Imagine a world where an insurance company can monitor your driving to better tailor its packages, or connect to a fitness monitor you’re wearing so it can deliver personalised health insurance. That world is called the “Internet of Things” (loT) – and it’s set to explode.
Google surprised a lot of people earlier this year when it splurged $US3.2 billion on an upstart consumer electronics company called Nest. Nest is best known for its internet-connected thermostats and indoor smoke alarms. The devices, designed with a panache normally associated with Apple (indeed, Nest’s founder helped develop the iPod), could be controlled from smart-phone apps, and would also learn from the day-to-day life patterns of its user.
Dig a little deeper, however, and what Google had done was fire what could be the first salvo in the coming war over the internet of things. These ‘things’ are devices connected to the internet, and one another, and some of them, such as Nest’s thermostat, are capable of learning from their environment.
The growing Internet of Things
Research firm Gartner expects there will be 26 billion installed devices in the internet of things by 2020 and that the market will be worth over $US300 billion in the same time period. Rival research firm IDC has the number of connected devices pinned at 212 billion.
“It’s important to remember that while the market for the internet of things is still in its infancy, there is a long legacy of autonomous wired and connected things,” IDC’s program vice president, mobile services, Carrie McGillivray, said in a statement. “The enabler for increased growth over the forecast period is the pervasiveness of wireless connectivity and ubiquitous access to the internet, regardless of location.”
What’s in it for business?
According to consulting firm Deloitte, the opportunities for business in the internet of things are wide open. Already insurance firms are using telematics – the monitoring of car and driver behaviour – to better tailor coverage packages for their customers. Automatic teller machines may use sensors to monitor and take action on behalf of a consumer, while financial services companies could connect to a fitness monitor to tailor health insurance for individual clients based on their personal health needs.
Opportunities already exist for retailers wanting to take part in the Internet of Things. Near field communications apps allows retailers to beam information and offers to a customer’s phone – so long as the customer has installed the retailer’s app. The key for retailers is that once the app is installed, it doesn’t need to be running to send the offers to the potential customer.
However, business also needs to be aware that there are still some significant hurdles before the internet of things achieves mass-market penetration. Privacy aspects need to be worked out – for example, when should information remain private and when is it okay for the information to be shared with third parties?
There’s also the issue of standards and interoperability. Unless there’s some sort of standard, retailers will be left having to deal with incompatible systems produced for competing operating systems.
With Google and Apple moving quickly to exploit the internet of things, there are also myriad opportunities for other businesses to get on board, from retailers beaming offers to customers, to car companies offering real-time maintenance and diagnostics on their cars. And with the market set to explode between now and 2020, Google’s purchase of Nest, giving it a valuable foothold into the internet of things, could look like the best investment it has ever made.