News & Perspectives

The Internet of Things is a Battleground, And Your Home is the Prize

The Internet of Things is a Battleground, And Your Home is the Prize

A new kind of Internet is here, one that will revolutionize how we live. It’s called the "Internet of Things" (IoT) - where all the devices in the home become smart and connected to the web. It’s no longer science fiction, or just for early adopters: IoT devices will be in Target, Best Buy and Ikea this summer. Big power plays by Apple and Google will drive it even further mainstream. And there are hundreds if not thousands of business opportunities in IoT, at every layer of the value chain, from infrastructure and security, to hardware, apps, services and data. What’s your IoT strategy?
Perspective// Posted by: Joanna Harrison / 29 May 2015

The promise of an easy life

“Smart home” solutions promise to make our lives easier, save us money, conserve resources and help us anticipate things. Connected devices will turn our homes into self-adjusting systems that can unlock doors, talk to our cars, track our health, dim the lights, set security systems, turn off the faucet, modify sprinklers according to the weather and adjust the room temperature.

Dubbed the “Internet of Things”(IoT), this next generation of e-life is a collection of billions of everyday objects and devices that connect to each other and to the Internet. Thanks to cheap sensors and processing, the rapid growth of cloud, abundant bandwidth, ubiquitous Wifi, and ever smaller sensors and cameras, it’s possible to create smart, connected devices out of just about any physical object, from jewelry to washing machines.

Coming to a store near you

These devices are no longer for the early adopters. In May this year, Target began stocking smart-home products in a new “Connected Life” section of its stores. Target’s shelves will now include home cameras and sensors, location tracking devices and digital scales. Ikea has just begun selling its “Home Smart” series of furniture with built-in induction charging capabilities. Meanwhile, Comcast announced that, starting this summer, it will be integrating new partner devices into its “Xfinity Home” platform: August Smart Locks; Automatic car adapters; Cuff smart jewelry; Leeo Smart Alert Nightlight; Lutron Caseta® Wireless dimmers, remote controls, and battery powered shades; Rachio smart sprinkler controllers; SkyBell video doorbells and the Whistle pet monitor. Comcast hopes to become the platform that ties these devices together into one experience, controlled by the television, an app or a voice command.

Transforming the value chain

Now the product is actually a first-class participant in its own value chain

Companies producing the smart “things” will be able to use data collected from connected personal devices to understand their audiences better and improve the customer experience. CEO of software company PTC, James Heppelmann, says the feedback loops created by connected devices will transform the value chain. “We’ve always thought of the value chain as being around the product and that the product was just a dumb stone, if you will, moving through some smart value chain. But now, the product is actually a first-class participant in its own value chain. It’s talking to its creators in engineering and manufacturing. It’s talking to the people who are supposed to service it. It’s talking to its operators. It’s even talking to the sales and marketing department about what the customer is thinking.”

Not just growing. Exploding

Bringing inanimate objects to life might still seem wildly futuristic to some, but critical mass is just around the corner. According to Parks Associates research, 13% of U.S. broadband homes own some type of smart home device; that percentage is likely to increase to 50% by 2020. Gartner predicts that there will be 26 billion connected objects worldwide by 2020, not including PCs, smartphones and tablets. (Cisco’s estimates are higher: 50 billion devices and objects will be connected to the Internet by 2020.)

The adoption of IoT is not limited to a single sector or market but is a trend affecting almost every aspect of the way we live and work. Goldman Sachs has named 5 key verticals of adoption: Connected Wearable Devices, Connected Cars, Connected Homes, Connected Cities, and the Industrial Internet.

In terms of how much the IoT market will be worth, IT research agency IDC predicts the worldwide IoT market will grow from $655.8 billion in 2014 to $1.7 trillion in 2020. Revenues generated from smart home services alone are predicted to reach a global market value of $71 billion by 2018, rising from $33 billion in 2013, according to Juniper Research.

The IoT battleground

These staggering numbers point to some serious disruption ahead, and a battle amongst companies for IoT supremacy. GE coined the term the “Industrial Internet” and with its software platform "Predix", is creating a system to run industrial-scale analytics and connect machines, data, and people. Networking equipment maker Cisco has named the coming wave of growth the “Internet of Everything” while Microsoft calls it the “Internet of Your Things” and has launched IoT versions of Azure and Windows 10. AT&T has a home automation and security service "Digital Life", and Samsung bought the home automation company SmartThings.

The most recent move came this week from Google when it unveiled Brillo, its own “Internet of Things” platform derived from Android. Last year Google purchased Nest, the makers of smart thermostats and smoke and carbon-monoxide detectors, for $3.2 billion. Google is pitting itself against Apple, which has announced “HomeKit”, an iOS software framework that enables connected devices to work together, (more news on this expected in June).

Interoperability is critical

But with so many players, come many different operating systems, and so far no definitive standards. Without interoperability, your Bosch dishwasher, whirlpool fridge, Apple iPhone, Samsung TV and Audi car won’t be able to communicate with one another and the Internet of Things may never reach its full potential.

As the Juniper report points out, “Industry collaboration between stakeholders is crucial to realizing the potential of the ‘Internet of Things’; no single stakeholder is likely to be able to dominate thanks to the number of verticals within the home.”

To this end, a number of companies including Cisco, GE, Intel, MediaTek and Samsung have joined together to form the Open Interconnect Consortium, with the goal of “defining the connectivity requirements and ensuring interoperability of the billions of devices that will make up the emerging Internet of Things.” Another cross-industry consortium, the Allseen Alliance, has a similar aim and includes other big players such as Panasonic, Canon, Electrolux, Qualcomm and ADT. Added to this is Google’s recently announced “Weave”, its attempt to create the communications standard for IoT.   

Security concerns

Another IoT market challenge is to maintain privacy and security. An HP study revealed that 70 percent of “Internet of Things” devices are vulnerable to attack. Vulnerabilities include password security, encryption and general lack of granular user access permissions. HP recommends that, “organizations implement an end-to-end approach to identify software vulnerabilities before they are exploited.”

Endless possibilities

Despite the challenges, it’s clear that consumers are beginning to embrace the idea of a home full of intelligent objects assisting with energy efficiency, comfort and security. And since almost any physical object can be intelligent, the possibilities for smart solutions are endless. Now that Apple and Google are both in the ring, the speed of adoption is likely to become ever faster.

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Joanna Harrison
Joanna has a knack for storytelling, immersing herself into the world of her clients and quickly identifying their core narrative.