There has been a lot of hype about the Internet of Things (IoT) as a big deal, and one should conclude that it is big, even bigger than the impact of the smartphone. It’s surprising, though, that an estimated 87% of the population has never heard of IoT. Makes me wonder, how can it be a big deal, with so few of us knowing about it?
Digging a bit further, the sheer numbers associated with the opportunity are staggering. Consider that by 2020, the global population is estimated to be 7.6 Billion (a ho hum 1.1% annualized growth from 2003), and by that same time, Cisco estimates, the number of connected IoT devices will be 50 billion (over a 31% annualized growth rate during that same 17 years). That is almost 7 connected devices per person for each man, woman and child.
The smart investors seem to know, as IoT start-ups have attracted a cumulative $7.4 billion in venture investment over the last 6 years, according to CB Insights.
The concept of IoT is pretty simple and can easily be defined as the network of physical objects that communicate and sense or interact with their self and their surroundings. Sounds pretty wide open to the imagination, and it is. Implications of IoT will be felt in many different settings, including people, home, retail, office, factories, worksites, vehicles, and cities. The basic layers include the collection/sensing/controlling one can think of as the device layer where physical devices interact and collect, then communicate to the data layer, were data is aggregated and normalized, before being passed to the analytical or application layer.
NEST, Google’s supercool thermostat, is a great example of IoT in action within the home, where you can remotely control the thermostat, and much more importantly, it can learn based on your behaviour and optimizes the consumption of energy, even sensing when you are away. Google spent $3.2 billion acquiring NEST last January. It sounds like a lot for a thermostat, but think of it as the Trojan Horse in your house, the nerve center to control future Google devices sure to be around the corner, communicating back to your Thermostat and beyond. Already Mercedes Benz has an application that connects with NEST, informing it of the homeowner’s arrival. It won’t be too long, I would guess, before the market has available a simple security extension to NEST that leverages all those proprietary ADT, Chubb and other security sensors in your home, making the security service providers redundant. Google’s acquisition makes complete sense if you believe, as I do, that the home IoT market estimate of $490 billion before the turn of the next decade is realistic.
WAZE, is a favorite application of mine that applies to vehicles, another very large IoT market opportunity. It isn’t surprising that Google acquired them for $1.1 billion in June of 2013. The inventors built a very simple driving navigation app that uses your geolocation to dynamically route you a better/faster way. Significant more so because WAZE made the smart phone a data sensor. As my phone drives down the road (with me), it sends high value data to WAZE, is normalized (with all the other smart phones on roads leading to your destination) and then applies a little application layer smarts to reroute you with the most efficient directions. Whereas NEST has a physical installation required, WAZE required absolutely nothing! Simple applications like real time navigations are the tip of the iceberg. Automobiles are rapidly becoming more computer than machine, and the opportunities are endless. Only recently, for example, have insurers been using drivers actual real time driving data to modify their insurance costs (good drivers – fewer accidents). Innovative companies like Moj.IO are facilitating insurer’s needs by using the onboard diagnostic port (the access to your car’s command center that every vehicle manufactured after 1996 has) to read what is happening inside and simultaneously connect your car to the internet. Simple applications like pre-emptive maintenance, location based service offerings, insurance reductions for good driving, and accelerometer and location tracking (to keep a remote eye on your teenage driver) are all here now. Gartner estimates there will be 220 million cars on the road directly connected to the internet by 2020. That is a lot of possibilities.
While there are lots of hurdles, as there was with the internet itself, things are getting worked out quickly. Standards for communication to devices, and an expanded IP addressing system (IPv6) to facilitate all these new device connections are just a couple examples. Managing the significant amounts of data generated requires completely new ways to handle the volumes, such as NoSQL technologies and Hadoop applied to increase speed and flexibility of processing. Marlin is very bullish on big data, a by-product of IoT, see our recent newsletter for more information. On the legal side, there will be significant efforts in the near future to sort out privacy complications, and data ownership. Can I get a speeding ticket issued using data my car provided, or worse still, can my data be used against me in an accident lawsuit. And one may never forget about security, providing an abundance of opportunity for new security technology vendors to fill holes as IoT evolves.
There are too many ingenious applications, and data discoveries to come for one to ignore IoT. Good luck catching this wave, it’s going to be very big.