Why the internet of things is the next big thing

Iain McDonald

I was always taught by my English teachers never to use the word ‘thing’ in a sentence. Ironically, the ‘Internet of Things’ is probably the most apt description for the huge seismic shift that is blurring the lines between our physical and digital worlds. So, what is the ‘Internet of Things’, why is it important and why now?

In 1970 there were only 13 devices connected to the internet. Jump forwards to 1999 and this number had jumped to 80 million. At this time, internet enabled households were likely only to have a single type of device connected: an ugly looking desktop PC (or if you were really lucky a laptop which you would still have to plug in to get connected). Wi-fi was a word only being used by geeks.  Now, let’s look forward to 2020 – when the projected number of connected devices according to Intel is a staggering 31 billion. It becomes clear from these projected numbers that many more ‘things’ other than PC’s are being plugged in and this is where it all gets very interesting.

While the majority of us still tend to think of the internet as the platform that connects our PC’s, mobiles and tablets to websites and services, there is huge scope for these other things which will play a part in a connected world, and subsequently create benefits for consumers and businesses. Some you can already guess: Kindles, phones, game consoles and some modern TV’s. But the other ‘things’ that form part of the story are literally everything from a mains sensor in a water pipe, traffic sensors, taxis, washing machines, toys, health-care products, security alarms, TV’s, shop windows, POS terminals, even clothing and shoes. Every one of these items will individually provide some level of connectivity or data. Of course, data from these devices is fairly meaningless to most people. The real excitement comes from the experiences that are born from this connectivity.

In fact, some of us are already experiencing some of the benefits daily. The live information board which informs you when the next bus or train is about to arrive is a good example. Each bus is connected and aware of its route / location using GPS, and when combined with live traffic information from road sensors the information flows to the connected display giving you the heads up. This is one digital ecosystem which represents a huge benefit over the previous user experience (i.e., having no idea when the bus was going to arrive). Eventually that rotten city traffic will become less to do with traffic light schedules based on some underpaid government employee’s best guess, than with intelligent sensors and systems that will allow traffic to flow in the most efficient way possible. Bring it on.

Of course, many of these systems of connected things will be less obvious to everyday folk. Stock inventories within companies will be more readily controlled. Energy will be managed more efficiently. Potential technical problems will be tracked and fixed ahead of time, often before the problem even occurs. For most of us, daily needs like having packages delivered on time will make it feel like it was all worthwhile.

In 2012 two devices consumers use daily are set to evolve and truly make their mark in the history book of the ‘Internet of Things’. The first is the mobile phone. Around 60 per cent of Australian consumers already own a Smartphone and most of those are already connected on some level. The change we will notice most is the introduction of NFC (Near Field Communications) chips which allow ‘tap and go’ functionality for instant transactions or content exchanges. At this point in time Smartphones with NFC become the conduit to a new internet of things which never had a digital life before. For instance, NFC enabled advertising stickers or posters could trigger a purchase or cereal boxes that push you to an app for download when tapped. The much speculated iPhone5 should ship with NFC this year, and you can bet this will be productised nicely, as Apple does, with a name like “iWallet” for payments. By the end of 2013 we anticipate that all phones will have NFC as standard; meaning it should be a mainstream technology within two to three years based on handset turnover rates.

The second big device set for change this year is the old TV. We’ve seen TV’s becoming more connected, but in fairness they are little more than ‘feature TVs’ at this stage (despite what they might be calling themselves). According to Sony, about 30 per cent of new TV’s sold are connected to the internet already, but it only takes one big new release to smash that number through the roof. This may come in 2012. Although the Samsung Smart Window (very cool) was the undeniable star of CES this year, we’ve had a hunch for a couple of years that Apple would enter the TV market soon, after all it is the only screen they haven’t made a serious play for yet. The rumours seem to be mounting and there is speculation that a TV announcement may come at the same time as the iPhone 5. If the ‘Internet of Things’ has its way then the iPhone5 and the AppleHDTV will work seamlessly together. Whatever the functionality we will suddenly have new challenges to deal with in the media landscape.

So, gradually our surroundings are developing a deeper understanding and relationship with us. Remember, 31 billion devices by 2020 . . . We’re sitting at around six billion at present. The ‘Internet of Things’ may not feel intuitively relevant to our lives or the companies we work in when we first think about it, but to ignore significant shifts in technology like this can be costly. Just ask Kodak. Instead, we must look for the opportunities. Importantly we must not only focus on the impact of single devices but this ‘world of things’ and the data it will yield.

If nothing else, it will be that data which will help lead us on that path to wisdom.

Iain McDonald, founder and chief creative officer, Amnesia Razorfish.

The Australian Financial Review