Beyond Consumer Gadgets, What’s Next for the IoT?

Gartner may have placed the Internet of Things (IoT) at the top of its 2014 Hype Cycle for Emerging Technologies report, but it still projects a $1.9 trillion market and 26 billion smart connected products by 2020.

That’s rapid growth. Over the next five years the IoT will shift from buzzword to mainstream, but what does that really mean?

Smart, connected products aren’t homogenous. The consumer side of the IoT promises lifestyle improvements, while commercial (B2B) IoT is already advancing how manufacturers create, operate, and service products.

Delineating between the two can tease out insights into market growth, risks and opportunity:

Lifestyle drives consumer adoption of the IoT; business opportunity drives commercial adoption

Consumer connected products—think smart phones and other electronic gadgets—offer us greater convenience and have seen staggering adoption, growth and success, but there may be a limit to what they can deliver. Smart cat box anyone? Not so much. Conflating smart and “better” risks saturating the market with low-value products that dull consumer interest.

Commercial adoption of the IoT, however, is being propelled by new markets which are simply too profitable to ignore. There’s a growing necessity to manage complex products with smart manufacturing, requiring a strategic reshaping of operations rather than just a piecemeal investment in smart machinery.

Consumer data engages users to drive advertising; commercial data engages machines to drive productivity

Smart product data can provide consumers with direct informational feedback (e.g. fitness devices), or enable services (e.g. energy conservation). Data can also serve as a conduit for data brokering, much the same way Facebook resells user information to advertisers. Over time, these products should evolve to optimize machine to human (M2H) interactions, increasing valuable profiling data.

The risk here is excessive privacy-loss without a clear user benefit, and a resulting mistrust. In the long run however, more targeted, accurate marketing may help to reduce the invasiveness ad models that are used today.

In contrast, commercial IoT data will likely be shared via a machine to machine (M2M) network. M2M activity provides several benefits, including minimizing user error, and accelerating response times.

An over reliance on M2M over M2H could prevent valuable human-sourced analysis of operational data, so the appropriate balance needs to be found.

Consumer IoT systems use simple networks and protocols; commercial IoT systems use complex networks

While consumers continue to use Wi-Fi, Bluetooth, and 4G to connect them in their home, office and car, a more sophisticated internet of homes and cars will introduce new data to conserve energy, reduce traffic and other lifestyle improvements, while protocols will be refined to deliver maximum service and satisfaction at lower cost.

Consortiums are currently assembling standards recommendations and vendor certifications. Protocols will serve diverse requirements (e.g. low power, compact, sporadically distributed field sensors will have different optimal communication protocols than complex, centrally operated machinery), and commercial IoT platform solutions will help to solve current protocol challenges.

Consumer security is porous with individualized consequences; commercial security will be vigilant with systemic consequences

While outfitting homes and workplaces with smart appliances, consumers risk introducing substantial security vulnerabilities. One recent survey measures existing consumer concern over security at 67 percent, and the emergence of sophisticated thingbots and coordinated attacks on sensitive data create mistrust and delay adoption. A more robust “Internet of Security” will emerge and be a game-changer for protecting computers and devices.

Commercial IoT security is already a hot topic, causing indigestion throughout businesses everywhere. The predecessor to the IoT—smart, disconnected products capable of monitoring activity and actuating remote input—is already pervasive throughout manufacturing.

As companies establish interconnected systems, IT departments and executives are treading carefully, understanding that inadequate security can lead to a catastrophic compromising of data. Severe, well-publicized blunders could result in government regulations that stifle innovation. But security firms and C-level positions dedicated to IoT security are already emerging.

It seems likely that a commercial move to the IoT will continue to be larger-scale, conscious and strategic, while consumer growth will be based on piecemeal interest in smart product categories. A true M2M-based IoT is already materializing in the commercial market. The consumer market will follow later, as innovators recognize the true value of a network of smart connected products.

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