Opportunity beyond the IoT: Printed electronics and smart systems
The Internet of Things (IoT) continues to garner attention from technology vendors, organizations, business decision makers, and consumers. With connectivity penetrating applications such as wearables, home automation, transportation infrastructure, retail devices, and industrial manufacturing, to name a few, the future seems very bright for a connected world. When faced with the prospect of developing business cases for these connected things, we often limit our thinking to the "widgets" or devices that have connectivity and some level of intelligence or computational capability embedded within them. However, there is a broader opportunity of bringing sensor capability and tracking to "things" that can extend the utility of the IoT beyond the devices to products whose data can provide valuable insights or benefits to businesses and consumers.
Printed electronics technology has the potential to address some of the limitations that electronics currently have today. Recent advances in printed electronics enable basic memory, sensor, logic, display, battery, and communication functionality. Advantages that printed electronics bring include rapid prototyping as well as economical, scalable mass production.
In contrast to printed electronics, new semiconductor fab manufacturing requires extensive capital outlay and focuses on leading-edge technologies. Older, fully amortized semiconductor fabs are being retired as the semiconductor market consolidates and these older fabs become less competitive or products reach their end of life. Wafer capacity for the foundry industry is expected to grow only slightly higher than the revenue growth forecast, 10% for 2014, while semiconductor companies are also carefully rationalizing capacity additions. Forecast capacity growth will primarily support organic growth in microprocessor and memory production, and adding the manufacturing of billions of additional simple integrated circuits (ICs) and connected electronic sensors that would be used in disposable applications could challenge current traditional semiconductor manufacturing capacity. Printed electronics technology offers the potential to address this gap in manufacturing capacity.
The physical characteristics (flexibility, thickness, moisture/environmental resistance) of printed electronics could enable manufacturers, technology vendors, suppliers, distributors, retailers, and consumers to find new ways to solve problems or gain information through distributed sensing and unique identifiers that capture small, but meaningful, pieces of data.
With the market for printed electronics and smart systems in its infancy, the application of printed electronics will evolve from closed-loop (or semi-closed-loop) systems to open-loop systems and additional innovative applications.
Challenges for the printed electronics market
Companies looking to invest in printed electronics and smart systems to create additional value for their goods will have to consider some of the challenges that still exist within this market before making an investment decision. The sections that follow detail some of these challenges.
The cost of conventional NFC tags can range from $0.20 to $0.50 and more per tag. Sensors can add even more to costs. This range is economically viable in some healthcare applications and certain consumer goods, but overall it is not scalable. In some industries, packaging is already a significant cost in a product's overall product price (sometimes 30% to 40% of list price), so adding significant costs, including sensors, is not feasible. After interviewing vendors and suppliers in a variety of markets, IDC believes that printed electronics must significantly reduce the cost of sensors to be viable in industries where sensors are economically infeasible today. If successful, the economics of adoption at the individual package level will become more appealing.
IDC expects that the immediate opportunity for printed electronics resides within a B2B context rather than in B2C applications that directly engage consumers. Once NFC is ubiquitously available in smartphones, it is expected that rapid growth in printed electronics with NFC capability could occur. However, printed electronics and smart systems have an immediate opportunity within certain closed- loop and semi-closed-loop labeling applications in specific markets such as healthcare (i.e., tracking medications to maintain constant temperature) and cold chain and temperature-controlled logistics.
Although NFC tags offer globally unique identification numbers to differentiate one tag from another, the ecosystem needs to develop complete end-to-end solutions that combine printed electronicsbased NFC tags with server-side algorithms that verify the authenticity of products and assign sensor data to the correct label's data record.
Limited Memory Storage
The current memory capacity of printed electronics and related smart systems is limited. Without the use of a complementary identity management system, the functionality of this technology is limited. As printed electronics memory capacity increases, applications will be able to expand their functionality.
More Innovation Required
Many vendors in the printed electronics industry are currently in the technology or product development stages. Integration with sensors or other devices is still in the early stages of prototyping and testing, but some leading-edge printed electronics products are expected to enter production in 2015.
Selling a Business Solution vs. a "Cool" Technology
It's often easy to hype a new technology rather than determine how that technology can provide a business solution to a specific problem. Companies looking to invest in a printed electronics or smart systems solution need to consider the intrinsic value of the technology and how it fits within their technology road map to solve a specific business problem