The third wave of the Internet, which might be the biggest one yet, has landed. The Internet of Things (IoT) connects technology-enabled devices to each other and allows for sensors to send and receive data over a vast communications network (“the cloud”). The resultant output (“big data”) occurs when information is gathered and managed after networked devices communicate with each other; this data is then quantified and analyzed to create applications that monitor one’s health, measure the speed of one’s car or know when to turn on the coffee pot in the morning. The IoT uses software to create the connection and then goes deeper to increase network efficiencies, create new services and products, and help today’s global economy register financial, environmental, and societal benefits.
The IoT term was coined by Kevin Ashton in 1999 while he was at the Massachusetts Institute of Technology. As the executive director of MIT’s AUTO-ID Center, Ashton was instrumental in developing a global standard for interconnected sensors, commonly known as radio frequency identification or RFID. Ashton’s pioneering work led to the development of the Internet of Things, which is widely known as a system where the Internet is connected to the physical world via a vast network of ubiquitous sensors that “talk” to one another.
Multi-Trillion Dollar Business Opportunity
Since its invention, the IoT has grown to represent a multi-trillion dollar business opportunity. 2014 was touted as the Year of the Internet of Things and reflected big companies’ desires to dominate the space. The year saw the convergence of smarter-by-the-day smartphones and the rollout of innovative sensor-based technologies like beacons. The presence of beaconenabled technologies in Apple iPhones configures the phone’s position to the nearest centimeter. But, Apple is not alone in its pursuit of the IoT. Networking giant Cisco calls the IoT the Internet of Everything and industrial behemoth General Electric refers to it as the Industrial Internet. And the stakes are huge:
According to a Goldman Sachs Global Research report in an article published by Harvard Business Review, the IoT landscape is comprehensive and inclusive (see chart).
The financial implications of the IoT are so large that the Goldman Sachs Investment Research report detailed this mega-trend’s impact sector-to-sector. Goldman traces the emergence of the Internet’s third wave by looking back on the Internet’s evolution as a life-changing commercial ecosystem. The decade starting in 1990 represented 1 billion users connected to the fixed Internet while the following decade saw the mobile Internet connect another 2 billion users. Goldman projects the IoT, as defined by the decade starting 2010, as being able to connect as many as 28 billion “things” — from bracelets and smart phones to cars and buildings — to the Internet by 2020.
Historically, computer technologies follow a trend where every decade, the price point of the prevailing unit of measure decreases by ten times while subsequent sales simultaneously rise by ten times. The accompanying graph illustrates this trend.
Closer to home, innovative companies like Gainesville’s Paracosm view the IoT as a game-changer. Paracosm is aggressively pursuing its quest to 3D-map the world’s interior spaces by commercializing technologies that power the next generation of devices. Paracosm is on a mission to help machines connect to the physical world and to improve virtual and augmented reality experiences.
From the University of Florida campus, IoT breakthroughs are business as usual coming out of the lab of Dr. Sumi Helal. Professor Helal and his team of IoT magic-makers are deep into research involving pervasive computing and mobile computing, and they are world-class subject matter experts when applying IoT devices for healthcare activities. Operating from the UF Computer and Information Science and Engineering department, Dr. Helal is the co-founder and director of the Gator Tech Smart House, which according to its website, serves as “an experimental laboratory and an actual live-in trial environment” for validating technology and systems developed by Dr. Helal and his research team. These technology commercialization activities are what I classify as big, hairy, audacious goals and are “designed to assist older persons and individuals with special needs in maximizing independence and maintaining a high quality of life for the elderly and the disabled.”
IoT and Data Security
The media’s fascination with the IoT grows by the day, perhaps because of the many practical and useful applications that involve the IoT. The pioneering device that underscores the foundation of the IoT is the smartphone. Every time a smart phone goes anywhere, it beams information on our location to a server. The result is location-based applications that generate a large pool of data that is sliced and diced into seemingly infinite ways.
An area of keen interest involving IoT is privacy and security. This is arguably the hottest issue and creates very emotional responses from both supporters and critics of the IoT. Rapid early adoption of IoT technologies has already occurred in key verticals such as wearables, automotives, homes, cities and industrials. For companies to successfully monetize IoT technologies, they must focus on products and services that create sustainable competitive advantages that achieve cost efficiencies and generate revenues while also accommodating the public’s uncertainty involving privacy and security.
To allay these fears, an expert on the IoT has proposed a set of principles and practices that define the ownership and usage of data produced by networked devices. Alex Pentland is the Toshiba Professor of Media Arts and Sciences at MIT. Professor Pentland calls the principles and practices “the New Deal on Data”; the title harkens back to the United States’ original New Deal, though the deal for the 21st century calls for “rebalancing the ownership of data in favor of the individual whose data is collected.”
For the standards to work, transparency is key. According to Pentland, “Data being recorded about you forms a fairly complete picture of your life. Seeing all the patterns of your life allows you to personalize medicine, personalize insurance, personalize finances, etc. The show-stopping question is, ‘Who is going to hold the complete picture of your life in data?’” That answer is a work in progress that won’t be decided easily or without much public debate and private distress.
So, even with unsolved issues involving privacy, security and standards, the promise of the IoT for business transformation is huge. Granted, millions of companies may never integrate any aspect of their operations, product lines and service offerings in the IoT. Conversely, millions of companies will apply sensors, monitors and other networked devices to enhance operations and optimize revenue opportunities.
It is no secret that the IoT has already changed how business is conducted — and how life is lived — in fundamental and meaningful ways. In my research of all things IoT, I was struck by the fact that the Internet’s third wave has not yet come ashore destructively.
My recommendation is to commit now by participating in the Internet’s third wave, fully aware of the disruption, opportunities and transformative nature the Internet of Things has already begun to have on the world.
AUTHOR’S NOTE:
In compiling information and insights for this article, I enlisted my network to guide and counsel me on all things related to the Internet of Things. My professional and academic colleagues, IoT subject matter experts and former students contributed quality material — much of which shaped my thoughts on the Internet of Things. Heartfelt thanks go to all who contributed content and commentary when sharing their perspectives on the Internet of Things. Special acknowledgement goes to my Engineering Innovation students, present and former, who deepened my understanding of the Internet of Things and strengthened my awareness of its powerful implications on the world. I am proud of you and grateful for your skill in teaching the teacher.
DAVID WHITNEY serves as the Entrepreneur in Residence in the University of Florida’s College of Engineering. Whitney teaches a course, Engineering Innovation, to both undergraduate and graduate students at UF and is the creator of the Spotlight on Innovation series. In addition to his roles at UF, Whitney is the founding managing director of Energent Ventures, a Gainesville-based investor in innovation-driven companies.
The enterprise value created by the commercialization of the IoT is game changing. According to a Business Insider report published in October 2014, the following is predicted:
• The IoT will be the largest device market in the world. Estimates are that by 2019, the IoT will be more than double the size of the smartphone, PC, tablet, connected devices and technology wearables combined.
• Networked device shipments will reach 6.7 billion units in 2019. This represents a five-year combined annual growth rate of 61 percent, with hardware sales alone registering $50 billion.
• Although the private enterprise sector was expected to account for 46 percent of IoT device shipments in 2014, the public government sector will account for the majority of device purchases through 2019.