The Making and Breaking of the Internet of Things

2014 will go down in history as the year when the Internet of Things (IoT) hype peaked. Thus the interesting question becomes what will happen next? Will IoT follow the usual pattern of a set-back due to overinflated expectations, only to return later as a widely adopted part of our lives? Or will IoT be the exception that goes directly from hype to use?

I actually think it will do both. Or to be more precise I believe we will see two distinct developments for different halves of the IoT spectrum.

Breaking it in industry

Let’s not forget where all this began. The grandfather of today’s Internet of Things is RFID. One of the first mentions (if not the first one) of “Internet of Things” was by Kevin Ashton in 1999. Kevin was talking to Procter & Gamble (P&G) about using RFID in their supply chain. The supply chain scenario is still around—only today we add sensors such as temperature and humidity into the mix and voila, the shipping container can tell use if the fruit it is carrying has been spoilt during transit.

Supply chain is certainly not the only industrial application scenario for IoT. Some of the ones I believe will have long term potential include:

• Preventive maintenance/predictive servicing. This is when the assets out there—from the escalator in the mall to the boiler in your home—start reporting sensor readings to your service provider, and as by miracle the repair man turns up the day before it breaks down.
• Geo fencing. Think about all the stuff that “goes missing” from construction sites, or gets lost around bigger facilities like airports and hospitals. Surely it would be nice to know where stuff is, and get an alarm if it is removed from where it is supposed to be?
• Product development. Where IT companies often have decent knowledge about how we all use their products, traditional manufacturers know very little. They can go and ask a sample of the customers how their products are used, but that is very different from knowing exactly the usage patterns and external factors that all your products are exposed to. Having this knowledge should allow for product optimization as well as inspire product innovation.

As much as I see the potential in all of these, I believe that widespread use of IoT for industrial scenarios will be a long time coming, just like widespread use of RFID still has not happened. I am not talking a couple of year here, but a couple of decades. Here are three reasons why:

1. Lack of standardization. In your living room you might have a TV, a receiver, a blue ray player, a gaming console and so on. Each one comes with its own remote control. If you think that is frustrating, now think about the average factory. There are machines, pumps, electronics, air filters, trucks, levers, conveyers etc. from hundreds of different suppliers. What if each one of these came with its own “remote control”, all using different technologies to communicate, all using different software to monitor and control? On a global scale there are millions of makers of “things”. Despite some, at least on paper, good initiatives like the Industrial Internet Consortium it will take a very long time to gather enough body behind any standard. If it happens at all.
2. We are talking about long-lived products. Unlike your smartphone that gets replaced every couple of years, that escalator in the mall doesn’t. Nor does the boiler in your house. Consequently if we are to wait until all the world’s malls have replaced their current escalators with new “connected and smart” ones, we are probably waiting half a century or so. For IoT to succeed with long-lived products there has to be a massive wave of retrofitting smart stuff onto old equipment. That will take time. A lot of time.
3. There is no dominant eco system. Should the industrial IoT revolution be driven by industrial equipment manufacturers like SKF and Grundfors, or by communications providers like Cisco and Ericsson, or by software vendors like Microsoft, Oracle and Google (that recently acquired Nest who makes sensors for homes)? Nobody knows the answer to this and none of these players has enough of an eco-system “in the other camp” to set an industry standard in lieu of proper standards.

I am not dismissing IoT in the industry completely. On the contrary, there are many scenarios that offer real business value, and here at IFS we are already looking into a couple.  And I am sure we will see some high profile success stories already in 2014. However some early success stories do not IoT-transform the world’s industry over night. That will, as surely as it will happen, take decades.

Making it in consumer wearables

In stark contrast to industrial applications for IoT stand consumer gadgets and more specifically, wearables. All the reasons why an IoT revolution in industry will take decades are reasons why it can happen in years for wearables.

• The standards are already in place—wearable technology can use Bluetooth for low-power short range communications. Things with bigger batteries can use Wi-Fi or even 4G networks.
• We are talking about short-lived products. When Apple and Samsung were to introduce something new, such as a heart rate sensor, on their phones or watches it will set a de-facto standard and a couple of years later we could all be using lie detector apps and have games that measure our excitement whilst playing.
• The larger eco systems are already in place, with the hardware manufacturers, the platform providers (Google, Apple, Samsung, and Microsoft) and the software vendors building apps and services to take advantage of new possibilities.

With high-end smartphone and tablet sales starting to level out, I think the new fuel in consumer electronics will be wearables. Initially not the high profile concepts like Google Glass, but rather accessories like watches, bracelets and necklaces. And as the next step, wearables built into clothes.

Watches are already a sure thing with Samsung Gear 2 in the market, LG’s upcoming G watch, and the rumored Apple iWatch. They are not just for sport and fitness though—IFS Labs is already exploring what role smart watches can play in business.

IFS Labs concept on Samsung Gear II

At the moment wearables are receiving their fair share of skepticism, with many asking, “what is this really going to be good for?”But that is exactly what we all asked ourselves when Steve Jobs revealed the iPad.

Industry analysts are forecasting high growth in wearables with Gartner estimating that the wearable electronics market will grow to $10 billion by 2016 (Gartner, Technology Overview: Quantified Self, Mike Gotta, September 17, 2013.) and CCS Insight predicting that there will be up to 100 million smartphone companions (e.g. smartwatches) by 2017.

50 bn Devices in 2020

With Ericsson, Cisco and others talking about 50 bn connected devices by 2020, it has become the universal truth about what the IoT future will hold. We might get to that number. But what types of devices will it be? I’m pretty sure that the lion’s share will be consumer gadgets rather than industrial applications.