The Internet of Things Looks Like Big Business

Stephen DeAngelis

July 22, 2013

The world changed forever when people started connecting over the Internet. The world is going to change again as billions of devices and machines start connecting over what is being called “The Internet of Things” (IoT). Brian Proffitt writes, “The rise of the Internet of Things means billions of physical objects will soon generate massive amounts of data 24 hours a day. Not only will this make traditional search methods nearly impossible to use, it will also create an environment where instead of looking for things in the world, those things will be seeking us out to give us all sorts of information that will help us fix, use or buy them.” [“How The Internet Of Things Will Revolutionize Search,” readwrite, 26 April 2013] Proffitt continues:

“When talking about the Internet of Things, it is important to get past the hype and explain exactly what it is: vast numbers of automated physical devices and objects connected to the Internet. These devices are usually routers, switches, phones … but increasingly devices like security cameras and remote climate sensors are being added — and over time we can expect everything from cars to refrigerators to join the party.”

Kenton Williston notes that as “embedded systems grow increasingly interconnected, fragmentation is becoming a major problem.” He reports that Intel is trying to solve the problem “with a set of interoperable solutions that can scale across applications. The framework brings together hardware, OSs, and software for connectivity, security, manageability.” [“Intel Intelligent Systems Framework Simplifies ‘Internet of Things’,” Intel Embedded Community, 11 September 2012]

 

Although the Internet of Things seems to be the name with the greatest degree of stickiness, it has been referred to by other names as well. Early this century, for example, my friend Thomas P.M. Barnett predicted its rise and called it the “Evernet.” Others prefer the term “Internet of Everything” (IoE). General Electric (GE) prefers the term “Industrial Internet” since it will primarily connect machines. For more background, read my post entitled Machine-to-Machine Communication. GE also believes that the Industrial Internet is going to be good for business. “GE believes the Industrial Internet will spur accelerated economic productivity, potentially boosting GDP by an average of $4,600 to $7,000 per person in the U.S.” [“‘Industrial Internet’ Could Boost GDP $2 Trillion by 2020,” by Patrick Brogan, USTelecom, 14 June 2013] Brogan reports that a study released by GE last November concluded, “The ‘Industrial Internet,’ the growing network of machines and sensors across all sectors of the economy linked through Internet communications networks, could add an estimated $1.5 trillion to $2.3 trillion to annual U.S. Gross Domestic Product (GDP) by 2020.”

 

General Electric isn’t the only company that sees a big future for the Internet of Things. “The value at stake for the ‘Internet of Everything’ is $14.4 trillion that businesses and customers can capture in the next decade, according to Cisco. In other terms, Cisco is projecting that the Internet of Everything has the potential to grow global corporate profits by 21 percent in aggregate by 2022.” [“Cisco: ‘Internet of Everything’ to yield $14.4 trillion in value,” by Rachel King, CNET, 13 March 2013] At a Cisco-sponsored conference, Rob Lloyd, the company’s president of sales and development, told the audience “that 99 percent of electronics in the world today still aren’t connected to the Internet.” King continues:

“The next step, therefore, is the Internet of Everything in which those devices will be brought online. ‘If you look at those business imperatives and think of them in the context of those major technology trends, there is an entirely new role of IT coming out,’ Lloyd said. ‘The role of the network is critical to unlock these major market trends.’ For the Internet of Everything, Lloyd said that means taking people, process, data — all the things done so far in connecting the first 10 billion connected devices — to unlock capabilities we haven’t seen yet.”

Brogan points out that most of the technologies required to make the Internet of Things a reality already exist. They include, radio frequency identification (RFID) sensors, real-time data analytics, cloud computing, machine-to-machine communications, mobility, and visualization of data. King reports that Cisco believes the Internet of Things will probably be implemented vertically before being connected horizontally. She writes:

“Cisco believes that there are at least seven verticals that will move more quickly, starting with manufacturing followed by the public sector, energy/utilities, health care, finance/insurance, transportation, and wholesale/distribution. But Lloyd stipulated that the Internet of Everything will be driven by business funding — not IT funding — as we embrace consumer devices (aka bring your own device, or BYOD), the cloud, and data analytics to drive insights. Cisco’s chief strategy and technical officer, Padmasree Warrior, explained further, asserting that the next decade of work will be about making all of these processes more efficient. For the network, Warrior outlined some of the technology implications, asserting that networks need to be more programmable, automated, dynamic, aware, agile, and secure in the face of a growing ‘app-based economy’. ‘The network needs to be much more orchestrated rather than just being configurable,’ Warrior added. Warrior also reflected that the discussion — at least around big data — is finally moving from data collection to data usage.”

Once a robust Internet of Things is developed, pundits imagine all sorts of things will become possible. Bob Violino writes, “The most common examples are smart cars, IP-addressable washing machines and Internet-connected nanny cams.” [“The Internet of Things: Coming to a network near you,” Network World, 22 April 2013] Tom Soroka, Vice President for Engineering and Technology at USTelecom, sees huge potential in the industrial sector. “When we marry the power of a global Internet with the power of global industry,” he writes, “one can just imagine the massive potential of an industrial-grade network built just for the purpose of developing, manufacturing, ordering, delivering and operating commerce around the world.” [“Explaining the Industrial Internet,” USTelecom Newsletter, subscription required] Proffitt envisions the day when the IoT will schedule maintenance work and direct customers to RFID tagged products. He writes:

“This world is not far off. Smartphones and other mobile devices can already tap into public search engines to discover more about the world around them. You can use augmented reality to see results displayed graphically on device screens. As more and more objects join the Internet, they’ll create information that will be added to the potential data you can receive, raising the level of information available by orders of magnitude. This will be both a boon (more data to help make decisions) and a curse (so much data you could drown).”

Analysts at ABI Research agree that M2M networks and services are going to prove to be “golden eggs” of profitability for those who master the domain. However, they have found “porous security is exposing vulnerabilities in a large number of use-case scenarios” and that vulnerability threatens to slow the growth of the Internet of Things. [“Machine-to-Machine Application Market Grows, But Poor Security Is Major Issue, Report Finds,” SupplyChainBrain, 13 February 2013] The analysts argue, “The horizontal evolution of M2M will require full end-to-end security. Significant efforts need to be invested into M2M application security in order for the M2M market to fully evolve. Whether this is through open source initiatives or standards development, the demand for increased M2M application security will have to be answered, and sooner rather than later.”

 

Most analysts, however, are convinced that the Internet of Things will come about and that it will be big business. Earlier this year, Cisco CEO and chairman John Chambers, stated, “I believe that businesses and industries that quickly harness the benefits of the Internet of Everything will be rewarded with a larger share of that increased profitability. This will happen at the expense of those that wait or don’t adapt effectively. That’s why the value is ‘at stake’ – it’s truly up for grabs.” [“Economic impact of the ‘Internet of Everything’ will be US$14trn – Cisco’s Chambers,” by John Kennedy, Silicon Republic, 19 February 2013]

 

The U.S. Telecom Association expects its members to get a share of the trillions of dollars at stake. Brogan explains, “Central to this operation are the broadband networks that link machines and sensors together, connecting data centers hosting computers that collect data, process it into actionable information, and display the information in usable formats to end users or connected machines. To keep this system running, fiber-optic networks and systems will need to be built, and large quantities of routers and switches will need to be deployed.” Obviously, there are still hurdles to be jumped and challenges to be met before a full-fledged Internet of Things emerges. The biggest players, however, are already involved and it won’t be long before the Internet of Things is much larger than the Internet/World Wide Web used to connect humans.