Everything that can be connected will be connected. That’s the essence of the Internet of Things (IoT). Over the past few years, this concept has evolved from a technologist’s curiosity into a full-fledged business opportunity.
There have always been “things” connected to the internet and things connected to other things. But advancements in a number of areas over the past decade have laid the groundwork for the steepening IoT growth curve. The dramatic rise in computing power, storage capacity offered at ever-lower prices, the miniaturization of sensors and chips, robust wireless networks, IPv6, and a software-defined world are just some of the enabling factors.
6.3 ‘Connected Things’ Per Person
Estimates put the number of “things” connected to the internet at 50.1 billion by 2020. That’s about 6.3 connected things per person. This count of “things” provides a sense of scope and scale, but that is only part of the story.
A report published by the McKinsey Global Institute projects that IoT will result in upwards of $11 trillion in global economic value-add by 2025, reflecting the combined benefits that businesses will derive through the sale and usage of IoT technology. Similarly, General Electric predicts the Industrial Internet, their interpretation of IoT, will boost global GDP by $15 trillion over the next 20 years.
Market intelligence firm IDC narrows in on the IoT market itself, projecting the worldwide market for overall IoT solutions to grow from $1.9 trillion in 2013 to $7.1 trillion in 2020. To put that into context, the global IT industry, including telecom, is estimated to reach about $3.8 trillion in 2016.
If everything falls into place, these lofty projections may very well come to fruition. But what will it take for everything to fall into place?
There is a complex ecosystem surrounding the development of IoT technology. Understanding this ecosystem is the first step toward addressing security pitfalls, privacy concerns or monetization challenges.
The IoT Ecosystem
The Internet of Things is composed of many different pieces working in concert to create a new model. Just as the traditional internet has many different components and is not a discrete product, IoT has many pieces in four broad categories that must be understood at a basic level in order to build value-added services:
Hardware, including the “things” in IoT, is the first piece of the puzzle. Advances in miniaturization and the low cost of high-performance silicon have led to both sensors and computing components that can affordably be placed in practically any type of device. Inexpensive sensors can measure everything from geolocation to temperature to blood pressure, and translate this information into a digital format. Computing can be done onboard in many cases, or the data can be transmitted to a central location.
The type of device that might contain this capability is practically limitless. At one end of the spectrum are extremely large devices such as cars, which are soon expected to carry more than 200 sensors each. At the other end are devices such as the Michigan Micro Mote, which packs processing, data storage and wireless communications into less than a cubic millimeter. In between are any number of objects that have never before had computing capability or connectivity.
Another Piece: The Network
Another piece of hardware to consider is the network. With so much data being transmitted, robust networks will be a critical part of any strategy around IoT; in fact, much of the momentum behind the trend has been generated by producers of networking equipment. The need is very real, though. CompTIA research consistently shows that unplanned network upgrades often contribute to the hidden costs behind new technology implementations.
The software component begins with new platforms. The primary example of this is the new operating systems that have dominated the mobile device landscape. With smartphones and tablets, iOS and Android have become major players. As consumers expand their notion of computing to include wearables, homes and cars, vendors are also seeking to expand their operating systems into those areas.
A firmware of sorts is needed for IoT to be successful. This firmware itself is made of multiple components. Because the cloud is a primary tool in facilitating IoT, the software created by cloud providers to construct their offering plays an important role in the overall solution. This software is made available to other parties through APIs, which will be dependent on both the cloud software and the access a cloud provider is willing to grant.
Many companies that have traditionally operated as telecom carriers are looking into providing cloud solutions as well, and these offerings could be of interest if they are packaged with broad network capabilities. Cellular and WiFi networks have enabled modern computing models, but they also come at a cost that must be considered when building a plan around new data streams.
Another Major Element
Hardware, software and connectivity make up the technical foundation for IoT, but there is another major element that will dictate the way the subject develops.
Rules, standards, regulations and best practices will shape the way that companies implement projects, and several different organizations are involved in helping build these rules for IoT. Many industry observers view standards as the largest hurdle to mass adoption.
The technical side is just one half of the challenge in successfully building IoT systems. The other half relates to dealing with social concerns, such as the security and privacy implications inherent in mass numbers of connected devices sharing data. Here, there likely will be government action, building on regulations that have been established to cover activities such as electronic health records or digital collection of financial information.
Services are typically not considered to be part of an ecosystem, but the true value of IoT lies in the data being generated, captured and analyzed. This data does not hold much value on its own without services that perform the analysis and present findings or insights in a usable way. Additionally, the data has to be highly available and tightly protected.
The complexity of IoT is another factor that drives a critical need for services. Standards and protocols will help create some conformity, but the reality is that there will still be multiple systems interacting. Consider a smart home, where HVAC, lighting and home entertainment (among others) will generate data that a homeowner will want centralized for control. That central control likely will need to be available on a variety of different platforms, such as PC, tablet and smartphone. Even with standards in place, creating this comprehensive system is a complicated task. Services, then, are an important ingredient in realizing the full benefits of IoT.
Ready For Prime Time
In contrast to last year, channel companies have moved away from believing that the companies providing these components (hardware, apps) will be the ones most likely to make money. Instead, they view themselves as strong profitability candidates.
This makes sense for two reasons. First, the complexity of IoT projects is beyond what many companies can handle internally. Especially on the SMB end of the spectrum, end users will be looking for results without necessarily building out the entire solution on their own. Second, many areas of IoT can be seen as extensions to skills or lines of business that solution providers already have. Here are three examples:
Devices: Most break/fix or device management efforts today are focused on office equipment, such as PCs or printers, but the same skills and considerations can apply to new devices and sensors. There will be some new areas to consider, such as power usage, security and network protocols. However, the general business processes for device repair and upkeep will be applicable, as will any experience in monitoring connected devices.
Data Analytics: Although the data streams generated by IoT devices will require new data warehousing techniques and new analytics tools, these new functions are often complementary to existing techniques and require a strong foundation in data management. CompTIA research has found that many companies, especially in the SMB space, do not have this foundation. These companies can benefit from data audits along with more traditional tools, such as SQL or relational databases, before moving into new areas.
Integration: As with data analytics, many channel firms are already providing integration services. These firms recognize that integration typically constitutes the bulk of the effort for a new IT product and have built the planning practices necessary for integrating complex systems. The new skills required for IoT integration will be the APIs that connect various devices and services, especially as standards are in flux.
For channel firms to take full advantage of the IoT opportunity, they will have to continue transforming along the path forged by cloud and mobility. IoT solutions for the most part will be an ongoing process with recurring revenue, so the business model must account for these things. There will have to be incremental learning for the familiar technical areas and deeper learning or partnering for non-familiar technical areas.
The Internet of Things has moved past the initial hype phase. Now it’s time for businesses to figure out how to use this new technology to go to the next level.