[This article was written by Sean Lorenz.]
Pundits within the technology sphere have been calling 2014 the year of the Internet of Things (IoT). The market revenue potentials are forecasted into the trillions and it’s a Fortune 500 land grab with major companies moving quickly to stake their claims . If this sounds a bit like pages from an American Wild West history book, a frontier analogy isn’t too far off. This is an exciting turning point in technology that—thanks to advances in plummeting sensor costs, wireless communication, and chip size reduction—will soon make today’s futuristic IoT concepts seem humorous in retrospect.
While it’s difficult to see where the market is going, given the exponential rate of change in IoT technology, I have noticed several key trends emerging. As a fellow IoT prospector on the frontier, this is my account of the most evident trends as well as some educated predictions for the future.
1. Business Value Over Technology Focus
Like any promising new technology still in its infancy stage, the true innovation stems from tech-savvy researchers and tinkerers that build fascinating devices that sometimes have no consumer base–I’m looking at you, robotics market. We have all heard about the smart toothbrushes and smart egg trays coming to market and thought: “Interesting! I wouldn’t buy one, but… sure!”
Perhaps the biggest trend is a shift from thinking, “let’s build it because we can” to “what business problem are we solving here?” IoT developers are getting wise to this mentality and building user-focused MVPs (Minimum Viable Products) that will begin hitting the market in late 2014 and early 2015.
2. Keeping It Real
At my company, Xively, we often get asked what are the real use cases for the IoT. Many times our customers walk in the door with a vague idea of how connecting their product or service to the Internet would be potentially interesting, but need a little help with seeing how an IoT-enabled product can transform their business—internally and externally. The reason for this is that most of the exciting, transformative elements happen under the hood. Right now, the true “wow” moments in the industry are far from sexy: energy savings in enterprise complexes, CRM & ERP integration, service and support, supply chain efficiencies, product part failure and alert, and so on… you get the idea.
Smart homes that respond to our every whim are really great ideas, but these products aren’t integral to our lives yet. Large manufacturing companies and enterprises are using the Internet of Things to manage internal operations and efficiency while also engaging their customers more fully with new IoT data sources aggregated in existing services like Salesforce1 or SAP.
The IoT protocol wars are heating up, but allegiances aside, publish-subscribe messaging is what the bulk of implemented models use for connecting devices to the cloud. Pub-sub protocols such as MQTT, CoAP, and AMQP are attractive for connected product development thanks to their ease of scalability and many-to-one/one-to-many possibilities.
Given the massive variance of the IoT market, there is bound to be more than one protocol that wins in the end; yet before we get to that point, there are plenty of bugs and vulnerabilities to patch across all of the thriving, open IoT protocols out there.
4. Security Panic!
Hacked refrigerators, big box stores, and security cameras… oh my! There has been no shortage of concern for privacy, security, and compliance in the Internet of Things space. Like any news story, some of this attention is warranted and some overblown.
Just like your pre-IoT old-fashioned Internet, creating specific application keys and advanced permissioning systems for hardware connecting to the cloud is essential. The amount of nodes at the edge connecting to services across the Internet will be far larger than anything we see now, but IoT platforms are already addressing these complex device lifecycle management issues that are crucial for protecting personal and enterprise information in a connected world.
Now lets hop in the DeLorean and look into the future. Rather than focus on five, ten, or twenty years into the future, let’s focus only on the next few years. Why? As I mentioned in the beginning, the IoT landscape changes on a day-to-day basis, so even a prediction looking forward six-months from now can be unreliable. This list contains no self-driving cars or sentient AIs. Instead, it makes some pretty sure bets for what to expect over the horizon.
1. A Household Name
Usually the second question after “what’s your name?” at a dinner party is the inevitable “so what do you do?” Mentioning the Internet of Things to non-techies still draws blank stares and looks of confusion. Those looks are justified given the not-so-great marketing name of IoT and the myriad definitions trying to explain what it actually is. Whether it’s called the Internet of Things, Internet of Everything, or just the good ol’ Internet, the concept of connecting any and everything to the Internet will begin to make sense for everyday consumers.
2. Consumers Slow to Adopt
Many IoT products are still just toys in many people’s minds. Startups are building products that address problems which most consumers don’t see as a problem yet. This isn’t to say the consumer IoT market will evaporate. It just means we need to get smarter about what customers actually want from smart devices.
Today’s wearable products remind me of the Newton—Apple’s infamous PDA. The problem wasn’t the idea, but rather the timing. The Apple Newton seemed clunky, not very powerful, and low on the usability scale. Years later, the iPhone and iPad came along with a set of features and a form factor that customers were looking for. The same feels true of wearables right now—they may need a few more years to incubate before the general public gives two thumbs up.
Other consumer IoT markets such as the smart home or driverless cars seem to be in the same situation as the wearables market, but this is changing quickly with major players like Apple and Google moving into these arenas. For example, in the home automation space, frameworks like Apple HomeKit will be essential for unifying disparate protocols and clouds into one application that can handle various products’ data, automating much of the technology and pushing it into the background. I am sure there is a brilliant developer learning Swift and building the first killer smart home app as we speak.
3. Analytics and Automation
This prediction probably comes as no surprise, but it is worth stating. Most companies willing to foray into the IoT unknown are, for now, happy with connecting their devices to an external application or cloud service. Having a place to send the data is usually the first step in constructing an IoT system. So what do you do with all this data once you have it?
Reporting tools for IoT are just starting to become available, but this is just the tip of the iceberg. The real magic lies in the ability to use exploratory and predictive algorithms to make actionable intelligence a reality. These insights are beneficial to both businesses understanding their customers and to the customers themselves.
One could imagine closing the feedback loop between sensor, cloud, and actuator by adding some beautiful supervised machine learning code into the cloud platform at some point in the chain. There are currently a handful of analytics startups focusing on IoT specifically, but this market is about to explode from both platform and application perspectives.
4. IoT Startups Galore
For any developers out there interested in the IoT with a real customer pain that needs solving, now is the time to get coding and building that pitch deck. With hardware back en vogue, venture capital funding of IoT-centric companies ison the rise . Having been to a number of IoT events, the amount of enthusiasm by VC and angel investors is palpable. There’s a definite need for developers with great, connected product and service ideas; so, if you haven’t already, I strongly suggest putting on your favorite prospecting gear and exploring the untamed wild west of the Internet of Things.