Manufacturers must learn to behave more like tech firms

The Economist

Nov 21st 2015 | From the print edition

THE best manufacturers used to be the firms that made the best widgets. No longer. As the “internet of things” spreads to the factory floor, products are being packed with ever more sensors and connected to the internet. That is transforming manufacturing—and the mindset that firms need to succeed.

The first shift is from products to services. By one estimate the number of wirelessly connected products in existence (excluding smartphones or computers) will rise from 5 billion today to 21 billion by 2020. The data these products generate are the raw material for new services—from windscreen-wipers whose movement helps produce real-time weather reports, to tennis racquets whose sensors tell you why your backhand isn’t working, or machines that can order a new spare part when it is needed (see article). Such services will often be more profitable than the products they are based on.

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