Common themes are being seen in the shift from traditional asset-heavy business models in the transition to the Internet of Things (IoT), and this includes comprehending the generated data and applying the insights gained  to add real value.

The interconnection of billions of devices can transform services and processes; moreover, the understanding and translation of the “intelligence” collected can produce “enormous value”, Telkom chief commercial officer Dr Brian Armstrong said this week.

It is believed that the value of IoT can become as large as the economy of the US.

The 250-million connected vehicles, six-billion smartphones, the connection of large machinery, ten-million “connected clothing items” and the connection of millions of home appliances in the next few years would see to this.

Armstrong noted that, compared with the $19-trillion economy of the US, IoT was generally expected to generate some $14-trillion in economic value over the next decade, with other estimations coming in at between $10-trillion and $15-trillion over the next 20 years, $11-trillion by 2025 or $19-trillion – one-quarter in the public sector and the balance in the private sector – in the next ten years.

“It becomes believable that IoT could have as big an impact on global gross domestic product by 2020 as the entire US economy produces in a year,” he said at the Southern Africa Telecommunication Networks and Applications Conference, in George.

Unpacking the IoT industry, Armstrong pointed to the renewed ability to deal with key socioeconomic challenges – education and skills development, a reduction in unemployment as new opportunities are unveiled, a decline in crime with enhanced security measures, an improved health supply chain and rural healthcare and enabling active citizenship.

For citizens, it will mean personalised and customised services, citizen empowerment and convenience and on demand services, while governments can leverage IoT to improve service delivery, promote collaborative public policy processes, improve revenue and reduce costs.

The data that is obtained could also enable the prioritisation of specific needs to address socioeconomic challenges in a relevant manner, such as the digitisation of education and the development of a digital supply chain that ensures children receive adequate access to education.

Similarly, enterprises operating in the new digital world will be able to transform business models, improve market competitiveness and stimulate technology-enabled innovation.

IoT also opens a significant pathway for the development of innovative applications by small, medium-sized and microenterprises.

In addition, it is increasingly capital-easy to launch a start-up with a $5 000 outlay, when compared with some 20 years ago, when it cost some $2-million to start a business.

This is a digital era where it is becoming the “new normal” for asset-light “Internet platform-focused businesses” to reach $1-billion valuations at exponential rates.

Armstrong was citing companies that were connecting resources to people or enterprises and linking supply and demand with zero assets, low marginal costs and little capital invested, with increasingly faster growth trends each year.

Compared with a typical Fortune 500 company, which takes around 20 years to reach its first $1-billion evaluation, it took Google only eight years and Tesla only four years.

Facebook, which generates zero content and is valued at $357-billion, took five years to reach the milestone of a $1-billion valuation.

Uber, owning no fleet and valued at $62.5-billion, took two years to get to its first billion, as did WhatsApp.

Snapchat and Slack both passed the $1-billion mark within one year.

Further, Alibaba, which is valued at $239-billion, has no inventory and Airbnb does not own any real estate, but is worth $30-billion, indicating the value that can be found in the new disruptive business models of the digital era.

However, Armstrong cautioned against complacency in the rapid rise of business, unsustainable growth models and a growth-at-all-costs approach.