THE GEORGE GILDER REPORT

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Our Robot Future

and IoT
In 2008, the internet hit an inflection point.

Globally, this is when the number of devices connected to the internet

surpassed the number of people connected to the internet.

Since then, we have seen a massive increase in the number of connected

devices in the US and overseas.

The internet of things — better known as the IoT — involves deploying over
617 connected devices per second every day. IoT refers to a broad range
of internet-connected devices that are capable of communicating with
other devices and networks.

They can perform a variety of functions but are typically used to gather
information and perform specific actions, whether in the home, at the
office, or in the factory.

This is the general model for new technology emerging at the moment.
We’ve connected essentially all the people in the world onto the internet.
And now, we are connecting things.

But things move. Things are dynamic. And so, to have an internet of
things, we really need a vastly expanded wireless generation, a technolo-
gy — and that’s called 5G.

As you can see from the chart on the following page, no emerging tech-
nology has penetrated the US economy as fast as IoT. In fact, with each
passing second, another 127 devices are connected to the internet.

With some 20 billion devices projected to be connected to the internet

worldwide in 2020, I’ll leave the math to you to see where this is all heading.

This rapid growth is possible because IoT is part of the Telecosm.

As investors, we care about IoT because of its potential to fundamentally

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Technology Adoption
Years Taken Until Adopted By 25% of U.S. Population

IoT

Smart
Phones

Web

Mobile
Phones

PC

Television

Radio

Telephone

Electricity

0 10 20 30 40 50
SOURCE: MARKET REALIST

transform the industrial landscape, not to mention our homes, businesses,

and cities. With the promise of IoT comes the ability to create new busi-
ness models, offer new types of products and services, increase produc-
tivity, and raise living standards around the world.

Especially in the context of the traditional idea of “the factory.”

The 21st Century Factory Floor: 5G and IoT

Stronger Together
Just one of the platforms likely to gain traction in the months ahead is
industrial IoT and factory automation.

Companies like Qualcomm envision a wireless web of robots in an indus-

trial setting operating at close to 100% reliability at blazing fast speeds.

The company supports more than 25 purpose-built and mass-market

platforms for IoT. Qualcomm’s IoT solutions, which are also 5G, give
industrial manufacturers around the world new flexibility and efficiency
they did not have previously.

And that’s just one of the myriad new opportunities for IoT in general, let

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alone Qualcomm’s place in the new world order. The company has nearly
3,000 IoT patents. As of this writing, it’s No. 2 in IoT in patents, globally.
Behind Samsung — but ahead of LG, Huawei, Intel, ZTE, and others.

Not only that, but as Qualcomm partners with Tencent to collaborate on

5G and gaming devices, it is opening the door to the IoT and a plethora of
new connected device markets.

With 5G, near instantaneous, infinite, and omnipresent connectivity will

accelerate the transformation — enabling new applications, new business
models, new industries, new jobs, super powering growth in income and
wealth.

Beyond this, there is the potential to profit from an expansion into billions
of connected devices via industrial IoT.

China In the Driver’s Seat

Consider this: An estimated 4.4 billion people are on the global net today.

My readers will not be surprised to learn that China, with the heaviest
population of citizens connected to the internet in the world, is racing
ahead in IoT.

As the producer, supplier, and end-user of many of the world’s IoT-relat-

ed sensors and devices, China is in the early stages of an internet-driven
industrial transformation the likes of which the world has never seen.

Within the next three years, spending on IoT in China is expected to rise
to $300 billion annually, making it the biggest IoT market in the world.

China sees IoT enabling the development of more intelligent and efficient
production processes, collaborative manufacturing, and cloud manufac-
turing platforms that will enable interconnectivity across the entire value
chain in key industry verticals — like transportation, utilities, health care, and
consumer products.

There are also a host of venture-backed, early-stage IoT companies in

China that are emerging. Last year, China boasted four of the top five
venture-backed IoT companies.

The four companies were Horizon Robotics, which specializes in smart

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devices and surveillance cameras, Huitong Tianxia Wulian Technology

Co., which offers real-time fleet monitoring solutions, and Tuya Smart and
Orbbec 3D, who both focus on smart homes, surveillance, and security.

Increasingly, we are seeing ordinary household appliances (e.g., refriger-

ators, washing machines, thermostats, LED lamps), robots on the factory
floor, automobiles, tractors on the farm, and rigs in the oil fields that are
connected to the internet.

China will certainly be our most valuable resource as these innovative

predictions become reality.

How IoT Will Reshape Industries

Billions of connected devices generate data that IoT applications use to
aggregate, analyze, and deliver insight, which helps drive more informed
decisions and actions.

You see, IoT enables new business models and new applications that
extend beyond what we have seen with the internet.

For example, consider the fact that American manufacturers spend

almost $200 billion on compliance. It costs a great deal of money to keep
in line with economic, environmental, and safety regulations. IoT can be
used to reduce these costs.

The same functionality that lets IoT technologies facilitate compliance is

also helping businesses protect valuable in-field assets.

Connected IoT devices can be deployed to remotely monitor equipment,

track maintenance schedules, and detect malfunction that generates au-
tomated alerts. Employing IoT in such a manner works to mitigate down-
time and losses caused by inefficiency and help prevent full-scale failures
and equipment damage.

These are just a couple of examples. It is early days for IoT. As Qualcomm
acknowledges, its 5G technology is in its infancy, still pregnant with sur-
prise — the hallmark of capitalism and freedom.

But if you’re going to have all the data from heart monitors, automobiles,
and beyond on the internet, can we survive with an internet that had a

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billion breaches last year and has gone for three billion this year?

In the same way that you cannot have an internet of things without 5G,
you cannot have an internet of things and 5G without a new security
architecture for the internet.

And so, I believe against what everybody thinks. A new architecture for the
internet and an internet reboot is about to happen — and it’s going to hap-
pen despite everybody’s resistance to it and constant claims that just a few
more clever patches and post-TAC security solutions are going to create a
secure internet.

Security is not a patch, it’s an architecture. And the unstoppable force of

the internet of things will demand a new era of security and accountability.

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