The Internet of Things and Business

Martin De Saulles

• Editore: Routledge
• Anno: 2016
• ISBN:
  9781134975129
• Edizione: 1
• Argomento: Business
• Categoria: Business generale

The internet of things (IoT) has the potential to change how we live and work. It represents the next evolution of the computing revolution and will see the embedding of information and communication technologies within machines at home and in the workplace and across a broad range of industrial processes. The effect will be a radical restructuring of industries and business models driven by massive flows of data providing new insights into how the man-made and natural worlds work.

The Internet of Things & Business explores the business models emerging from the IoT and considers the challenges as well as the opportunities they pose to businesses around the world. Via real examples and a range of international case studies, the reader will develop an understanding of how this technology revolution will impact on the business world as well as on broader society.

1 Introduction

“Every great movement must experience three stages: ridicule, discussion, adoption.”

– John Stuart Mill

The Internet of Things (IoT) has the potential to change how we live and work in ways greater than the internet has up to this point. Thus far, the internet has changed how we communicate and access information. Email, instant messaging and social media have accelerated the speed with which we share information with friends, family and colleagues, and the World Wide Web (WWW) has provided a global platform for freely publishing information to the world. However, while these innovations have made significant impacts on the publishing, communications and entertainment sectors, industries in other sectors have been far less affected. The application of computing technologies within businesses has changed back-office processes to an extent in terms of operating efficiencies, but most industries still develop and deliver their goods and services in much the same way they did 30 years ago. The IoT is the next evolution of the computing revolution and will see the embedding of information and communication technologies (ICTs) within machines at home and in the workplace and across a broad range of industrial processes. The effect will be a radical restructuring of industries and business models driven by massive flows of data providing new insights into how the man-made and natural worlds work. New companies will emerge to capitalise on this data while established ones will need to adapt the way they operate or face extinction in the same way that steam, electricity and the internal combustion engine rendered obsolete old ways of working. Within a few years many billions of new devices will be connected via the IoT, generating trillions of dollars of value to businesses and national economies (Gartner, 2014; Manyika et al., 2015; Norton, 2015).

So what is the Internet of Things? Gartner, the technology analyst company, defines the IoT as:

the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.

(Gartner, 2016)

Although this may sound like a rather dry definition for an area of technology which promises so much, it does encapsulate the form and function of the IoT at a high level. The key words to take away from the definition are “network”, “embedded”, “communicate”, “sense” and “external environment”. Embedding networked sensors into everyday objects and ones yet to come to market will provide businesses, as well as public bodies, with almost unimaginable quantities of data. The application of machine learning and artificial intelligence (AI) software to analyse and make sense of this data will herald a new wave of innovation in business processes and industrial organisation. Other definitions for the IoT exist; network technology giant Cisco talks about the “Internet of Everything” while some companies talk about machine-to-machine (M2M) innovations. These are explored in more detail in Chapter 2, but the key point to realise is that the IoT is not a single technology, but a broad range of technologies which are coming together in synergy where the whole is greater than the sum of its parts. This book explores the impact that the IoT is having on the business world and considers some of the key companies driving this revolution, the business models which are emerging and where it is likely to lead. This is a fast-moving sector with new players and technologies emerging all the time, which makes writing a book on the subject difficult. However, although up-to-the-minute examples have been used to illustrate what is happening in the IoT world, the core models and frameworks discussed will provide a solid foundation for the reader to make sense of this revolution as it unfolds.

Chapter 2 considers the origins of the IoT and the technologies which have come together to form its foundations. In Chapter 3, the core drivers from the supply and demand side are examined to explain why the IoT is developing in its current form. Chapter 4 goes into detail on the key companies from across the technology spectrum which are shaping the IoT. Chapter 5 explores the business models of these companies and considers the broader impact on where value is likely to be generated in an IoT world. In Chapter 6, the main challenges facing companies and broader society from a pervasive IoT are examined, including the issues of privacy, security and regulation. Finally, in Chapter 7, the future of the IoT is considered in terms of likely business winners, emerging technologies and the impact of the IoT on the world of work.

References

Gartner, 2014. Gartner Says 4.9 Billion Connected. [online]. Available at: www.gartner.com/newsroom/id/2905717.

Gartner, 2016. IT Glossary. [online]. Available at: www.gartner.com/it-glossary/internet-of-things/.

Manyika, J., Chui, M., Bisson, P., Woetzel, J., Dobbs, R., Bughin, J. and Aharon, D., 2015. The Internet of Things: Mapping the Value beyond the Hype. San Francisco, CA: McKinsey & Company.

Norton, S., 2015. Internet of Things Market to Reach $1.7 Trillion by 2020: IDC. Available at: www.idc.com/getdoc.jsp?containerId=prUS25658015.

2 The origins of the IoT

Before exploring in detail the implications of the IoT for business as well as broader society, it is important to understand the origins of this technology revolution. As with all new computing and communication technologies, the IoT is built on a range of innovations stretching back to the nineteenth century, when it first became possible to remotely monitor environmental conditions. This chapter considers these developments and the role they played in creating the IoT.

The ability to remotely monitor the environment and/or control devices at long distance is known as telemetry. The first telemetry system is reported to have been in early nineteenth-century Russia, where the Russian army remotely detonated mines to slow down the invading French. A system closer to more modern telemetry systems designed to relay information from remote locations can be traced back to 1845, when a data transmission circuit was established between the tsar’s Winter Palace and Russian army headquarters to exchange logistics information (Mayo-Wells, 1963). In the twentieth century, telemetry became widely accepted for use in power-generating plants to remotely measure power outputs of individual power stations and loading on transmission networks. These landline-based systems used fixed wires and were rolled out to chemical-processing plants, oil wells and petroleum pipelines to transmit operating information. The first wireless telemetry systems were used in weather balloons, where the design emphasis was on size and power consumption. This was then incorporated into aircraft to monitor flight performance and removed the need for pilots to make measurements themselves (Foster, 1965). The Second World War accelerated the deployment of wireless telemetry systems in aircraft, but also in the emerging rocket-based weapons being developed in Germany. These technologies fed into the American space program and were pivotal in getting men on the moon.

By the mid-twentieth century, the value of telemetry systems and, more specifically, the data which flowed across them was becoming apparent in both commercial and government spheres. However, one of the limitations of these systems was their proprietary nature, with systems being developed for very specific purposes and using a disparate range of hardware, software and transmission protocols. While the systems were generally good at providing data for the narrow purpose for which they had been built, they had little or no value beyond that. Later in the twentieth century, these systems became more sophisticated and the term machine-to-machine (M2M) emerged to describe a broad range of systems and networks which were being deployed across industrial sectors.

At the same time, the internet was taking shape and by the turn of the millennium had become established as the primary network for exchanging digital data streams across and between individuals, corporations and the public sector. Built around the TCP/IP open protocol, the internet allowed anyone or anything, using this protocol, to connect with each other and exchange digital bits which might be reconstructed to form text, images, video or music. The non-proprietary and open nature of the internet was the key factor in its rapid dominance over proprietary networks such as CompuServe, AOL and Prodigy. The open nature of the internet as a platform for innovation encourages third parties, whether large corporations or students in dorm rooms, to develop content and applications which can sit on top of this network. Permission is not required from any ‘internet authority’ to create the next Facebook or Google. Obviously, there are barriers to entry based around the notion of network externalities or network effects which give established players such as Facebook an inherent advantage, but the internet itself is still, for the moment at least, an open platform.

As we saw in the introductory chapter, the IoT encompasses a range of information and communication technologies (ICTs), as well as activities such as data analytics. The development of telematics and then M2M systems has proven the business case for data-gathering and -monitoring networks, and the mass deployment of the internet has provided a robust and cost-efficient backbone across which to transmit the data. Alongside the development and adoption of the internet has been the pervasive diffusion of computing by both businesses and individuals. The computing industry has seen a series of revolutions, first with the rise of mainframe computing in the 1950s and 1960s followed by mini computers in the 1970s. In the 1980s and 1990s, personal computers (PCs) introduced end users to the computing revolution and provided the foundations, along with mobile phones, for the smartphone revolution. By the end of 2015, it was estimated there were 3.2 billion smartphones users around the world (43% of the global population), and it is forecast that this number will rise to 6.3 billion users by 2021 (81% of the global population) (Qureshi, 2016). Smartphones are no longer a high-end luxury for wealthy individuals, but are becoming pervasive in developing countries as well. The attractions of having a connected computer which can fit in your pocket are obvious, and such devices are becoming the entry point into computing for generations of consumers in countries where the personal computing revolution has been skipped for a mobile computing one. This is being made possible through the economies of scale enabled by the mass production of smartphones with unsubsidised handsets available for less than $20. A side effect of this revolution is the industry which has emerged, particularly in China and Southeast Asia, producing smartphone components such as sensors, accelerometers, radio chips and microprocessors. These have become commodity items and are one of the enablers of the IoT which relies on cheap components to produce this next generation of embedded and pervasive computing devices.

The notion of computing devices becoming embedded in our daily lives emerged once PCs had begun to appear on office desks and in homes. In 1991, Mark Weiser, then head of the Computer Science Laboratory at the Xerox Palo Alto Research Center,¹ claimed that:

The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it.

(Weiser, 1991, p.94)

Weiser’s prescient paper anticipated the emergence of embedded, intelligent devices and saw beyond the PC as the dominant paradigm for how we interact with computers. While new technologies have emerged since 1991 which Weiser could not have anticipated, his vision of a world where intelligence is built into everyday objects to create an environment of ‘ubiquitous computing’ describes many of the features of the emerging IoT. According to Gravely (2015), the first what he terms “internet appliance” was a Coke machine in the early 1980s at Carnegie Mellon University which allowed staff to check via the internet whether the machine had cold drinks so they did not have to make a wasted journey down the hallway. However, it took until the late 1990s for a more refined description of what a world of ubiquitous computing might look like when Kevin Ashton, then a brand manager at Proctor and Gamble (P&G), saw the potential for RFID chips to streamline the vast supply chains which companies like P&G were part of. Kellmereit and Obodovski (2013) sum up Ashton’s vision for an “Internet of Things”:²

Information about objects – like Gillette razor blades or Pantene shampoos – would be stored on the internet, and the smart tag on the object would just point to this information.

(Kellmereit and Obodovski, 2013, p.17)

Reflecting on his original vision 10 years later, Ashton (2009) argues that the core benefit of a fully developed Internet of Things would be computers gathering information from RFID- and sensor-enabled objects for themselves rather than relying on humans to input the information. People, he claims, are not as efficient as computers at collecting, managing and inputting data, and by bypassing humans we may be creating a new revolution greater than that enabled by the internet.

This idea has been taken up by a number of writers, researchers and analysts (Anderson and Rainie, 2014; Bauer, Patel and Veira, 2014; Berthelsen, 2015; Greenfield, 2006; Kellmereit and Obodovski, 2013; Meunier et al., 2014) over the previous decade to the extent that a broad consensus now exists as to what the IoT comprises and what its potential is. As with any new technology there is always the risk of it being over-hyped by enthusiastic vendors, analysts and commentators. Gartner acknowledges this and in 2015 placed the IoT at the “Peak of Inflated Expectations” in terms of its path to diffusion (Gartner, 2015). However, it should be noted that this stage precedes, for those emerging technologies which are ultimately successful, the journey to the “Slope of Enlightenment” and then the “Plateau of Productivity” if one accepts Gartner’s model of technology adoption.

There are strong indicators that the IoT is not a transient technology which will go the way of previous over-hyped innovations that never met with market success. We can see that the enab...

Indice dei contenuti

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of figures
• Acknowledgements
• 1 Introduction
• 2 The origins of the IoT
• 3 IoT drivers
• 4 IoT players
• 5 IoT business models
• 6 IoT challenges
• 7 The new business landscape
• Index