For a topic so ubiquitous, so potentially disruptive and so overhyped in the media in the recent couple of years, the concept of the Internet of Things (IoT) is surprisingly difficult to describe. Although the term itself has appeared in the media nearly a decade ago, there is still no universally agreed definition of what IoT actually is. This, by the way, is a trait it shares with its older cousin, the Cloud.
On the very basic level, however, it should be possible to define IoT as a network of physical objects (“things”) capable of interacting and exchanging information with each other as well as with their owners, operators or other people. The specifics of these communications vary between definitions, but it’s commonly agreed that any embedded smart devices that communicate over the existing Internet infrastructure can be considered “things”. This includes both consumer products, such as smart medical devices, home automation systems, or wearables, and enterprise devices ranging from simple RFID tags to complex industrial process monitoring systems. However, general-purpose computers, mobile phones and tablets are traditionally excluded, although they, of course, are used to monitor or control other “things”.
Looking at this definition, one may ask what exactly is new and revolutionary about IoT? After all, industrial control systems have existed for decades, healthcare institutions have been using smart implanted devices like pacemakers and insulin pumps for years, and even smart household appliances are nothing new. This is true: individual technologies that make IoT possible have existed for several decades and even the concept of “ubiquitous internet” dates back to 1999. However, it’s the relatively recent combination of technology, business and media influences that has finally made IoT on of the hottest conversation topics.
First, continuously decreasing technology costs and growing Internet penetration have made connected devices very popular. Adding an embedded networking module to any device is cheap, yet it can potentially unlock completely new ways of interaction with other devices, creating new business value for manufacturers. Second, massive proliferation of mobile devices encourages people to look for new ways of using them to monitor and control various aspects of their life and work. As for enterprises, the proverbial Computing Troika is forcing them to evolve beyond their perimeter, to become more agile and connected, and the IT is responding by creating new technologies and standards (such as big data analytics, identity federation or even cloud computing) to support these new interactions.
It is its scale and interoperability that fundamentally differentiate the Internet of Things from existing isolated networks of various embedded devices. And this scale is truly massive. Extrapolating the new fashion of making each and every device connected, it is estimated that by 2020, the number of “things” in the world will surpass 200 billion and the IoT market will be worth nearly $9 trillion. Although the industry is facing a lot of potential obstacles on their way to that market, including lack of standards, massive security and privacy-related implications, as well as the need to develop a mature application ecosystem, the business opportunities are simply too lucrative to pass.
Practically every industry is potentially impacted by the IoT revolution, including automotive, healthcare, manufacturing, energy and utilities, transportation, financial, retail and others. Numerous use cases demonstrate that adoption of IoT as a part of business processes can bring generate immediate business value by improving process optimization, providing better intelligence and more efficient planning, enabling real-time reaction to various needs and opportunities and improving customer service.
In addition to various improvements of business processes, IoT enables a huge number of completely new consumer services, from life changing to trivial but “nice to have” ones. One doesn’t need to explain how a doctor’s ability to monitor patient’s vital signs can reduce mortality and improve quality of life or how a connected vehicle improves road safety. IoT benefits don’t end there, and it’s up to manufacturers to introduce completely new kinds of smart devices and persuade consumers that these devices will make their life fundamentally better (this has already worked well for wearable devices, for example).
Of course, IoT market doesn’t just include manufacturers of “things” themselves. Supporting and orchestrating such a huge global infrastructure introduces quite a lot of technological challenges. Obviously, manufacturers of networking hardware will play a major role, and it’s no wonder that companies like Intel or Cisco are among the major IoT proponents. However, being able to address other challenges like providing global-scale identity services for billions of transactions per minute can open up huge business opportunities, and vendors are already moving in to grab an attractive position in this market. Another example of a technology that’s expected to get a substantial boost from IoT is Big Data Analytics, because IoT is all about collecting large amounts of information from sensors, which then needs to be organized and used to make decisions.
Interestingly enough, most of current large-scale IoT deployments seem to be driven not by enterprises, but by government-backed projects. The concept of “smart city”, where networks of sensors are continuously monitoring environmental conditions, managing public transportation and so on, has attracted interest in many countries around the world. Such systems naturally integrate with existing eGovernment solutions; they also enable new business opportunities for various merchants and service companies that can plug directly into the global city network.
In any case, whether you represent a hardware vendor, a manufacturing, a service or an IT company, there is one thing about the Internet of Things you cannot afford: ignore it. The revolution is coming, and although we still have to solve many challenges and address many new risks, the future is full of opportunities.
This article has originally appeared in the KuppingerCole Analysts' View newsletter.