Understanding the amazing Internet of Things (IoT) — innovation creates value.

Vast oceans of data, distributed computing going mainstream, lots of money to be made, security nightmares, and watching the next mobile future emerge all around us.

Many people have overlooked the Internet of Things (Iot) permeating our lives. With the term “Internet of Things” perhaps dating back as far as 1999, the idea is not new. Today however, we stand at the precipice of a new era of data connectivity that far surpasses anything we’ve seen emerge from the ubiquity of mobile devices — absolutely mind-blowing potential for consumer and enterprise innovation.

What is IoT?

Wikipedia has a nice definition which explains IoT as:

the network of physical objects — devices, vehicles, buildings and other items — embedded with electronics, software, sensors, and network connectivity that enables these objects to collect and exchange data.

Practically, IoT means installing micro-sensors and controllers on things to make them ‘smart,’ i.e. allowing everyday devices to communicate and share data to some sort of network. Anything that can produce data can be considered IoT, practically EVERYTHING in our natural and unnatural world: nano-technology in human tissue, smart parking meters, RFID devices, smart homes, drones, smart watches, smart cars, health monitors, and sensors for every industrial application on earth.

Why is IoT so hot right now?

IoT is gaining interest in the press because we are just arriving at a point where low-power chipsets with built-in Wifi and 3G/4G connectivity are smaller, more powerful, and cheaper to produce. At the same time, the overall cost of building and maintaining the software networks necessary for these devices to communicate has declined dramatically. In recent years we’ve also seen some fantastic consumer integrations that are starting to capture the imagination of the greater populace. The beautiful Nest thermostat could be selling more than one million thermostats per year. In 2013 Tesla introduced the world’s largest interactive vehicle display. Consumer drones are becoming commonplace. Mobile phones are streaming home security videos in real-time. Smart watches are monitoring our health while sending photos, emails and text messages.

As our consumer understanding of IoT is just starting to mature, enterprises have long invested in critical IoT infrastructure. Companies like John Deere, Maersk, AT&T, FedEx, and many more have end-to-end IoT integrations for industries like global logistics, agriculture, asset tracking, security and more.

Where will the most value be created?

We will see staggering value created in the IoT space. However, that value will be dispersed across an extremely fragmented and solution-specific hardware ecosystem. This will be in contrast to our mobile device space, which is dominated by three device formats (handheld, tablet, watch) and two main operating systems (iOS and Android), where much of the value is created by third-party applications.

IoT Data as a Service

This space is hot with services like AT&T’s M2X, Autodesk’s SeeControl, Xively, ThingWorx, ThingSpeak, DeviceHive, and more.

However, it’s a tough space to play in. Incredibly low margin, incredibly high volume. If we use similar comparable platforms like Apigee or Mashery, these companies have proven that profitability comes slow even when powering mission critical systems. Differentiation is hard when providing agnostic data solutions without penetrating behind device networks.

Acceleration of Distributed Computing

Distributed computing refers to a network of self aware servers, machines or devices that communicate with each other to share network capacity and promote beneficial characteristics like availability, failover, capacity expansion/reduction, location awareness, logging and data processing.

For example we can look at how analogous systems like Amazon Web Services, Google Cloud, MediaTemple, Rackspace, Joyent and Heroku function by distributing virtual servers across a shared network infrastructure which overlays a physical data center.

The same distributed design systems that power virtual servers for Amazon and Google are starting to become applicable to physical devices with low-power operating systems that communicate with each other in the real world. In effect, the ‘cloud’ is jumping out of the data center and into our cities and homes.

We’re starting to see interesting problems solved by the open source community around distributed key-value storage, data consistency algorithms, security, containerization, failover, log streaming, formatting and storage, and even data warehousing and aggregation.

There will be massive innovation in the area of low-power distributed computing, and large SaaS and service companies will emerge to solve difficult problems using open source platforms.

Security

In the last 18 months we’ve seen incredible security news focused on the IoT space. Baby monitors have been hacked, industrial trucks and ambulances compromised, FBI warnings about cars interrupted remotely while driving, hotel tablets hacked, power grids compromised, remote rifles changed targets, drug pumps altered, and many more wild stories.

We are accustomed to web security being handled with HTTPS connections, with many of the security breaches coming from actual hacked/fished accounts, i.e. the web is a predictable delivery and threat network at this point. In contrast, with IoT we will see a massive proliferation of proprietary networks, each with their own truly unique hardware, software, protocols, and security profiles. This all means that a huge economy will emerge for hackers, but also for security experts in the IoT space.

The Battle for Low-Power Micro-Hardware

Since the Arduino’s release in 2005, there has been a slow, percolating increase in low-power micro-hardware from Raspberry Pi, Tessel, Nanode, AMD mbed, Pinoccio, Nvidia, and many more.

We’re also starting to see new long-range micro-hardware like Filament and Flutter.

This competition for innovation will help the entire IoT industry create incredible value. As the space matures, large players like AMD, Intel and Nvidia will be forced to invest heavily, which will ultimately be a great thing for everyone.

Get on-board!

If you’re not already excited about IoT, just look around and connect the dots. Everything around us is already talking, but our ability to listen is nascent. Our ability to listen will grow exponentially in the next ten years, and untold innovation will come.