interaction. And the third step will happen once connected objects are everywhere and a complete platform system that can be run as a software is wired onto them. Needless to say the last two steps will matter a lot more than the first. The battle over wealth creation is always won by those who have privileged access to the end user and it tends to be a winner-take-all situation.
The media and the public tend to focus more on B-to-C than on B-to-B objects, but the latter may generate as much if not more wealth. The Internet of Everything could transform old and declining physical activities such as manufacturing: in factories where every machine and every room generate information to solve problems on the production line, labor productivity will be raised tremendously.
It could also be a source of significant job creation. It has long been commonly thought that technology creates a need for more highly educated workers. The technology revolution has certainly contributed to further destroying jobs in manufacturing industries. But the IoE economy will likely create jobs for the less educated as the training of workers will be radically changed. Constant feedback loops (which characterize the IoE) make training a lot easier (and cheaper). Simply by using connected equipment, workers will learn more on the job. Increasingly, it will be more justified to hire unskilled workers and just train them. It could be possible to have the advantages of an apprenticeship system built into the very DNA of an IoE-based economy. Job experience will make workers who complement machines increasingly valuable.
Policymakers will have to constantly heed innovation and economic growth when they address the needs for privacy and security in the Internet of Everything, lest they stifle economic activities with excess regulation. Michael Mandel, chief economic strategist of the Progressive Policy Institute, describes the internet of everything as a new wave of technology innovations that can raise US GDP by 2 to 5% by 2025. He believes it can lead to an economy built on production and investment with more education and training “built right into the fabric of the economy rather than separated out”. If our companies and public officials aren’t too far off the mark, the same could be true for France.
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