On 7 January, Intel Corp. chief executive Brian Krzanich unveiled some “smart" products, including earbuds with biometric and fitness capabilities and Edison—a miniature computer housed in a memory card with built-in wireless capabilities and support for multiple operating systems—at the International CES in Las Vegas.

Intel hopes to start selling at least some of these products in the next couple of years.

On 13 January, Google Inc. said it had entered into an agreement to buy Nest Labs Inc. for $3.2 billion (around 19,700 crore) in cash. Nest makes “smart" home devices such as thermostats and smoke alarms that help “save energy costs and keep families safe". The acquisition is expected to help Google further build its business of connected devices, such as its pilots with self-driving cars and wearable technology such as Google Glass—all businesses that typically get clubbed under the so-called Internet of Things (IOT) or Internet of Everything (IOE)—a concept that devices perform more intelligently when connected online, and hence become more useful.

IOT or IOE is gathering momentum with companies like Intel, Google, Cisco, Microsoft Corp. and International Business Machines Corp. putting their might behind it, and so are the number of connected devices.

Two years ago, there were 8.7 billion connected objects globally, comprising 0.6% of the “things" in the world, according to Cisco Systems Inc. In 2013, this number exceeded 10 billion, and Cisco expects the number of connected objects to reach 50 billion by 2020, or 2.7% of the “things" in the world, driven by reducing price per connection and the consequent rapid growth in the number of machine-to-machine connections.

According to ABI Research, there are more than 10 billion wirelessly connected devices in the market today, with over 30 billion devices expected by 2020. Bluetooth, Wi-Fi, ZigBee, Cellular, RFID (radio frequency identification) and many other wireless technologies will drive IOE growth, according to the research firm.

According to Zinnov, an advisory firm, the Konntected Network of Things (KNoT) is an evolved concept of traditional IOT. “KNoT technologies are on the rise and it is estimated that over the next decade, the opportunity is bound to generate revenue in excess of $10 trillion with more than 30 billion connected devices," it said.

According to research firm Gartner Inc., IOT—which excludes personal computers, tablets and smartphones—will grow to 26 billion units installed in 2020, representing an almost 30-fold increase from 900 million in 2009. It added that IOT product and service suppliers will generate incremental revenue exceeding $300 billion, mostly in services, in 2020.

Gartner predicts that enterprises will make extensive use of IOT technology, and there will be a wide range of products sold into various markets. These will include advanced medical devices, factory automation sensors and applications in industrial robotics, sensor motes for increased agricultural yield, and automotive sensors and infrastructure integrity monitoring systems for diverse areas such as road and railway transportation, water distribution and electrical transmission.

“The traditional IT (information technology) market is not going to grow at a faster rate any time soon, if ever. Increased growth will come from the non-traditional IT market," said Peter Sondergaard, senior vice-president at Gartner and global head of research, in a 12 November report.

“While in 2015 the combined IT and telecom market will hit nearly $4 trillion, the incremental revenue generated by the Internet of Things’ suppliers (vendors) is estimated to reach $309 billion per year by 2020. Half of this activity will be new start-ups," he added.

For example, the manufacturing sector will benefit from producing billions of devices and from more efficient tracking of materials and components leading to cost efficiencies. In healthcare, smart slippers and other wearable devices for elderly people contain sensors that detect falls and various medical conditions.

If something is amiss, the device will alert a doctor via email or text message, possibly preventing a fall and a costly trip to the emergency room. Another example includes installing sensors in cars that provide a pay-as-you-drive insurance that links the insurance premium to the individual’s risk profile.

Economic value-add (which represents the aggregate benefits that businesses derive through the sale and usage of IOT technology) is forecast to be $1.9 trillion across sectors in 2020. The verticals that are leading its adoption are manufacturing (15%), healthcare (15%) and insurance (11%).

Emerging areas will witness rapid growth of connected things. This will lead to improved safety, security and loss prevention in the insurance industry, said the Gartner report. IOT, it added, will also facilitate new business models, such as usage-based insurance, calculated based on real-time driving data.

“By 2020, component costs will have come down to the point that connectivity will become a standard feature, even for processors costing less than $1. This opens up the possibility of connecting just about anything, from the very simple to the very complex, to offer remote control, monitoring and sensing," said Peter Middleton, research director at Gartner, in a 12 December research report.

IOE will re-invent industries at three levels: business process, business model and business moment.

“At the first level, digital technology is improving our products, services and processes, our customer and constituent experiences, and the way we work in our organizations and within our partnerships," said Hung Le Hong, research vice-president and Gartner Fellow. “We do what we normally do, but digitalization allows us to do it better or develop better products within our industry."

IOT will create tens of millions of new objects and sensors, all generating real-time data.

“Data is money," said Nick Jones, research vice-president and distinguished analyst at Gartner. “Businesses will need big data and storage technologies to collect, analyse and store the sheer volume of information."

For instance, the $100 million Intel Capital Connected Car Fund that aims to facilitate seamless connection between vehicles and consumer electronic devices as well as drive new in-vehicle applications, services and differentiated user experiences based on Intel technologies, has invested in companies with competencies in Advanced Driver Assistance Systems, human-machine interface, telematics and cloud services.

But as devices get more connected and collect more data, privacy and security concerns will increase too. How companies decide to balance customer privacy with this wealth of IOT data will be critical.

At an IOT workshop in New Jersey on 19 November, Edith Ramirez, chairwoman of the US Federal Trade Commission (FTC) acknowledged that IOT posed consumer privacy and security issues as “...the Internet of Things has already entered the daily lives of many consumers".

Ramirez noted that home security systems can show us who is at the front door on a screen on our tablets, even if we are across the country. People wear wireless medical and fitness devices that share blood glucose readings with doctors while sensors in plants can send a message to remind us that they need watering. And by 2020, an estimated 90% of consumer cars will have some sort of vehicle platform, up from 10% today.

However, she added that while the benefits to consumers will, no doubt, be great, “...the expansion of the Internet of Things presents three main challenges to consumer privacy. First, it facilitates the collection of vastly greater amounts of consumer data. Second, it opens that data to uses that are unexpected by consumers, and third it puts the security of that data at greater risk".

Ramirez recommended that privacy should be integral to the innovation process of companies with privacy hard-coded in. Companies, she said, should also consider how to shift the burden of privacy protection off the shoulders of consumers.

Any device connected to the Internet is potentially vulnerable to hijack and companies, said Ramirez, need “to build security into their products, no exceptions".

FTC staff is seeking public comments on the issues raised at the workshop.

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