Lessons from the rise of the internet of things in Asia—and beyond

November 7, 2016



How and why APEC businesses are betting on the internet of things.


Like cloud technology before it, the internet of things (IoT) did not immediately strike company leaders as a technology they must invest in or suffer consequences.

That is changing—and the shift is readily apparent among companies operating in countries in the Asia-Pacific Economic Cooperation (APEC). Sensors embedded in oil and gas pumps that send performance data to operations centers and the ability to track a fish from a pond in Java to a plate in a Singapore restaurant are just two examples of the IoT in action. A core set of APEC businesses already receive such information from an ever-expanding network of connected devices. Additional companies in the region will follow the early adopters.

The PwC 2016 APEC CEO Survey shows that over the next three years, more APEC companies expect to implement and expand IoT technologies in an effort to lower operating costs and transform machine data into insights they can use to improve customer experiences and enhance product and service offerings. With IoT in Asia, it’s no longer a matter of if, but when.

When a “legacy” industry has a leg up

Here’s the twist: The typical pattern of industrial or “legacy” sectors struggling to catch up to consumer enterprises—which are usually quicker to ascend the adoption curve—may not apply in the IoT.

Why? Two words: Industry 4.0. Heavy industry has been working with IoT technologies for some time now. After all, connected devices are essentially a modern extension of the manual gauges and indicators that have always been built in to industrial machinery.

Manufacturers and industrial products businesses have the largest numbers of devices and appliances that will need to be digitally upgraded to take advantage of the IIoT—and they also have much to gain. They can take advantage of the IoT lead they have established simply by virtue of being in a sector where machinery must be monitored around the clock.

IC Insights estimates that the market for global sensors and actuators alone—from industrial machine monitoring to smartphones to wearables—will reach $13.4 billion in 2020, up from $10.2 billion in 2015. The automotive and industrial sectors are expected to be the primary drivers of this increase, and these industries have long thrived in Asia-Pacific. Meanwhile, APEC is forecast to capture 56 percent of the sensors and actuators market by 2020, up from 36 percent in 2005. IDC estimates that the market for IoT solutions (including sensors, connectivity, and IT services) is even larger.

Security first

When companies start implementing IoT technologies, they must consider a range of issues—not least of which is security. High-profile IoT attacks like the distributed denial-of-service attack that hobbled the internet in the eastern United States in October are a constant reminder that the IoT’s benefits come with risk.

Business concerns over security vulnerabilities and the lack of common technical standards for data usage to protect privacy and ensure data security are top of mind. One in four APEC CEOs agreed they would be “highly likely” to invest more in IoT if regulations or standards for data security and privacy were the same across the region.


On the path from point solutions to ecosystems

PwC’s survey found that APEC companies today tend to use connected devices as point solutions, collecting and receiving the data they generate for a single purpose, such as early reads on equipment malfunctions, tracking inventory, or connecting their workforce. Not surprisingly, the survey showed that CEOs in Asia view these types of operational, cost-cutting efficiencies as the main return on investment for IoT technologies.

APEC CEOs are laying the groundwork for what IoT will become in the region, home to the world’s established manufacturing centers. These companies will look beyond lowering operational expenditures and will start to innovate in the same ways consumer companies already do, using connected devices to track end-consumer behavior and optimize experiences based on that data—and potentially expand or replace product offerings with services.

For manufacturers and industrial products businesses, connecting products in the industrial internet of things (IIoT) will likely mean getting closer to end users in a way they haven’t been able to before. Industry 4.0 offers industrial companies the chance to forge a direct relationship with consumers because it can shrink the factory floor to “a lot size of one.” For example, an apparel maker can offer customers the option to design exactly what they want in a piece of clothing so it can then produce that custom apparel in near real time.


The APEC CEOs in the financial services, technology, and consumer-facing sectors also expect to create services based on improved customer experiences. These responses signal where IoT systems design is likely heading. Today, applications of IoT are proliferating in electronics, such as thermostats that know you’re in the room, and in retail products, such as athletic clothing that sends biometric data to the cloud for real-time analysis. APEC financial services CEOs, particularly insurance providers, are looking at ways their IoT investments can help mitigate risk.

Technology innovations often originate in Asia, and the IoT is no exception. From streamlining operations to striking out to explore the relatively untested terrain of near-real-time manufacturing, APEC CEOs are bullish about the advantages they could gain from investing in connected devices and using sophisticated analytics to transform that device data into insights about their customers, products, and the state of their industry.

To explore the full extent of APEC CEOs’ current and future IoT technology investments, download the survey.



Chris Curran

Principal and Chief Technologist, PwC US Tel: +1 (214) 754 5055 Email

Vicki Huff Eckert

Global New Business & Innovation Leader Tel: +1 (650) 387 4956 Email

Mark McCaffery

US Technology, Media and Telecommunications (TMT) Leader Tel: +1 (408) 817 4199 Email