Industry Market Trends
How the "Internet of Things" is Revolutionizing Business
September 18, 2012
While building Internet connectivity into everyday goods once seemed like a sci-fi dream, the price of embeddable chips has come down, making the "Internet of Things" the next revolutionary concept for manufacturers and consumers alike. Increasingly, it's not people using the Internet, but machines. The term "Internet of Things" (IoT) was coined in 1999 by Kevin Ashton, former cofounder and executive director of the Auto-ID Center at MIT, and it refers to the networking of items we use every day, enabling them to track the movements and actions of people and products and draw business data - and actionable conclusions - from the information. Retailers and shipping companies today use technology such as RFID (radio frequency identification) and sensors that allow computers to track, identify and manage goods and inventory across networks without human input. If you're a smartphone owner and an active user of mobile social networking, your phone already knows what your friends are doing and where they are, just as your friends' phones know similar information about you. Have a locator chip on your dog? Somewhere, a computer knows precisely where Fluffy is right now. Having an MRI? By the time you get home from your appointment, the condition of your knee will be communicated by the MRI machine's computer to your electronic health records stored in a data center and available to your physician or your surgeon...largely without human input. Already under development is a medicine container that keeps track of how often you take your medication, reminding you when it's time for another dose, and automatically reordering from the pharmacy when you're getting short on pills. In the near future, IoT technology may connect all cars on the road. Traffic will move smoothly, since it will be managed centrally to optimize flow and auto accidents will become rare, as cars will be able to sense each other's presence and avoid collisions. Your car may also be able to find and navigate to an empty parking spot without any input from you. Many jet engines today already contain embedded chips that continuously transmit their operating condition to a network, creating automatic schedules for maintenance. While the concept of building Internet connectivity into products once seemed like a sci-fi dream applicable only to the costliest products, the price of embeddable chips has come down, and the technology is viable even for manufacturers of ordinary consumer goods. ComputerWeekly estimates that costs for embedded chip technology may be under $5 per item now, which increases the opportunity for manufacturers to use the chips for profitable results. Imagine a washing machine that could intelligently track not only its operating condition - automatically scheduling maintenance - but also monitor detergent use, setting the consumer up for automatic detergent delivery when supplies run low. With the costs of the technology dropping and the profit margin on automatic delivery so high, embedded chip technology will likely become more attractive to manufacturers. But the implications for businesses go beyond smart appliances. The Internet of Things could even revolutionize the way companies market. ComputerWeekly's Alastair McAulay writes that once the items we own are able to network, business opportunities will be nearly unlimited. "An action triggered by the user on one device could lead to a cascade of other state changes and messages being exchanged with other devices," McAulay notes. "If two tins of beer and a packet of potato chips are opened within a 20-minute interval, and the TV is switched on to the sports channel, then you are probably going to be more amenable to an advertisement flashing up on your smartphone for a 20 percent discount on pizza if ordered in the next 10 minutes." In fact, the Internet of Things has become so pervasive, it's estimated that more inanimate objects are digitally networked than people, and the trend will only escalate. The Cisco Internet Business Solutions Group predicts that 25 billion common devices will be connected to the Internet by 2015, and a staggering 50 billion by 2020. The opportunities are widespread, but many U.S. companies have yet to capitalize on them. Both China and the European Union have been investing heavily to ready themselves for the IoT revolution; by comparison, the U.S. has done very little. This ought to be the job of the U.S.'s newly created office of Chief Technology Officer, says W. David Stephenson, government technology consultant and principal of Stephenson Strategies. "The [U.S.] Office of the Chief Technology Officer should convene a public-private conference to begin the overdue work of creating an agenda for effective federal support of the IoT industry," Stephenson explains. "In the wake of the Solyndra loan guarantee, the Administration is undoubtedly leery of trying to 'pick winners' in the technology field, but the IoT is largely an enabling technology that will underlie a wide range of specific technologies and the basic technology is well proven." One thing the U.S. IoT industry will require is standards. At this time, there is no broadly accepted, open standard for the way Internet-connected objects communicate and share data. The concept is a non-starter if the various objects, devices, appliances and automobiles cannot communicate with one another effectively. Manufacturers can't create standards: that task is for regulatory bodies and governments. Given the difficulties the U.S. has experienced in trying to create and maintain standards in the wireless industry, we don't have a great track record of technological cooperation. If this doesn't change, the Internet of Things phenomenon may prove a missed opportunity for economic growth.