One day, talking to your fridge could become a normal part of your week.
Thus far in our Future of the Internet series, we’ve discussed how the Internet’s growth will soon reach the world’s poorest billion; how social media and search engines will start offering sentiment, truth, and semantic search results; and how tech giants will soon exploit these advances to develop virtual assistants (VAs) that will help you manage every aspect of your life.
These advances are designed to make people’s lives seamless—especially for those who freely and actively share their personal data with tomorrow’s tech giants. However, these trends by themselves will fall short of providing that completely seamless life for one very big reason: search engines and virtual assistants can’t help you micromanage your life if they can’t fully understand or connect to the physical objects you interact with day to day.
That’s where the Internet of Things (IoT) will emerge to change everything.
What is the Internet of Things anyway?
Ubiquitous computing, the Internet of Everything, Internet of Things (IoT), they are all the same thing: At a basic level, IoT is a network designed to connect physical objects to the web, similar to how the traditional Internet connects people to the web through their computers and smartphones. The main difference between the Internet and IoT is their core purpose.
As explained in the first chapter of this series, the Internet is a tool to more efficiently allocate resources and communicate with others. Sadly, the Internet we know today does a better job of the latter than the former. IoT, on the other hand, is designed to excel at allocating resources—it’s designed to “give life” to inanimate objects by allowing them to work together, adjust to changing environments, learn to work better and try to prevent problems.
This complementary quality of IoT is why the management consulting firm, McKinsey and Company, reports that IoT’s potential economic impact could range between $3.9 to 11.1 TRILLION a year by 2025, or 11 percent of the world’s economy.
A little more detail please. How does IoT work?
Basically, IoT works by placing miniature-to-microscopic sensors onto or into every manufactured product, into the machines that make these manufactured products, and (in some cases) even into the raw materials that feed into the machines that make these manufactured products.
The sensors will connect to the web wirelessly and initially be powered by miniature batteries, then through receptors that can collect energy wirelessly from a variety of environmental sources. These sensors provide manufacturers, retailers, and owners the once impossible ability to remotely monitor, repair, update, and upsell these same products.
A recent example of this are the sensors packed into Tesla cars. These sensors allow Tesla to monitor the performance of the cars sold to their customers, which then allows Tesla to learn more about how their cars operate in a range of real-world environments, far surpassing the testing and design work they could do during the car’s initial design stage. Tesla can then use this mass of big data to wirelessly upload software bug patches and performance upgrades that continuously improve their cars real world performance—with select, premium upgrades or features potentially withheld to later upsell existing car owners.
This approach can be applied to almost any item, from dumbbells to fridges, to pillows. It also opens up the possibility of new industries that take advantage of these smart products. This video from Estimote will give you a better sense of how this all works:
And why didn’t this revolution happen decades ago? While IoT gained prominence between 2008-09, a variety of trends and technological breakthroughs are currently emerging that will make IoT a commonplace reality by 2025; these include the:
- Expanding the global reach of reliable, cheap Internet access through fiber optic cables, satellite Internet, local wifi, BlueTooth and mesh networks;
- Introduction of the new IPv6 Internet registration system that allows over 340 trillion trillion trillion new Internet addresses for individual devices (the “things” in IoT);
- Extreme miniaturization of inexpensive, energy-efficient sensors and batteries that can be designed into all manner of future products;
- Emergence of open standards and protocols that will allow a range of connected things to securely communicate with each other, similar to how an operating system allows a variety of programs to work on your computer (the secretive, decade-old company, Jasper, is already the global standard as of 2015, with Google’s project Brillo and Weave gearing up to be its main competitor);
- Growth of cloud-based data storage and processing that can cheaply collect, store, and crunch the colossal big data wave that billions of connected things will generate;
- Rise of sophisticated algorithms (expert systems) that analyze all this data in real time and make informed decisions that impact real-world systems—without human participation.
IoT’s global impact
Cisco predicts there will be over 50 billion “smart” connected devices by 2020—that’s 6.5 for every human on Earth. There are already search engines entirely devoted to tracking the growing number of connected devices now consuming the globe (we recommend checking out Thingful and Shodan).
All of these connected things will communicate over the web and regularly generate data about their location, status, and performance. Individually, these bits of data will be trivial, but when collected en masse, they will produce a sea of data greater than the amount of data collected throughout human existence to that point—daily.
This data explosion will be to future tech companies what oil is to present day oil companies—and the profits generated from this big data will eclipse oil industry profits entirely by 2035.
Think of it this way:
- If you ran a factory where you could track the actions and performance of every material, machine, and worker, you’d be able to discover opportunities to reduce waste, structure the production line more efficiently, order raw materials exactly when needed, and track finished products all the way to the end consumer.
- Likewise, if you ran a retail store, it’s backend supercomputer could track the flow of customers and direct sales staff to serve them without ever involving a manager, product inventory could be tracked and reordered in real time, and petty theft would become near impossible. (This, and smart products in general, is explored deeper in our Future of Retail series.)
- If you ran a city, you could monitor and adjust traffic levels in real time, discover and fix damaged or worn infrastructure before they fail, and direct emergency personnel to weather-impacted city blocks before citizens complain.
These are just a few of the possibilities IoT allow. It will have an enormous impact on business, reducing marginal costs to near zero while affecting the five competitive forces (business school speak):
- When it comes to the bargaining power of buyers, whichever party (seller or buyer) gains access to the connected item’s performance data gains leverage over the other party when it comes to pricing and services offered.
- The intensity and variety of competition between businesses will grow, since producing “smart/connected” versions of their products will turn them (in part) into data companies, upselling product performance data, and other service offerings.
- The threat of new competitors will gradually decrease in most industries, as the fixed costs associated with creating smart products (and the software to track and monitor them at scale) will grow beyond the reach of self-funded startups.
- Meanwhile, the threat of substitute products and services will grow, as smart products can be improved, customized, or entirely repurposed even after they are sold to their end user.
- Finally, bargaining power of suppliers will grow, since their future ability to track, monitor, and control their products across all the way to the end user can allow them to eventually sidestep intermediaries like wholesalers and retailers entirely.
IoT’s impact on you
All that business stuff is great, but how will IoT impact your day-to-day? Well, for one, your connected property will regularly improve through software updates that enhance their safety and usability.
On a more profound level, “connecting” the things you own will allow your future VA to help you further optimize your life. In time, this optimized lifestyle will become the norm among industrialized societies, especially among younger generations.
IoT and Big Brother
For all the love we’ve showered upon IoT, it’s important to note that its growth won’t necessarily be smooth, nor will it be broadly welcomed by society.
For IoT’s first decade (2008-2018), and even through much of its second decade, IoT will be plagued by a “Tower of Babel” issue where sets of connected things will operate on a wide range of separate networks that won’t easily communicate with each other. This issue dampens the near-term potential of IoT, as it limits the efficiencies industries can squeeze out of their workplace and logistics networks, as well as the extent that personal VAs can help the average person manage their day-to-day connected lives.
In time, however, the clout of tech giants like Google, Apple, and Microsoft will push manufacturers to a few common IoT operating systems (that they own, of course), with government and military IoT networks remaining separate. This consolidation of IoT standards will finally make the dream of IoT a reality, but it will also breed new dangers.
For one, if millions or even billions of things are connected to a single common operating system, said system will become a prime target of hacker syndicates hoping to steal massive inventories of personal data about people’s lives and activities. Hackers, especially state-backed hackers, can launch devastating acts of cyberwar against corporations, state utilities, and military installations.
Another big concern is the loss of privacy in this IoT world. If everything you own at home and everything you engage with outside becomes connected, then for all intents and purposes, you will be living in a corporatized surveillance state. Every action you make or word you say will be monitored, recorded, and analyzed, so the VA services you sign up for can better help you live in a hyper-connected world. But should you become a person of interest for the government, it wouldn’t take much for Big Brother to tap into this surveillance network.
Who will control the IoT world?
Given our discussion about VAs in the last chapter of our Future of the Internet series, it’s very likely that those tech giants building tomorrow’s generation of VAs—particularly Google, Apple, and Microsoft—are the ones whose IoT operating systems electronics manufacturers will gravitate to. In fact, it’s almost a given: Investing billions into developing their own IoT operating systems (alongside their VA platforms) will enhance their objective of pulling their user base deeper into their profitable ecosystems.
Google is especially primed to gain unmatched market share in the IoT space given its more open ecosystem and existing partnerships with consumer electronics giants like Samsung. These partnerships by themselves generate profit through the collection of user data and licensing agreements with retailers and manufacturers.
Apple’s closed architecture will likely pull in a smaller, Apple-approved group of manufacturers under its IoT ecosystem. Much like today, this closed ecosystem will likely lead to more profits squeezed out from its smaller, more affluent user base, than Google’s broader, but less affluent users. Moreover, Apple’s growing partnership with IBM could see it penetrate the corporate VA and IoT market faster than Google.
Given these points, it’s important to note that American tech giants aren’t likely to take over the future entirely. While they might have easy access to South America and Africa, frenemy nations such as Russia and China will likely invest in their domestic tech giants to build IoT infrastructure for their respective populations—both to better monitor their citizens and to better protect themselves from American military cyber threats. Given Europe’s recent aggression against US tech companies, it’s likely they’ll opt for a middle ground approach wherein they’ll allow US IoT networks to operate inside of Europe under heavy EU regulations.
IoT will promote the growth of wearables
It might sound crazy today, but within two decades, no one will need a smartphone. Smartphones will largely be replaced by wearables. Why? Because VAs and the IoT networks they operate through will take over many of the functions smartphones handle today, reducing the need to carry around increasingly powerful supercomputers in our pockets. But we’re getting ahead of ourselves here.
In part five of our Future of the Internet series, we’ll explore how VAs and IoT will kill the smartphone and how wearables will turn us into modern day wizards.
Future of the Internet series
Mobile Internet Reaches the Poorest Billion: Future of the Internet P1
The Next Social Web vs. Godlike Search Engines: Future of the Internet P2
Rise of the Big Data-Powered Virtual Assistants: Future of the Internet P3
The Day Wearables Replace Smartphones: Future of the Internet P5
Your Addictive, Magical, Augmented Life: Future of the Internet P6
Virtual Reality and the Global Hive Mind: Future of the Internet P7
Humans not allowed. The AI-only Web: Future of the Internet P8
Geopolitics of the Unhinged Web: Future of the Internet P9