What is the Internet of Things and why will it change the world?

What is the Internet of Things and why will it change the world?

06-Nov-2014 by MeganEllis
Megan Ellis is a Senior Associate at Claro Partners, a business innovation and service design firm that helps its clients – corporations and startups – to navigate disruptive shifts.

What is the Internet of Things and why will it change the world?

The buzz around the Internet of Things is growing. This year it’s headlined global conferences, been the focus of corporate investments and shaped public policy. Tech advisory firm Gartner has put it at the very top of its hype cycle for 2014 and according to sources like Cisco, the IoT will have a market size of over ten trillion dollars within the next ten years. With this frenzy of huge numbers and commercial excitement, it seems a sure bet. But, beyond the talk of sensors, connectivity, protocols, standards and networks, what is the Internet of Things exactly, and why is it grabbing so much attention?

Let’s start from the internet; in the last decade it’s grown to be an integral part of how much of the world lives. We are used to using a screen as a little portal to connect us to its big, interwoven ecosystem. Whether that screen is on a smartphone, tablet or laptop, we can easily hook it up to the internet and travel around its digital world. We can meet our friends, go shopping, play games against people on the other side of the world or read the news as it breaks.

Since the beginnings of the world wide web and slow dial-up modems, the technology has evolved rapidly. The components needed to create a connection to the internet have become affordable, compact and relatively easy to set up. This means that the barrier to experimenting with them has been lowered considerably, and it’s now possible to make a connection between almost anything and the internet. A plant, toaster or dog, it doesn’t matter – if the thing is recognised by the internet, it’s part of the Internet of Things. To be recognised, the internet needs to be able to read data from the thing. To do this, the data can be sent directly through a connection via a wifi or a mobile network. Or, a technology like Bluetooth/Bluetooth Low Energy (BLE, used recently in the new iBeacon) can connect with a smartphone, which then passes the data on to the internet. Similarly, RFID tags use radio frequency to transmit data to a local reader as a stepping-stone to the internet. At the low-tech end, the thing can simply have a QR code printed on its surface; a smartphone can then scan the code and make a connection to the internet, which receives the data and recognises the object.

But how can something like a plant even create the data in the first place? Where we, humans, use our phones to type Facebook status updates or take a photo and send it to a friend, dogs, plants and toasters have neither the interest nor opposable thumbs to do this. One way to solve this is by putting a sensor on the thing, which will capture data about it and its environment – temperature, sound or movement, for example.

Great, but what’s the benefit of setting all this up? As the technology evolves, people are starting to imagine and experiment with new ideas for putting it to use. Many IoT concepts today simply send data from the sensor to the internet, where the user can see, record and monitor it. For example, a sensor on the skin can measure the user’s blood pressure and that data can be accessed online by both the user and their physician. A moisture sensor in the soil of a houseplant can alert the owner with a message to their smartphone when the plant’s getting dry and needs watering. A location sensor in a suitcase enables its owner to track its journey and find it again if it gets misplaced. By sending data back to the thing via the internet, the user can also interact with the object. For example, an internet-connected switch on the front door of a property means that the owner can open the door remotely. These are all useful tasks that we couldn’t easily do before. However, enabling us to measure, monitor, control and interact is only the beginning of what the Internet of Things can do.

With more complex technology, we can go beyond just equipping the internet-connected object with a sensor and tapping into the data it sends. We can connect a mini computer to the sensor, and program it to act on behalf of the thing. The program taps into the data, processes it and takes decisions to act, making the object appear as if it were alive or conscious of its environment. This artificial intelligence makes the object “smart”. For example, the smart thermostat from Nest Labs has a program that processes the data taken in from its environment through sensors and physical interactions from its human user. After gathering this data over time, the thermostat (and its little computer-program brain) starts to predict what its owner would like it to do each day and then acts upon it; turning the temperature up and down accordingly. The device gradually gets more accurate at correctly predicting how to behave – in effect, it “learns” and gets smarter.

It’s clear that the first phase in building the Internet of Things is the connection of physical objects to the internet. Of course, the technology is fundamental to this, however it’s really only part of the story. In the near future we’ll take it for granted that objects are connected directly to the internet, like we do with computers and smartphones now. It’s then that the IoT will really flourish; when the foundations are laid and valuable new services and experiences can be built on top of the infrastructure of interconnected things. Like any other service or experience, they will speak to our different needs – both functional (monitoring, controlling, optimising…) and emotional (delight, discovery, intimacy…). These new services will live in ecosystems and will be integrated into the environment around us – both online and offline. As it would have been difficult fifteen years ago to imagine the global impact of websites like Facebook or Wikipedia, we’ll soon look back and think the same about services that seamlessly span the physical and digital worlds. They’ll represent a new wave of business, emerging from innovative, fresh perspectives of how we live, and enabled by new business models.

It won’t be just the large, established industry players or even the technology companies who tap into this huge opportunity. Innovation will come from everywhere as people are empowered to develop their own projects through easy access to tools for learning, designing, delivering and funding new ideas. Just as the smartphone app economy was built predominantly by individuals, a large part of the IoT will be driven by inspired entrepreneurs from different tech, design and business backgrounds. Even though we’re only at the beginning of this new era, there is already a lot of activity in the space and much of it comes from startups, in areas as diverse as home, health and automotive.

Many of the new offers at the moment are directed towards the individual consumer. This is partly because our smartphones can act as a portable, instant connection for an object to the internet, as well as provide compact, powerful computing power and an always-on screen. However, beyond giving us new ways to interact with our own belongings, other people and environments, there is huge potential for the internet to play a role in business systems and commercial processes at a large scale. The same benefits of a device like the Nest thermostat for the consumer – efficiency, economy and automation – are also highly valuable in a large-scale, business context, which is why the big industry players are getting so excited. In fact, the practice of tracking products in a supply chain using RFID in the twentieth century was an early incarnation of the Internet of Things. However, with the arrival of the internet and the development of more advanced connectivity and data technology, whole new capabilities are emerging and at a scale and cost that has more commercial potential than ever before.

In summary, the Internet of Things is simply the internet expanding into the physical world. It will be integral to our daily life experiences and will transform the context in which we live. Yes, its foundations will be the huge technological infrastructure that connects the physical things – existing or new – to the internet, but those connections alone won’t create the trillions of dollars of revenue cited by big business today. The real value of the IoT will come from the services built on top of the ecosystem which will span the physical and digital, to bring new capabilities, interactions and experiences to both people and business. Thanks to new tools, resources and online communities, the innovation to deliver these services can come from anywhere; there’s massive opportunity for everyone to turn the hype around the Internet of Things into a reality.

In September, Claro released the “Guide to Succeeding in the Internet of Things”. This comprehensive guide reveals their framing of this opportunity space so that product designers, entrepreneurs and company strategists can leverage the IoT to create products and services that deliver solutions which address real user needs. To download the guide, click here.