Internet of Things – the cloud’s big opportunity

Just about everyone seems to agree that The Internet of Things (IoT) is going to be the next `big thing’. Market researchers, IDC (International Data Corp) are just the latest to pitch in with opinions and estimates about its future.

And that future looks, in IDC’s eyes at least, looks to be a very big number. The company expects IoT technology and services spending to generate global revenues of $4.8 trillion in 2012 and $8.9 trillion by 2020, growing at a compound annual rate (CAGR) of 7.9%.

A good deal of that business opportunity, as IDC observes, will come from the vast number of monitoring devices operating , in real time, on (and in) the thousands of complex systems that form parts of our everyday lives. As Just one example of that, a General Electric GE90 jet engine, as found powering commonplace commercial airliners like the Boeing 777 and Airbus 330, produces as much data about itself in a day of operations as that produced by all the Tweets on Twitter in the same timescale.

And those planes each have two engines, so one plane produces twice as much data a day as Twitter. And with over 1400 have been sold so far, that is 2,800 times the amount of Twitter data a day, from just one type of aeroplane.  

There will be a much bigger business opportunity than simply collecting and collating such huge volumes of data, however. That will be making sense of it all – and not least working out which bits of that data mean everything is `normal’ and can therefore be safely ignored, and which mean `panic, and panic NOW’.

So it will be the analytical and management services exploiting this data that will, over time, produce the lion’s share of business opportunities and revenue. That, in turn, provides a golden opportunity for cloud-delivered and managed services – for there will be no other way of providing them. Many of those services will be geared towards collaboration between different service offerings – which may well be based on differing technologies.

A simple example of this might be collaboration between temperature and smoke detectors in a house collaborating to analyse their individual outputs to determine that a fire has started. They then collaborate with the local fire-fighting services to inform them, and the house security system to open up when the appropriately authenticated personnel arrive. The service, is to put the fire out as quickly as possible. The technology underpinning that has to collaborate.

 “The momentum of the Internet of Things is driven by a number of factors. There is no doubt that business and consumer demand exists and will continue to expand for IoT solutions”

"The momentum of the Internet of Things is driven by a number of factors. There is no doubt that business and consumer demand exists and will continue to expand for IoT solutions," said Vernon Turner, Senior Vice President of IDC's Enterprise Infrastructure, Consumer, Network, Telecom, and Sustainability Research. "I expect the current IoT use cases are just the tip of the iceberg."

Some enablers to the rise of IoT that IDC sees coming down the track include ongoing development of smart cities, cars, and houses, enhanced connectivity infrastructure, an increasingly connected culture. What is interesting here, possibly indicating the company’s perception that it does not exist rather than that it is not needed, is any mention of growing collaboration.

Even though there is growing demand for the IoT, the company sees several factors inhibiting growth of this market. This is not to say that they can't be overcome, but at present, they are hurdles that both vendors and enterprises will have to overcome to make IoT a reality.

Some of the challenges it sees are on the supply side, including lack of standards, global scalability, and a nascent ecosystem for application development. On the demand side, the challenges include lack of awareness and other IT/mobility priorities.

In the CSW view, standards will be essential, but the important ones will be about collaboration and interoperability rather than technology. This will become one of the cornerstones of IoT development and growth. It will, however,require a significant change of attitude amongst most of the technology vendors currently involved in developing IoT.

As can be seen in the mobile phone marketplace, the desire for vendors to `differentiate’ their own offerings – to the point where they will not interoperate with other devices. This is one of the major inhibitors of the growth in services, creating markets where service providers such as apps developers are obliged to re-develop, or at least re-engineer, their products and services to fit every alternative technology.

The fundamental point about IoT is that it will be the services provided, rather than the technology used to deliver them, which will make or break it. Sadly, history shows that it is the vendors of the delivery technology which end up limiting the potential of the services that can be delivered, as most of the best services will revolve around collaboration capabilities between disparate systems technologies.   

Despite these challenges, IDC expects the installed base of the Internet of Things will be approximately 212 billion "things" globally by the end of 2020. This will include 30.1 billion installed "connected (autonomous) things" in 2020. This is largely driven by intelligent systems that will be installed and collecting data – across both consumer and enterprise applications – by the end of the forecast period.

"It is important to remember that while the market for the Internet of Things is still in its infancy, there is a long legacy of autonomous wired connected things," said Carrie MacGillivray, Program Vice President, Mobile Services, M2M & Network Infrastructure. "The enabler for increased growth over the forecast period is the pervasiveness of wireless connectivity and ubiquitous access to the Internet regardless of location."

IDC's newly published market analysis, Internet of Things (IoT) 2013 to 2020 Market Analysis: Billions of Things, Trillions of Dollarsanalyses the worldwide opportunity for the burgeoning IoT market.

In addition, IDC recently published a related document, Internet of Things (IoT) Taxonomy, 2013that provides the classifications and definitions for the major components that comprise the IoT market and therefore are covered within IDC's IoT research. All definitions and terminology are current as of October 2013.