Guide to the Internet of Things
Humanity has arrived at a critical threshold in the evolution of computing. By 2020, an estimated 50 billion devices around the globe will be connected to the Internet. Perhaps a third of them will be computers, smartphones, tablets, and TVs. The remaining two-thirds will be other kinds of “things”: sensors, actuators, and newly invented intelligent devices that monitor, control, analyze, and optimize our world.
These opportunities tend to fall into three broad strategic categories, each reflecting a different type of enterprise:
- “Enablers” that develop and implement the underlying technology
- “Engagers” that design, create, integrate, and deliver IoT services to customers
- “Enhancers” that devise their own value-added services, on top of the services provided by Engagers, that are unique to the Internet of Things
How will your company build value in this new world? That will depend on the type of business you have today, the capabilities you can develop for tomorrow, and, most of all, your ability to understand the meaning of this new technology.
Evolution and Opportunity
At present, the Internet of Things remains a wide-open playing field for enterprises. It’s young, heterogeneous, and full of uncertainty. Estimates of potential economic impact by 2020 (as tracked by the Postscapes information service) range from about US$2 trillion to more than $14 trillion. Companies small and large, old and new, are scrambling to stake out their territory. Expectations are high: One in every six businesses is planning to roll out an IoT-based product, and three-quarters of companies are exploring how to use the IoT to improve their internal operations and services. (See “Embedding the IoT in Your Business,” by Chris Curran.) Much early work is likely to focus on boosting efficiency and cutting costs, but the greatest long-term business value of the Internet of Things will involve getting to know customers—both consumers and businesses—more intimately, and providing new digital services and experiences to delight them.
Rarely, if ever, has a single technological platform combined this much complexity, speed of development, global reach, and novelty among customers. Consider the range of interconnected systems, products, and services the IoT will enable, from simple monitoring of home temperature and security to the “quantified self” (the tracking of personal health, diet, and exercise metrics), to fully networked factories and hospitals, to automated cities that respond to the movements and interests of thousands of people at once.
1. Endpoints are the single-function sensors and actuators that reach out and touch the world around them, monitoring for changes and providing feedback to adjust to those changes. Their connectivity enables two key capabilities: gathering and analyzing data from the environment, and reaching out through the Internet to control objects.
2. Simple hubs are the devices that connect endpoints to broader networks. When integrated into products such as vehicle engines; washing machines; or home heating, venting, and air conditioning (HVAC) systems, the computing intelligence and storage embedded in a simple hub allows these products to adapt over time to the user’s behavior and to optimize for efficiency. The Nest is a good example of a simple hub. It acts as a joining point for a relatively small number of sensors and actuators, typically located near one another.
3. Integrating hubs that connect simple hubs and outside connections are relatively complex devices providing a diverse array of services that fit more or less seamlessly together. In May 2014, Apple introduced one of the first truly integrating hub offerings. Called the HomeKit, this platform is designed to bring together simple hubs from different vendors and present all of them in a single user interface on a smartphone or tablet. A HomeKit hub might integrate functions such as electric power (SolarGuard solar power systems), security (Goji smart locks and Leviton motion and video monitors), HVAC (the Nest), appliances (LG smart refrigerators), window shades (QMotion’s electric shading systems), entertainment (Roku audio and video streamers, which use set-top boxes as hubs), and personalized lighting (Hue). A family member might press the “bedtime” button on his or her iPhone, and the service would then dim or turn off certain lights, lock the doors, set the security system, close the garage door, and lower the thermostat, all at the same time.
4. Network and cloud services provide the infrastructure of the Internet of Things. They can either be public (accessible to the population at large) or private (protected behind an organization’s firewall). These services deliver the seamless and transparent connection to the Internet that hubs require, along with the cloud computing power needed to collect, store, and analyze vast amounts of data from myriad endpoints. They can also provide the infrastructure needed to build or connect to social networks, so that users of the IoT can compare experiences and share data.
5. Enhanced services is a nascent category, comprising the most technologically sophisticated components of the IoT. Enhanced services will make use of the information collected and analyzed by other platforms and services to deliver broad-based interactive functions. For example, today’s single-company telematics systems, like Progressive’s Snapshot system, are integrating hubs, connecting monitors on automobiles with software that links insurance rates to driver performance.
These five technological options, from endpoints to enhanced services, provide a menu of diverse opportunities for companies building IoT businesses. Some might start making stand-alone endpoints, and move up to producing hubs. Others might parlay their expertise at integrating hubs into providing network and cloud services—or vice versa.
One virtue of the IoT is the degree to which companies lacking in technological expertise can lean on the devices and platforms that others build. Even so, the creation and delivery of IoT services will require you to design and prototype their new services, to manage them once implemented, and to analyze the resulting wealth of data.
As new and challenging as today’s IoT is, it offers a large and wide-open playing field. The companies that gain the right to win in this sphere will be those that understand just how disruptive the IoT will be, and that create a value proposition to take advantage of the opportunities.