Analyst firm Gartner forecasts there will be 25 billion things connected on the internet by 2020.
As the internet of things grows, so will the number of applications developed to control internet-connected devices and objects. A standard communications protocol is only the beginning. Pan-industry collaboration across all industry sectors will be needed to control and make sense of the data produced.
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A number of industries are now involved in connected technology as inter-device communication increases. Health and fitness products targeting the consumer is set to drive the trend, but Gartner fellow Jim Tully says utilities will be one of the big growth areas, with the introduction of smart meters and smart appliances.
In a recent Computer Weekly article, Peter Terium, CEO of German electricity provider RWE, noted: “In the near future, people will be able to see exactly how much energy is used in their homes, helping them better manage their energy profile while providing energy companies with invaluable information for managing supply and demand.”
Regulators and interoperability will drive the development of cross-industry standards.
Home appliance manufacturer Bosch Siemens Home (BSH) recently unveiled Home Connect, a family of internet-connected appliances. Among the features the smart appliances will provide is an iOS and Android app to provide remote control and monitoring over Wi-Fi.
Speaking at the Gartner Symposium in Barcelona, Jürgen Sturm, CIO of BSH appliances, discussed how the company took an open approach to Home Connect, which allows other companies to develop software and products compatible with its software platform.
So how will standards and regulation affect the connected world?
Read more about the connected world
De facto standards
As devices and industries develop, the potential for smaller players to enter the market grows. Cisco, for instance, recently launched a contest to encourage startups and SME technology companies to develop internet of things systems for public transport.
In a post on the Bosch Connect World blog, Bosch software innovations senior marketing & communications manager, Anita Bunk, wrote: "Seek out companies on the IoT startup scene – join them for a drink at an IoT meetup to float your ideas (or, if you’re thinking bigger, to make a nice addition to your portfolio)." A comment in one of Bunk's LinkedIn posts stated: "To be successful in marketing IoT you either need to bring something to the market that is ‘Need to have – now' or have the capability to do very long-term investments (10-20 years). Being a startup, we have to do the first option."
While it is hard to fathom how connected devices would change the world of banking – a sector driven by software for high frequency algorithmic trading – Oliver Bussman, CIO of UBS, recently said the IoT would be a major disrupter in banking.
Some startups build on existing banking standards, while disrupters such as Bitcoin create entirely new operating models. As Bunk notes in the blog post, smaller companies are more agile. They are also driven to succeed by the need to create something. Supporting and investing in smaller companies allows larger businesses to tap into this creative thinking and innovation. Working with startups can be symbiotic in that the smaller company benefits from the marketing reach of the larger business; while the larger business gains innovation, which it can use to support its own product development, building an ecosystem of third-party suppliers.
For instance, there are third-party apps on Google Play and the Apple App Store for Philips Hue, the wireless light system.
Owning the ecosystem
The opposite of the open approach is a closed system - the walled garden of proprietary technology. This is Apple's model, says Ben Moscowitz, senior director of development strategy at Mozilla. He says Apple carefully controls everything that goes into its product without external influence, to promote innovation internally.
He says: “There’s one kind of innovation that stops completely, and that’s innovation against Apple’s business interest. And this is what happens when you end up with walled gardens and silos.”
With Apple controlling every aspect of its market in fine detail, Moscowitz says: "You get great products, great user experiences.”
Similarly, Nest partnered with electricity and gas provider npower in April 2014 to offer UK households its smart central heating system. Nest is a rival to the British Gas offering, Hive. Companies such as Honywell offer standalone internet thermostats. None of these products interoperate. There are also questions over how these products, and the software services that power them, will be sustained over the lifetime of a household central heating system.
Apple, Google and other major companies entering the IoT market have little chance of providing a user or, increasingly, a connected device, with every possible integration point to the outside world.
All of this technology seems to be driven from a consumer angle, rather than a commercial angle
Andrew Tang, MTI
User interface versus machine interface
Philips' Hue lighting system now has hundreds of external applications, according to AppleInsider. There are apps that change the light's colour in response to music, or create lighting schemes.
But many firms will not allow open standards in on the consumer-facing side of the IoT.
Andrew Tang, director of security at managed data services company MTI, points out that much of the functionality of IoT-led devices is hidden, and this lack of transparency overwhelms consumers, even though most devices already do this.
“All of this technology seems to be driven from a consumer angle rather than a commercial angle,” Tang says.
“It’s being led by devices rather than applications themselves, and I’m sure it will change but, when we look at the current, what we consider the internet of things – such as light bulbs and thermostats and wearables – they’re being led by the function of that device, rather than the application itself.”
What the future holds
The IoT will need some standards in place if it is not to become just another technology sector governed by the big IT companies.
Beecham research recently called on the technology industry to address security problems that could occur if standards continue to develop slowly. It argued that the industry must unite – from silicon semiconductor manufacturers to network operators and system integrators – to ensure security is built-in from start to finish.
Mozilla's Moscowitz says universal and interoperable protocols are important: “We need to not be owned by any particular entity, because if they’re owned then they’re controlled; and if they’re controlled, that creates the possibility that the person who owns it is vulnerable to executive intervention.”
Standardisation for the IoT as a whole may be unlikely, as larger organisations are generally reluctant to use methods already in place to encourage diversity in the market. And Tang points out that people are drawn towards traditional applications that will provide everything for them.
But that said, there remains scope for differentiation by offering customers greater choice or, like BSH, offering an interoperable ecosystem. Tang summarises: “If we standardise on both hardware and coding, it’s of benefit to the consumer because I then don’t need to buy product A to go with application A, and I don’t need to buy product B that will only work with application B - I could buy any product and it should just work with all these applications.”