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Pictures of the Future
The Magazine for Research and Innovation

Internet of Things

Facts and Forecasts: Billions of Things, Trillions of Dollars

By 2020, approximately 26 billion objects will be linked together in the internet. But the Internet of Things lacks technical standards.

In the near future, billions of pieces of equipment will be connected to one another – everything from the yogurt container that reminds you to eat its contents, to the smart city, where data is collected and analyzed in real time so that traffic flows better, water is supplied more efficiently, and resources are used more economically. The expression "Internet of Things" (IoT) was coined by the British technology pioneer Kevin Ashton in 1999. His definition has not changed since then. So far, says Ashton, the Internet has been almost completely dependent on people for its supply of information. But in the future, things will be able to input data themselves. It will be as though a net is laid over the physical world, linking up and processing the abundance of data generated by "smart" things and ubiquitous sensors. This is expected to reveal patterns and make everything from energy to logistics transparent and potentially open to real-time optimization.

According to the business consultancy firm Gartner, approximately 26 billion objects will be linked together in the Internet of Things by 2020. If you add in laptops, PCs, and smartphones, which will number around seven billion by 2020, Gartner arrives at 33 billion objects. The market research and consulting firm International Data Corporation (IDC) foresees almost the same number. It estimates that 32 billion objects will be connected to the Internet by 2020, and that these will produce ten percent of all the data generated worldwide. A recent study by MIT Technology Review anticipates 28 billion Internet-connected things.

Billions of Networked Objects

No matter whether it's 28, 32, or 33 billion – as the number of networked devices and sensors increases, they will create an ever-growing, unprecedented flow of data. Large quantities of information will have to be collected, analyzed, and stored.

In its 2013 "Global Information Technology Report,” the international strategy consultancy company Booz & Company studied the economic and social effects of digitization. According to this study, a 10-percent increase in a country’s digitization rate leads to a 0.75 percent higher gross domestic product (GDP) per capita and a 1.02 percent lower unemployment rate. Just how the benefit of this economic growth will be distributed is an open question, however. "This wealth can either be concentrated in the hands of a few, or it can create opportunities for billions of people," says Erik Brynjolfsson ((LINK)), a professor of management and information systems at the Massachusetts Institute of Technology (MIT). The Internet of Things is thus a vision of the future with vast economic potential. Just how vast is unforeseeable; but according to Gartner, it will generate an added value of $1.9 trillion across a number of sectors by 2020. IDC predicts earnings of $8.9 trillion. Companies are investing in this promising field accordingly.

China, for instance, is planning to invest five billion renminbi yuan (RMB: about €606 million) in the IoT industry by 2015. For instance, it has set up the Chengdu Internet of Things Technology Institute in Sichuan Province, which is developing a "healthcare capsule." Village residents will be able to step into a telephone-booth-sized capsule and obtain a diagnosis and a prescription from a doctor located in a distant hospital. When it comes to wireless machine-to-machine communication, Asian countries are playing a leading role with more than 50 million connections, according to the GSM Association, the global trade group of GSM mobile network operators. The biggest contributor here is China, with more than 39 million connections.

The industries that Gartner expects to profit the most from the Internet of Things include manufacturing, healthcare, and insurance. More than any others, the manufacturers of commodities will benefit because they will have a precise overview of their inventory and the intake and depletion of raw materials and components at all times, and will be able to react quickly to changes in the market and in customer preferences. In healthcare, clothing equipped with sensors will be able to detect when older people fall down — and call for help if they don't move afterward. Small containers holding medications will "know" whether their owners have taken prescribed pills are not — and will send an e-mail or text message reminder when necessary. Another important market is that of smart homes that are connected to the Internet and centrally controlled and monitored. Consulting company Deloitte & Touche estimates that the smart home market will have a volume of €4.1 billion by 2017 in Europe alone

Needed: Standards

One obstacle impeding the growth of the Internet of Things is the lack of technical standards. These ensure that all devices from all manufacturers can communicate with one another. A key technology for connecting everyday objects to networks is radio frequency identification (RFID), in which data from a chip is transmitted via wireless links. According to IDTechEx, the RFID market has a total volume of $8.89 billion as of 2014 (compared to $7.77 billion in 2013). IDTechEx estimates that this will grow to $27.31 billion by 2024.

RFID is no longer the only industry standard, however. Sensors are now being connected via WLAN, Near Field Communication (NFC), Bluetooth, and Zigbee. Market research firm Navigant Research reports that in 2012, almost 40 million devices around the world were equipped with Zigbee. In 2020, that figure is expected to grow to over 200 million — a more than five-fold increase within just eight years. On the other hand, completely new approaches are being tried too: researches at the University of Washington have developed sensors without batteries that can engage in wireless communication with other devices. They use the attenuation of radio waves as a signal path – a technology that could allow a significant expansion of the Internet of Things.

Security at Risk?

These developments may be good news for business, but they are worrisome trends for data-privacy advocates. When the professional network Spiceworks conducted a survey on this topic, it found that 59 percent of the respondents were not actively preparing for the possible consequences for their company. Furthermore, a recent study carried out by HP shows that the manufacturers of Internet-connected devices take a carefree approach to their security. The Internet-connected devices studied in the survey had an average of 25 vulnerabilities. Poor encryption in combination with unnecessary and yet sensitive private information, weak passwords, and defective user interfaces could turn Internet-connected devices into a major security risk. In nine out of ten devices, for example, users had to enter unnecessary personal data, including, in some cases, credit card details. When combined with the unencrypted connections used for communication, that is one of the greatest security risks, according to the study.

As a result of the lack of IT security, the German trade magazine Computerwoche predicts a world of people, applications, and devices that co-exist in a chaotic and insecure state along with trillions of passwords that make everything even more complicated and insecure. The identity of the things and the users is the key to simple and secure communication within an open, standards-based identify framework. By assigning each thing and each user an identity, it becomes possible to keep track of all access in a transparent fashion.

Gitta Rohling