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This May, California-based company C3 IoT announced that it was managing streams of information from 100m digital eyes and ears.
The sensors and devices that the eight-year-old business has “under management” are planted in the factories, processing plants and buildings belonging to its clients, which include global energy company Engie and the US Department of State.
By helping these organisations harvest and make sense of the data flowing through their systems over the internet, privately held C3 IoT — valued at more than $1bn — increased its revenue by 65 per cent year-on-year.
The start-up’s growth is a sign that the internet of things — the attention-grabbing label that refers to electronic devices that send and receive information over the internet — is becoming big business.
Twenty years ago, being online meant hunching over a chunky desktop computer and dialling up the internet on a fixed phone line. Today if you wear a FitBit or Garmin Activity Tracker you are already connected.
The internet is also in home appliances such as sprinkler systems controlled by smartphones or fridges that order more milk when supplies run low.
For companies, connected devices present compelling opportunities. Bill Ruh, chief digital officer at US conglomerate General Electric, hailed the IoT as “the way to get to the next level of productivity”.
A growing business commitment is reflected in hiring patterns. According to a LinkedIn analysis, the third quarter of 2017 saw four times more advertisements for jobs mentioning the IoT than in the same quarter two years ago. The number of such jobs posted is, on average, doubling each quarter, year-on-year.
IoT sensors in electronic equipment constantly gather data. Businesses can crunch through this, often using machine learning, to discover more about their customers, machines or supply chains. It is a wealth of information that should, in theory, help managers and executives make better decisions.
Researchers expect that companies will increase spending to capture the potential benefits of “internetting” everything, from tracking pallets of their goods to giving WiFi-connected pedometers to staff.
Estimations for spending on the IoT vary considerably. Research firm Technavio believes that the market value of the IoT could be nearly $132bn in 2020. Gartner says more than $440bn will be spent on the IoT in 2020. IDC, meanwhile, reckons that global spending on the IoT will reach $1.29tn in 2020.
Sam Lucero, an analyst at IHS Markit, says the numbers are hard to verify: “To my way of thinking it does not mean anything because who’s getting that money? It’s a very convoluted picture, ultimately.”
Mark Hung, an analyst at Gartner, says that while connected consumer goods such as Apple’s smartwatch have gained most media attention, “industries that are asset-intensive by nature”, including manufacturers and energy companies, spend the most on connected devices.
Bringing the IoT to business is a slow process rather than a revolution. “Right now, the internet of things is still largely about increasing efficiency,” says Mr Lucero.
The companies benefiting most are those providing the services to build it, says Mr Hung, “because companies are still in the exploration stage with most of their IoT projects . . . they’re looking for outside help for that,” rather than trying to create them in-house.
Cloud computing giants, allowing organisations to access their information from anywhere on the planet, are the biggest providers of IoT platforms — including Google, Microsoft, Amazon Web Services and IBM.
Long-established manufacturing and utilities companies have also rushed to offer IoT services.
Hitachi, the Japanese company, made what Toshiaki Higashihara, company president and chief executive, called a “monumental change” in September, when it combined three companies into Hitachi Vantara, a single business focused on the IoT.
GE has also entered the arena, offering Predix, an IoT platform for industry, while SoftBank, the Japanese telecom company, this year acquired chipmaker Arm Holdings for $32bn, largely based on its anticipated ability to produce 1tn chips for IoT devices over the next two decades.
Some start-ups hope to establish themselves in the nascent market for providing IoT platforms, notably Ayla Networks of California, which is backed by investors including Cisco and led by David Friedman, who previously worked at tech groups ZeroG Wireless and SanDisk.
The IoT does, however, come with a host of real world difficulties, from ethical questions over companies spying on employees to an organisation’s vulnerability to cyber attack.
Internet-enabled devices have been hacked and used to mount cyber attacks. Stories abound about mundane internet-connected items being exploited to gain access to systems, including a fish tank in a casino.
The US Federal Trade Commission is so concerned about the effect on the privacy and information security of consumers that it laid out best security practices two years ago.
Mishandling IoT security is a legal and reputational risk for companies and the commission has already taken device-makers to court. In January, it charged D-Link, a computer networking company, and its US subsidiary, over inadequate security measures that the regulator says could have allowed criminals to gain access to users’ live webcam feeds — although part of the FTC’s case was subsequently dismissed by a California judge.
Chris Doran, director of research collaborations at Arm Holdings, told the MIT Technology Review that security anxieties were a barrier for the IoT.
“Most people realise . . . that IoT won’t happen until security is cracked to the point that people have a sufficient level of comfort [with it],” said Mr Doran.
There are also ethical concerns, with the EU taking a dim view of businesses using wearable devices to monitor staff’s footsteps: an EU panel said in June that the practice should be outlawed even if businesses obtained workers’ permission.
These potential storms make it difficult to determine the return on investment that companies will achieve from becoming hyper-connected, says Mr Lucero.
Even within the industry, companies are pragmatic about how far the IoT can go.
CloudMine, a Pennsylvania-based start-up, provides hospitals with a platform to help manage and analyse data, a key component for any IoT project.
“I think that health IoT, whether it’s wearables or portable devices, provide us with the ability to capture an unprecedented amount of patient data,” says Steve Wray, CloudMine’s chief executive. This patient information could be used to personalise healthcare.
He adds, though, that “the great promise somewhat has to be tempered with a bit of realism,” because healthcare in the US “operates in a largely disconnected state.”
“Healthcare IoT is an example of potentially putting the cart before the horse,” he says.
5G and the fourth industrial revolution
According to Rajeev Suri, Nokia’s chief executive, the fourth industrial revolution will be powered by superfast 5G internet.
“I know that more than a few of you may wonder why we need 5G, wonder what is so different about it, wonder whether it will be worth the billions planned to be spent on it,” he told the Mobile World Congress.
“My simple answer is yes. It is both worth it and it is also necessary.”
Visitors to Seoul for next year’s Winter Olympic Games will be the first to try the turbo-charged internet connection, thanks to a rollout by Ericsson and the KT Corporation (formerly Korea Telecom).
A full mobile-standard version of 5G is expected to be widely available by 2020, says IHS Markit analyst Sam Lucero.
Analysts say that 5G will be a big leap forward for the industrial internet of things, for example enabling split-second responses on a factory floor.
Less battery power will be required for devices connecting to 5G, meaning that remotely deployed devices, for instance a sensor detecting water levels on a farm, could last much longer.
Orange and Nokia are partnering to accelerate the development of 5G services for industries in Europe.