The ‘Internet of Things’

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The ‘Internet of Things’ is not just the latest buzz-term, it’s arguably the most game-changing technology of recent decades. So, what exactly is it, how is it changing the business sphere – and what are the potential pitfalls? Director asks the experts…

First there was the age of steam, followed by the ages of electricity and information technology. But the biggest change – the driving force behind an imminent fourth industrial revolution – is now on our doorstep.

So crucial is it considered to Britain’s future that prime minister David Cameron has pledged an extra £45m to its development in the UK, bringing the total public sector investment to around £73m. As an emerging sector, it’s on track to grow by 17.5 per cent per year, reaching a value of $7trn (£4.3trn) in 2020 according to IT research agency IDC. Analysts at US banking giant Morgan Stanley suggest there could be as many as 75 billion interconnected devices in the world by 2020.

To call the Internet of Things (IoT) ‘the next big thing’ would be an understatement.So, what exactly is this phenomenon that has proactive thinkers rubbing their hands with glee – but reactionary technophobes feeling the cold hand of Big Brother on their shoulder? For the uninitiated, the IoT is the emerging scenario whereby familiar objects contain miniature hardware which transfers data over the web without any human intervention taking place. ‘Internet of Things’ seems rather a woolly name for it, but ‘things’ is actually the only word vague enough to cover the frankly enormous range of objects we’re talking about here – anything from office bins to thermostats, coffee makers, washing machines, headphones, lamps, oil-rig drills, heart monitors, plants, cattle, jet engines, nuclear reactors and space probes.

You’ll notice that list became progressively more outlandish – and that’s because the possibilities appear infinite. “It’s the biggest change, the biggest opportunity since perhaps the introduction of the mobile phone,” says William Higham of future-gazing strategic consultancy Next Big Thing. “It’s a genuine revolution. And it’s already started to an extent. Even things like sat-navs, GPS museum guides – at the David Bowie exhibition at the V&A, you turned on a device and it knew where you were in the space, and changed the soundtrack and script accordingly – all those things are, to an extent, early examples of the Internet of Things in action.”

Higham believes that understanding the IoT starts with a genuine appreciation of the word ‘smart’. “The word is bandied about,” he argues, “but what it really refers to is devices that are genuinely intelligent: that can, in effect, make decisions. A smart appliance realises that when ‘X’ happens, it should do ‘Y’.” Google Glass, exercise aid Nike+ FuelBand and Apple’s indoor position system iBeacon are all good examples of what he’s talking about, and demonstrate the extent to which behemoth global enterprises are cottoning on to the potential of the IoT. But, says Higham, the IoT is set to make not just gizmos from the world’s most famous brands, but the everyday objects around us part of a network of hyper-efficiency – and throughout society at large. “Imagine there’s enough rubbish in an office waste basket to reach a certain height,” he says.

“A censor could send a tweet to the office manager telling them to empty it. On a much larger scale, it could activate the entire building’s central recycling centre, which could ultimately notify the collectors when the trucks need to come and so on.”

Early adopters
Other simple scenarios that look likely in the near future include straightforward matters of convenience – your car’s sat-nav informing your boiler you’ll be home an hour earlier, or being able to rectify the fact you’ve gone out without setting up your entertainment system to record the Premier League match. But there’s far more potential to the IoT than that – not least in the area of retail. A case in point is British IoT start-up Evrythng, whose ambitious plans to change the face of UK shopping received a huge shot in the arm in April: a £4m investment from US networking giant Cisco.

In simple terms, Evrythng’s plan is to give a unique URL to pretty much every object that exists. In practical terms, the company vision includes concepts such as promotions being tailored according to the time and place an item is purchased and fridges that tell owners when food is about to go off. “With just one per cent of the physical world connected at this time, this is just the beginning of an amazing future,” as Cisco’s UK & Ireland chief executive Phil Smith put it at the time of the cash injection: “As connections become smarter, faster and more insightful, we will only see more imaginative and ambitious applications of the internet of everything which will, quite literally, change the world.”

Higham is equally passionate about the potential that lies in the retail arena alone. “The IoT is a sign of things getting a bit Minority Report,” he says. “You know the scene where Tom Cruise walks into the shopping mall and every store recognises him and starts telling him what goods he might want to buy? That seems a little dystopian in the film but, actually, a lot of retailers are realising that the IoT is a huge opportunity for them to create closer relationships with their customers.

I recently ran some workshops with the senior management of a major supermarket chain, and what they’re trying to move towards now is recreating the positives of old-school retail – the old butcher’s or greengrocer who personally knows the customers and so on. The IoT can really help fulfil this.”

Meanwhile, London City airport is set to become the first major international travel hub to implement an IoT scheme later this year. Ideas include retailers monitoring passenger behaviour so they can customise offers and ads when a specific passenger arrives at the airport and luggage tracking systems which ensure the belongings of those who miss their flights don’t end up in the hold.

Outside the UK, Xerox Research Centre Europe recently deployed 7,000 sensors around Los Angeles city centre to detect which parking meters were occupied, then adjusted parking prices accordingly, thereby maintaining a situation whereby 20 per cent of spaces were always available.

And, needless to say, the IoT has a quirkier side: Chinese tech company Baidu, at its annual conference in Beijing in September, unveiled a set of smart chopsticks which gauge food’s PH, temperature, calories, salt levels and hygiene levels (given China’s growing food sanitation issues, there’s more to this project than just a gimmick). In the West, the French equivalent to the smart chopstick – HAPIfork – monitors how many mouthfuls of food one eats at a sitting, as well as the intervals between them, with a view to making users’ dining habits more healthy.

On a far more prosaic front, what the IoT promises is far greater, and instant, powers of analysis and therefore efficiency. “IoT-enabled devices are becoming a key method for providing ‘right now’ visibility into supply chains,” explains Ashley Ford, vice president and general manager of Zebra Technologies EMEA. “These devices are also prevalent in very process-driven tasks where feedback and control are essential, especially within the energy sector. Businesses can use this deep visibility to eliminate inefficiencies in industries such as manufacturing, healthcare, transportation and retail.”

Look before you leap
Whoever coined the above phrase may well have had a premonition of the exponential technological progress of the 21st century. Because wherever there is a great leap forward in information technology, it follows that there will be threats, obstacles and legal complications. The first that springs to mind in the case of the IoT is the potential for damage, disruption and fraud perpetrated by cyber-criminals. “Will people be able,” the technophobic reader might be permitted to ask, “to access my bank account via my rice cooker?”

As banal as that sounds, it’s a legitimate question. Jim Carlsson, chief executive of Swedish network security firm Clavister, already has an example of the IoT being exploited for nefarious means. “In December 2013, more than 100,000 consumer devices, including an internet-connected refrigerator, smart TVs and multimedia hubs, were exploited to send more than 750,000 spam and phishing emails,” he tells Director. “The majority of the devices used in the attack weren’t infected by malware, but were simply left open so that attackers were able to use their IP capabilities to relay spam and infected emails. This incident highlights just how resourceful attackers have become in using unconventional, but effective, attack vectors.”

Proliferation of connectivity, he points out, can only create a cyber-criminal-friendly playing field. “The more smart devices are connected to the internet, the more information becomes available – creating more opportunities for people to intercept data and steal personal data, such as financial records, health information and more. They could even take control of devices for their own purposes.”

Even more scarily, it seems that our existing measures against cyber-crime will be made to look woefully archaic once the IoT really takes off. “As things stand, security relies on users changing passwords and other settings away from defaults, and ensuring the devices are not left open,” says Carlsson. “But relying on such primitive security measures is likely to become futile in the battle against cyber-crime. A new generation of security measures will be required to protect our connected lives, and manufacturers will be tasked with adopting a new generation of protection – embedded security, which actively protects devices against interception of data and data theft.”

The other issue is the legal ramifications. “Companies considering it will need to think about the draft EU Data Protection Regulations, which will provide an even more robust legal framework than the existing directive,” says Kim Walker, partner and technology specialist at Thomas Eggar, a leading law firm with a key specialism in technology and retail. “It’s under consultation, but is expected to be agreed in 2015 and in place by 2017.”

Of course, while the proliferation of the IoT will add reams to the already vast repository that is Big Data, a potential pitfall that legislators are addressing is the illicit re-purposing of data. “The EU commissioner has recommended that IoT should be designed from the start to meet detailed requirements that underpin the right of deletion, the right to be forgotten, data portability, privacy and data protection principles,” says Walker.

Early adopters, he predicts, will have been keeping a very close eye on the recent ‘Right to be Forgotten’ case, whereby Google was ordered by the European Union’s court of justice to delete ‘inadequate, irrelevant or no longer relevant’ data from its results at the request of a member of the public. “Customer-facing issues must be addressed from the outset – including privacy by design, consent, use of customer profiling and privacy policies,” says Walker, adding that stiff financial penalties are expected for those who fall foul of the EU Data Protection regulations, once they’re enacted.

Higham, on the other hand, believes the legal implications are easily surmountable: “It has to be all about opt-in – you need to give permission to interact with your devices,” he says. “From a legislative point of view, it shouldn’t be too complex beyond that.”

All these issues considered, word on the commercial street is, don’t be put off. The basic reality is, the IoT is exceptionally suited to the zeitgeist – the growing trend towards personalised service; markets becoming less supply-driven and more demand-driven; and increasing public (emotional) and government (financial) investment in connectivity. “It’s a great opportunity for UK businesses to compete globally,” says Higham. “But in order for it to happen, government and businesses need to invest in digital and virtual infrastructure, rather than physical infrastructure like HS2.”

A half-hearted or fearful approach is anathema to Higham. “We’ve been afraid of intelligent computing since HAL and 2001: A Space Odyssey, Isaac Asimov and I Robot, and so on,” he says. “Fear of this stuff is instilled into our psyches now. But some of it actually has the potential to free things up, rather than impose ‘Big Brother’-style threats.”

Happily, he says, scepticism is waning – especially across the pond. “A survey by US software solution company Janrain recently found that nearly 60 per cent of Americans would be happy to lose some privacy in order to be offered more personalised marketing and offers,” he says. “It’s about a trade-off. If people can see that what they’re gaining is much greater than what they might be losing, they’re going to snap it up. It has to be about understanding the opportunities and worrying less about the threat.”

The Internet Of Things In Numbers

73m The amount, in pounds sterling, the UK government has now invested in the IoT, with David Cameron describing it as “a way of boosting productivity, of keeping us healthier, making transport more efficient, reducing energy needs, tackling climate change.”

667m The amount, in sterling, that was pumped into IoT technology in 2013 across 153 separate investment deals, according to research firm CB Insights.

3.2bn The amount, in US dollars, Google paid this year to buy the company Nest – a business which reinvents everyday household objects with the IoT in mind, and plans to create the “conscious home”, according to founder and chief exec Tony Fadell.

40 The number of years since a packet of Wrigley’s Juicy Fruit chewing gum became the first item to be scanned at a US supermarket checkout; four decades on, the barcode is widely thought of as the earliest precursor to the Internet of Things.

6.4m The amount of government funding via the UK’s Technology Strategy Board, in sterling, that was given earlier this year to HyperCat – a consortium of 40 UK-based tech firms and local authorities striving towards smart cities and smart homes.

About author

Nick Scott

Nick Scott

A former editor-in-chief of The Rake and deputy editor of the Australian edition of GQ, Nick has had features published in titles including Esquire, The Guardian, Observer Sport Monthly and Rolling Stone Australia and is a contributing editor to Director magazine. He has interviewed celebrities including Hugh Jackman, Daniel Craig and Elle Macpherson, as well as business people including Sir Richard Branson, Charles Middleton and Nick Giles and Michael Hayman MBE.

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