Internet of Business speaks to Cisco executive and bestselling author Maciej Kranz about his IoT forecast for 2018.

Maciej Kranz is vice president of strategic innovation at networking giant Cisco and also author of the New York Times bestseller, Building the Internet of Things. It’s fair to say he keeps a pretty watchful eye on IoT developments, which is why Internet of Business was pleased to sit down with Kranz earlier this week and discuss his predictions for 2018.

He’s optimistic about the year ahead. “I think 2018 will be a watershed year for IoT, where we move from a first phase that focused on incremental improvements, to a new phase in which IoT gains momentum as barriers and challenges are addressed, in terms of security market structures, industry standards and so on. We are moving beyond the basics, to an era of more advanced value propositions.”

From that perspective, he adds, IoT in 2018 will be about the transformational impact these technologies can have, “less about hype, and more about business benefit.”

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The IoT year ahead

So what are Kranz’s ten predictions for 2018?

1. IoT devices will converge with artificial intelligence (AI), fog computing and blockchain

The main purpose of IoT devices is to generate data – but that data is only useful when we do something with it, says Kranz. In this respect, three technologies are now gaining in importance, because they will help companies move from IoT initiatives that merely produce incremental gains, to those that create entirely new business models and revenue streams. They are artificial intelligence (AI), fog computing and blockchain.

With huge volumes of real-time and near real-time data now flowing from IoT devices, standard analytics are no longer enough. Sophisticated use cases, such as preventive maintenance applications for vehicles and machinery, call for more in-depth approaches that lead to greater accuracy. “If IoT is the body, AI is the brains,” Kranz explains. Fog (or edge) computing, meanwhile, will help companies overcome the bandwidth challenges of processing huge volumes real-time data, by locating processing power closer to the source of data. And blockchain will provide secure ledgers for IoT-enabled transactions.

2. We will see the rise of co-everything

The IoT is forcing companies large and small to co-innovate and co-develop. From a technology perspective, IoT applications increasingly rely on technologies sourced from a wide range of vendors, says Kranz.

3. The customer will become a co-innovator

Connected products give manufacturers key insights into how they are used by customers throughout their lifetimes. “There’s an opportunity to learn more uses of products, which feeds product development,” says Kranz. “The other aspect of this is that it offers device makers the opportunity to wrap services around products in smart ways.”

Read more: Seven predictions for the Internet of Things in 2017

Standards, security, industries

4. We will see an industry-wide, accelerated move to open standards, open architectures and interoperability

As with many previous technology trends, there’s been an overwhelming lack of standardisation in IoT. Kranz predicts that in 2018, industry standards and consortia will consolidate. “We’re finally starting to see companies recognize that they need to open up architectures and get multiple ecosystems working together,” he says.

5. IoT will become the key security domain

Cyberattacks aren’t going away, but in 2018, Kranz believes that organizations “will finally begin to take IoT security seriously.” High-profile distributed denial of service (DDoS) attacks have served as a huge wake-up call, he says, and we can expect to see a corresponding rise in investment in security, both on the part of IoT device makers and on the part of the consumers and enterprises that deploy them. “There’s a widespread recognition that not enough has been done thus far, so 2018 needs to be a year in which the threat landscape is tackled head-on,” says Kranz.

6. Agriculture and healthcare will emerge as top adopters of IoT technologies with the most innovative use cases

What could be more important than our food and our health? Manufacturing, transportation and smart cities may have led the charge as early adopters, says Kranz, but agriculture and healthcare are quickly emerging as serious contenders, in part because of the serious issues both industries face. Farming, for example, is grappling with challenges around climate change and food safety, while healthcare stands to gain from tackling the health issues around ageing populations and the need for more targeted, patient-specific treatment of conditions such as breast cancer.

Read more: IoT on course to dominate connected landscape, says Cisco

Regulation, analytics, China

7. Governments will become more aggressive in legislating IoT security, open systems and interoperability standards

In 2018, Kranz expects to see the first IoT-specific regulations come into force. “In the US, Europe and other parts of the world, policymakers are stepping in, as they become more aware of IoT challenges. My concern here is that these regulations are not rushed through government without proper engagement with industry. To get the right outcomes, there needs to be close engagement between government and industry.”

8. IoT will revolutionize data analytics

IoT will drive a shift away from batch analytics based on static datasets to dynamic or real-time analytics and streaming data using AI and machine learning, Kranz predicts. “Next year, I expect to see analytics companies widely adopting AI to supplement their product sets.”

9. China will solidify its spot as top IoT innovator and adopter

“We need to recognize that, just as China has emerged as a leader in mobility and payment technologies, it’s also set to emerge as a leader in IoT, too,” says Kranz. For one thing, the government is investing heavily in IoT; for example, through its IoT Special Fund. For another, the huge Chinese population is increasingly an urban one, creating demand for smart cities. Finally, the industries on which the Chinese economy rely need to find new efficiencies to cope with rising wages. “The world needs to pay attention to what China is doing – and learn from it,” says Kranz.

10. The focus of IoT will move from driving efficiency to creating new business value

Early IoT focused on improving existing processes, as seen in early M2M efforts, for example. “They were about squeezing more efficiency and productivity out of existing capabilities,” says Kranz. “Now, where we’re heading is companies using IoT to create new value propositions: in manufacturing, for example, we’re starting to see more mass customization, more mass personalization, creating new products and building new revenue streams based on a stream of intelligent data that drives decision-making.”

Read more: Cisco announces $1 billion smart cities fund