We recently attended an “Internet of Things” (“IoT”) event showcasing new projects that had received funding from Innovate UK (the new name for the UK’s innovation agency – the Technology Strategy Board). IoT is an up and coming area for innovation and opportunity that regularly attracts a lot of attention in the press and we felt there were a couple of interesting takeaways from the event. Let’s start with a quick briefing on what IoT is.
What is the Internet of Things?
According to Wikipedia, the Internet of Things (IoT) is “the network of physical objects or “things” embedded with electronics, software, sensors and connectivity to enable it to achieve greater value and service by exchanging data with the manufacturer, operator and/or other connected devices. Each thing is uniquely identifiable through its embedded computing system but is able to interoperate within the existing Internet infrastructure.”
Essentially, more and more physical objects are coming “online” and connected with the potential ability to send and receive information. With this increased connectivity, everyday objects will provide a massive increase in both the volume and granularity of data, the harnessing of which could lead to a variety of new business opportunities. To give you a sense of scale, Cisco expects the IoT market is expected to be worth $19 trillion (yes, that’s TRILLION) with 50 million devices connected by 2020. Here’s where we are now according to their estimates:
(Those are some pretty big numbers)
This increasing number is being driven by the convergence of a number of different technologies and the economies of scale and scope that they provide:
- Hardware is becoming cheaper and smaller (the evolution of controllers, sensors and transmitters via related markets like smartphones and tablets);
- Increasing (and cheaper) bandwidth (led by the growth and increasing demand of internet and mobile use);
- Cheaper and faster ways of storing data (thank you open source software and the cloud); and
- Faster ways of managing data (machine learning)
What could this mean?
Basically there are a lot of potential applications that this interconnectivity and data could be used for. At the event, Jonny Voon (Lead Technologist, Innovate UK) mentioned several broad themes:
- Future / Smart Cities (e.g. using people’s biometric data for urban planning)
- Healthcare (e.g. wearables and the quantified self)
and flowing from those themes were potential subsets like:
- Social Care
These themes could be seen in some of the winning projects at the event:
Digital Shadows – aiming to secure smart cities through protection of building management and infrastructure systems that form part of the Internet of Things.
BuggyAir (an Internet of Things Academy project) – helping parents/carers understand how ground level air pollution affects their children by utilising GPS and compact air tracking monitors on pushchairs to map areas with poor air quality and allow parents to avoid them in the future.
Jonny Voon (Lead Technologist, Innovate UK) also talked about the UK’s position in terms of IoT. He thought that, with the exception of hardware (difficult to compete given lower labour and material costs from the Far East), the UK had the opportunity to be a major player in the sector through innovations in software, services and communications (5G networks).
Is IoT the next big thing?
With all this connectivity, it’s only going to be a short time until our fridge is ordering food for us automatically, right? Um…no. There are some interesting applications and potential opportunities coming out of the area but (as with any new emerging tech) there are also teething issues:
- Communication protocols – There is no standard protocol so no one has really agreed on how all these (potentially) interconnectable devices are going to communicate with one another
- Few proven business models (Google’s Nest (which they acquired for $3.2bn at the beginning of last year – clearly Google expects this to be a big area and a major strategic focus for them) is probably the exception rather than the rule at the moment).
- Security and privacy issues – with all these objects becoming connected with a two-way flow of information, the potential for hacking increases.
As a result of these issues, Gartner’s view is that we’re at the “Peak of Inflated Expectations” for this (as well as several other types of) technology and about 5 to 10 years away from real productivity gains (and presumably mass market use) – (see Gartner’s Hype Cycle for Emerging Technologies below):
Key takeaways from the event
The panel discussion on “What investors look for in an early stage IOT start-up” provided some interesting thoughts.
The key to discovering IoT opportunities is to understand that there is unlikely to be a giant and sudden paradigm shift but something far more subtle – an increasing proliferation of technology aimed at automating tasks and making our lives easier without us even realising it.
For instance, Geoff Seeley from Unilever mentioned that they had been interested in the area for some time from a packaging perspective. Unilever have been asking themselves what IoT could mean for what they see to be currently “dead” real estate on their products. Would it be possible to have intelligent packaging for shampoo bottles that automatically adds itself as an item to your online weekly supermarket shopping basket when you’re running low? Convenient, low touch and subtle.
In terms of start ups in this area, we noted that the advice provided by the speakers at the event could clearly apply for start ups generally – does the team really understand where it fits in the ecosystem? Do they understand the value chain? Do they truly understand the value proposition? And probably most importantly – focus on the solutions to problems and not just interesting tech.
In conclusion, IoT is still clearly nascent but with a lot of potentially interesting applications to solve problems – it represents frontier territory in technology and there are loads of opportunities for entrepreneurs to stake a claim. With the UK aiming to be a major global tech player, is there a possibility for the UK to lead the field in terms of IoT development? Hopefully. In any event, it’s worth watching this space.