What to expect of Internet of Things in 2014

The Internet of Things will continue to creep into consumers' homes in 2014, but the real growth in the next year is likely to be in the enterprise.

One contributing factor to this lag in the consumer market is that most consumers don't know the Internet of Things (IoT) exists. ISACA's 2013 IT Risk/Reward Barometer report (PDF) released in November found that although many consumers report using devices that fall into the IoT category, such as GPS systems (62%) or electronic toll devices on cars (28%), just 16% are aware of the term "Internet of Things."

Even so, growth in the Internet of Things will not necessarily rely on awareness of the term. Consumers faced with new purchasing decisions, from upgrading light switches and outlets to buying household appliances when their old ones break, will choose those that boast Internet connectivity for remote control and energy saving purposes. Cisco has estimated that the Internet of Things will grow to 50 billion devices by 2020. Awareness of the term may not grow even as the technology takes over consumers' homes.

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This kind of organic growth is expected to come in the next few years, but most of the evidence shows that 2014 will not be the tipping point for consumer adoption. In June 2013, The Economist conducted interviews for its Internet of Things Business Index sponsored by ARM (PDF), finding that "low consumer IoT awareness may be hindering faster development in the sector." In fact, the study found that "the single largest group (40%) of businesses are researching the IoT while 17% are planning to roll out an IoT-based product." Although the study predicts a "flood" of IoT products and services into the market in the next few years, the recent reluctance to move from planning to actually developing products suggests that 2014 may not be the year the market reaches its potential.

Even accounting for IoT products currently available, some wonder how long it will take for consumer adoption to build momentum. For example, The Economist's report cited Belkin, whose first IoT product has been on the market for about 18 months. Called the WeMo, it combines Wi-Fi-enabled plug sockets and light switches with smartphone apps to enable consumers to control their energy efficiency. The WeMo has been credited for relatively easy installation, but any kind of installation requires extra work on the part of the consumer. These are the kinds of obstacles that other high-growth markets, like those for smartphones and tablets, don't face.

"Right now, if you think about it, the Internet of Things in your household will probably require you to go and re-purchase many devices that you have today, and I'm not sure how many of us can take that hit in one calendar year," Robert Stroud, a member of ISACA's Strategic Advisory council and vice president of innovation and strategy at CA Technologies, says. "I actually think it might apply more in commercial ventures first."

Research shows that businesses are adopting IoT products at a faster rate than consumers. One reason is that businesses have much more to gain from an investment in the technology. The ISACA report says 38% of responding consumers in the U.S. cited "time savings" as the biggest benefit of IoT products; other business benefits range from energy efficiency to greater accuracy in the supply chain and increased employee productivity. Major retailers like Wal-Mart and Tesco have tagged products in the supply chain with devices that tracked their location since the early 2000s. In its study, The Economist found that businesses "are slightly further ahead in using the IoT internally rather than externally."

Whether businesses sell IoT products or use them internally, they will undoubtedly face a constant flood of data. Although big data is already on the radar of almost every company, Stroud says enterprises will face another challenge once they've figured out how to harness it.

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"I think enterprises will have to really understand not just how much information they're collecting, but where the value is in it," he says. "How do they turn it ... into information they can make decisions on? That's the big opportunity for an enterprise."

As more businesses realize this, more will seek out new hires with skills in the field. The "data scientist" has suddenly become a "hard sought-after role," Stroud says. Both studies cited a need for talent as a result of IoT growth, with The Economist warning of "the potential for IoT talent wars." Stroud agrees, so much so that he says "if I were starting my career again, I'd be going into this space."

"This is where you add real business value," he says. "Where an IT person is not just running machines anymore, but fundamentally taking good information and helping the business make true business decisions so that they can adjust the business in real time based on this information. If used well, you'll be able to spot trends and opportunities far faster than you could in the past."

Privacy will also play a role in the evolution of the Internet of Things market, in which consumers and businesses currently don't see eye to eye. According to the ISACA report, consumers are most concerned about hackers accessing their information, whereas most IT professionals surveyed believe consumers should be concerned about not knowing who can access their information or how it will be used by the companies collecting it. This means businesses selling IoT products will need to calm customers' fears in two ways: assuring them that their products are secure, and establishing trust in how they'll use their data. With the growing attention on the use of customer data, this could be a key issue for the market's future.

"If there truly will be 50 billion Internet of Things devices connected by 2020, organizations have much work to do to increase consumer (and employee) trust in how personal information is used," the ISACA report reads.

Colin Neagle covers emerging technologies and the startup scene for Network World. Follow him on Twitter and keep up with the Microsoft, Cisco and Open Source community blogs. Colin's email address is cneagle@nww.com.

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