CONTENTS

The Big Question

The Economics of the Internet of Things BUSINESS REPORT The Lowly Thermostat, Now Minter of Megawatts

The Light Bulb Gets a Digital Makeover

GE’s $1 Billion Software Bet

The Internet of You

The Internet Silicon Valley to Get a Cellular Network, Just for Things

Plus: Industry resources, key executives, of Things and companies to watch Billions of computers that can sense and communicate from anywhere are coming online. What will it mean for business?

The Big Question Business Adapts to a New Style of Computer

Are companies ready for billions of everyday objects to join the Internet?

● The industry is preparing for the Internet of things, a type of comput- ing characterized by small, often dumb, usually unseen computers attached to objects. These devices sense and transmit data about the environment or offer new means of controlling it. For more than a decade technolo- gists have predicted and argued about the onslaught of these ubiquitous devices. “There is lot of quibbling about what to call it, but there’s little doubt that we’re seeing the inklings of a new class of com- puter,” says David Blaauw, who leads a lab at the University of Michigan that makes functioning computers no bigger than a typed letter o. A key feature is very cheap radios, etched right into silicon. There’s one in your smartphone. But now prices are

STUART BRADFORD STUART falling to around $5. As they get

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groping to find the winning combination Machines Go Online of software, interfaces, and processors for n n The number of everyday objects, or “things,” connecting Things PCs & laptops whatever comes next. to the Internet will exceed PCs and smartphones. n Tablets n Mobile phones And it’s not just technology companies Connected devices (billions) that must stay alert this time around. The reason, explains Marshall Van Alstyne, 30 a professor at Boston University, is that as ordinary products become connected, 25 their manufacturers may enter informa- tion businesses whose economics are alien 20 to them. It’s one thing to manufacture shoes, but what about a shoe that com- 15 municates? Products could turn out to be valuable mainly as the basis for new services. “You might find the data is more 10 valuable than the shoe,” says Van Alstyne. In this MIT Technology Review busi- 0 ness report we decided to explore the big 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 question of what new businesses will arise as things get connected. One company making the point is Nest Labs, maker of As computers with wireless capability become cheap, it’s becoming a slick-looking smart thermostat that’s affordable to connect more things to the Internet, like sensors in sewer coupled to the Internet. Nest, which was pipes, factory machinery, lights, and home appliances. acquired by this year, has been clobbering rival thermostat makers. But now that it has a network of thermostats cheaper, it’s becoming affordable to con- has 60 microprocessors in it, according and can control them from afar, it’s start- nect more things, like sewer pipes or to the Center for Automotive Research. ing to offer services to electric utilities. On trash cans. At the University of California, Electronics account for 40 percent of the hot days it can selectively turn down air Berkeley, researchers are even designing cost of making a car. conditioners, controlling demand. computers the size of a pinhead to col- The Internet of things is especially Nest’s tests with utilities are still lect data inside the brain and transmit it important for companies that sell net- small. But one day, with a few bits sent through the skull. The idea is that human work equipment, like Cisco Systems. across a network, the company might bodies will join the network, too. Cisco has been enthusiastically predict- put a power plant or two out of business. It can all sound far-fetched and over- ing that 50 billion “things” could be con- No wonder this year, in his annual let- hyped. Does anyone really need a smart nected to communications networks ter to shareholders, Jeff Immelt, CEO of coffee pot or a refrigerator with a Web within six years, up from around 10 General Electric, the world’s largest browser? Plenty of the inventions do billion mobile phones and PCs manufacturer, told his investors seem silly. On Amazon, product review- today. Another beneficiary is 60 that “every industrial company ers have had a field day with a $78 digital the $300 billion semiconduc- Number of will be a software company.” microprocessors “egg minder” that reports to a smart- tor industry. As Blaauw notes, Gordon Bell, a in the average phone which egg in a refrigerator is oldest. “Every time there has been a new car researcher and a pioneer of the “Wonderful product!” sneered one. “So new class of computing, the total original computer revolution, many gray hairs avoided by never having revenue for that class was larger than believes no one knows exactly what to worry about my eggs again.” the previous ones. If that trend holds, it form computing will take on the Inter- Yet for every killer app that wasn’t, means the Internet of things will be big- net of things. But he says that’s unsurpris- there’s another computer-sensor combi- ger yet again.” ing. The importance of the PC and the nation that has quietly added to the capa- But every shift promises pain, too. smartphone became clear only after their bilities of some machine. Since 2007, for Large companies like Intel are already development. “The ‘Internet of things’ is a instance, every new car in the United reeling from the rapid emergence of way of saying that more of the world will States has had a chip in each tire that smartphones. Intel, with its power- become part of the network,” he says. “That measures pressure and sends data by ful, power-hungry chips, was shut out is what is going on. We are assimilating the radio to the car’s central computer. It’s of phones. So was Microsoft. Now both world into the computer. It’s just more and

starting to add up. The average new car these companies, and many others, are more computers.” —Antonio Regalado GSMA SOURCE:

2 MIT TECHNOLOGY REVIEW BUSINESS REPORT — THE INTERNET OF THINGS TECHNOLOGYREVIEW.COM JULY/AUGUST 2014

ers connect to it, together with a gover- platform business models are like play- Leaders nance model, which is the rules of who ing 3-D chess. gets what. Business platforms are often engaged in consummating a match. It’s You estimate that half the top 20 com- The Economics a match between riders and drivers with panies in the world, like Google, own Uber. It’s between travelers and spare platforms. Why are they winning? of the Internet capacity of guest rooms in Airbnb. There is a strong argument that plat- forms beat products every time. Think of Things Is connecting ordinary objects, like of how the iPhone is absorbing the fea- toasters, to the Internet going to trigger tures of the voice recorder, the calcula- As everyday objects get connected, new platforms? tor, and game consoles. The reason for brace yourself for network effects, says Absolutely, yes. But you can’t stop at this is that as a stand-alone product, one economist. the connectivity. The technologist’s mis- you’re going to have a certain pace of take is often to stop simply at the stan- innovation. But if you have opened ● Product companies compete by build- dards, the connections. You also have your product so that third parties can ing ever bigger factories to turn out ever to add the reasons for other people to add value, and you have designed the cheaper widgets. But a very different add value. That often means allowing rules of the ecosystem such that they sort of economics comes into play when recombination of features in ways that want to, your innovation curve is going those widgets start to communicate. It’s you, the original designer, just cannot to be faster. called the network effect—when each new anticipate. People have combined the To me this means there are huge user of a product makes its value higher. functions of the iPhone into hundreds of opportunities to take away business Think of the telephone a century ago. thousands of apps that Apple never even from existing players in all different The greater the number of people who conceived of. That is also what the Inter- kinds of goods. Or for existing players used Bell’s invention, the more valuable net of things enables if you design it in to expand their markets if they are pay- it became to all of them. The telephone the right way. ing attention. became a platform for countless new busi- nesses its inventor never imagined. Now that more objects are getting “Most companies compete by adding new features to wired up into networks—street lights, products. They haven’t been in the business of thinking of wind turbines, automobiles—there how to add new communities or network effects.” are opportunities for new platforms to —Marshall Van Alstyne emerge. That’s why some companies are seeking the advice of Marshall Van Alstyne, a business professor at Boston What’s an example of this happening? What are some of the next areas for University who has studied the econom- Philips Lighting just called me. They platforms? ics of e-mail spam and social networks. are adding a series of APIs to their LED It’s where you see connectivity is coming These days, Van Alstyne studies “plat- lights so anyone can create millions of in. Cities, health care, education, elec- form economics,” or why companies such colors, create romantic mood apps or tricity grids. as Uber, Apple, and Amazon are so suc- the colors of a sunset from one of your cessful—and what traditional product favorite trips. You can change the lights What are the biggest challenges? makers can do to emulate them. MIT in your study in conjunction with the In many cases, the governance mod- Technology Review’s senior editor for stock market conditions. That is the els have not been established. For business, Antonio Regalado, visited Van Internet of things, and they’re opening instance, population density can be Alstyne at his office in Boston. it to anyone. determined by mobile-phone distri- bution. A telecom company owns that How can I tell if a business is a platform? Do product companies have a difficult data. How do you motivate them to If you produce the value, then you are a time making this kind of transition? share it? All these sensors are captur- classic product company. But there are They have a really difficult time with ing data, but how do you divide the new systems where value is being cre- the mental models. It’s fascinating. value? Those are the rules that need ated outside the firm, and that’s a plat- Most companies compete by adding to be worked out, and that’s the miss- form business. Apple gets 30 percent new features to products. They haven’t ing piece of most of these discussions of the cut from other people’s innova- been in the business of thinking of how about the Internet of things. You have tions in its app store. I define a platform to add new communities or network to build economic incentives around it,

COURTESY OF REDACTIE EMERCE REDACTIE OF COURTESY as a published standard that lets oth- effects. One of the points I make is that not simply connectivity.

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Peak Power Wired Home On a 104° day in Austin, remote control of home thermostats helped cut power demand. TVs, heaters, and other appliances will account Megawatts for more of the Internet-connected devices in the average U.S. home. 2,650 Projected demand n Home appliances 2,610 n Home computers and routers

2,570 Actual demand 2,530 THERMOSTATS ACTIVATED 2,490

2,450 2:00 p.m. 4:00 p.m. 6:00 p.m. 2010 2014 2018

electricity use can be lowered just enough dents’ habits and preferences and can pro- Case Studies at peak times, utilities can avoid firing up gram heating and AC settings. A Wi-Fi costly (and dirty) backup plants. connection brings in weather data and Demand response is a neat trick. The allows consumers to control the system The Lowly Nest thermostat manages it by combin- with a phone or Web browser. ing two things that are typically sepa- Data is just the start. Just as Google Thermostat, rate—price information and control over parlays what it knows about you into demand. It’s consumers who control the tools for advertisers on the Web, Nest is Now Minter air conditioners, electric heaters, and using its capabilities to create new types furnaces that dominate a home’s energy of services for utilities to buy. “We can of Megawatts diet. But the actual cost of energy can vary go to utilities and say, ‘We’ve actually got widely, in ways that consumers only dimly a lot of customers in your service terri- How Nest is turning its consumer hit into appreciate and can’t influence. tory who already have a Nest,’” says Scott a service for utilities. While utilities frequently carry out ­McGaraghan, Nest Labs’ head of energy demand response with commercial cus- products. “And [then we] can flip it on.” ● Google’s $3.2 billion acquisition of Nest tomers, consumers until now have shown Austin’s municipal utility, Austin Labs in January put the Internet of things little interest. Nest Labs’ breakthrough Energy, is one of five utilities that have on the map. Everyone had vaguely under- was to make a device that has popular signed up for Nest Labs’ Rush Hour stood that connecting everyday objects to the Internet could be a big deal. Here was an eye-popping price tag to prove it. Once inside a home, Nest starts its real work: gathering Nest, founded by former Apple engi- data. It has a motion detector; sensors for temperature, neers in 2010, had managed to turn the humidity, and light; and algorithms that learn residents’ humble thermostat into a slick, Internet- habits and preferences. connected gadget. By this year, Nest was selling 100,000 of them a month, accord- ing to an estimate by Morgan Stanley. appeal. “There’s a lot of digital Internet Rewards, as the service is called. Air At $249 a pop, that’s a nice busi- thermostats out there, but Nest was able to conditioners account for half of Texas’s ness. But more interesting is what Nest create a concept around it. They’ve created electricity demand on hot days, and that has been up to since last May in Texas, something that people are relating to,” demand for cooling drives the wholesale where an Austin utility is paying Nest says Mary Ann Piette, a demand response cost of electricity from less than $40 per to remotely turn down people’s air con- expert and head of the Building Technol- megawatt-hour to well over $1,000. ditioners in order to conserve power on ogy and Urban Systems Department at Twelve months ago Austin Energy hot summer days—just when electricity Lawrence Berkeley National Laboratory. started offering a one-time $85 rebate to is most expensive. Once inside a home, Nest starts its real customers who agreed to let it automat- For utilities, this kind of “demand work: gathering data. It has motion detec- ically trim their air-conditioning using response” has long been seen as a killer tors; sensors for temperature, humidity, smart thermostats sold by Nest and other

app for a smart electrical grid, because if and light; and algorithms that learn resi- companies. Each company earns $25 for NEST OF COURTESY ENERGY; AUSTIN SOURCE: MASON; ANALYSIS SOURCE:

4 MIT TECHNOLOGY REVIEW BUSINESS REPORT — THE INTERNET OF THINGS TECHNOLOGYREVIEW.COM JULY/AUGUST 2014

every thermostat it enrolls, and another tricity consumption tests the grid’s lim- A moment later, the conference room $15 per thermostat each year after that. its most. But if demand response can where we were sitting darkened. The “vast majority” of the 5,500 expand to cover the 300 or 400 hours of It may seem like Rube Goldberg’s idea thermostats registered so far are Nests, peak usage, it could entirely shut down the of how to turn off a light. Or it could be according to Sarah Talkington, the Aus- market for “peakers,” or gas-fired plants the beginning of how lighting companies tin Energy engineer leading the program. that come online only to sell expensive such as Philips find their way from selling Nest says it finds that roughly half its cus- electricity. “That’s a big chunk of money lighting hardware into networks, soft- tomers will sign up for demand response that’s at stake,” says Tom Osterhus, CEO ware, apps, and new kinds of services. when the opportunity is offered. of Integral Analytics, a Cincinnati-based The introduction of networked lights By the end of last summer, Talkington maker of smart-grid analytics software. is happening because of another trend. says, she could log on to a Nest portal and, “It’s in the billions.” —Peter Fairley Manufacturers have been replacing incan- with a few keystrokes, dial down the next descent and fluorescent lights with ultra- day’s demand by nearly 5.7 megawatts. That efficient LEDs, or light-emitting diodes. may seem small compared with the 2,800 Case Studies The U.S. Department of Energy says that megawatts that often sizzle across the Aus- LEDs had 4 percent of the U.S. lighting tin grid, but every watt counts. On hot days market in 2013, but it predicts this figure like September 3, 2013, as temperatures The Light Bulb will rise to 74 percent of all lights by 2030. rose to 104 °F, the cost of power spiked to Because LEDs are solid-state devices a record $4,900 per megawatt-hour. Gets a Digital that emit light from a semiconductor chip, Austin had tried residential demand they already sit on a circuit board. That response before, using one-way pagers to Makeover means they can readily share space with turn air conditioners on and off. But the sensors, wireless chips, and a small com- utility couldn’t know if customers were Electric lights are 135 years old. The puter, allowing light fixtures to become home, so it wasn’t able to shut off any one Internet is 45. They’re finally getting networked sensor hubs. air conditioner for long. Nest, in contrast, connected. For example, last year Philips gave builds a thermal model of each house and outside developers access to the soft- predicts how quickly it will warm up. It ware that runs its Hue line of residential can also guess whether people will be LED lights. Now it’s possible to down- home. The result, says McGaraghan, is load Goldee, a smartphone app that turns that Nest can maximize energy savings your house the color of a Paris sunset, or

and minimize annoyance to residents. Reflector Ambify, a $2.99 app created by a German Talkington predicts the residential programmer that makes the lights flash to 7 LEDs program will enroll enough homes to save Heat spreader music as in a jukebox. more than 13 megawatts through demand That’s a very different kind of business Circuit boards: response this summer. Even if Austin gives from selling light bulbs, as Philips has out $2 million in rebates, that is cheaper • Radio chip done since 1891. “With the new digitiza- than increasing power supply by build- • 512k of tion of light, we have only begun to scratch computer ing a natural-gas-fired generator. Accord- the surface on how we can control it, inte- Philips storage ing to Michael Webber, co-director of the Hue grate it with other systems, and collect clean-energy incubator at the University LED light rich data,” says Brian Bernstein, Philips’s of Texas in Austin, new power supply costs Price: global head of indoor lighting systems. $500,000 to $4,000,000 per megawatt of $59 each Another look at how lighting systems capacity, depending on the type of plant. are changing will emerge this Novem- Webber believes that within five years ber, when a 14-story regional headquar- the “vast preponderance” of Texans will ters for Deloitte, nearing completion in have smart thermostats. And Nest knows ● To demonstrate how the Internet is Amsterdam, will be festooned with net- that whoever builds this network first changing one of the oldest and least excit- worked LEDs in each fixture—the first could win big, especially as other energy- ing technology businesses around, Shane such installation for Philips. consuming devices, like electric cars and De Lima, an engineer at Philips Lighting, Each of 6,500 light fixtures will have hot-water heaters, also get wired up. took out his smartphone. A flick across an IP address and five sensors—all of them Eventually, the effects of demand the screen sent a message to a nearby wired only to Ethernet cables. (They’ll response could be profound. Austin’s pro- Wi-Fi router and then to wireless hub, use “power over Ethernet” technology to gram is designed to manage demand only which shot a radio command to a chip in deliver the juice to each fixture as well as

COURTESY OF PHILIPS OF COURTESY during the 50 hours each year when elec- the base of an LED lamp in front of us. data.) The fixtures include a light

5 MIT TECHNOLOGY REVIEW JULY/AUGUST 2014 TECHNOLOGYREVIEW.COM BUSINESS REPORT — THE INTERNET OF THINGS sensor to dim the LEDs during the day, many of them programmers and data and a motion detector that covers the area Service Play scientists. directly beneath each light and turns the GE’s industrial revenues are split between sell- “People have told companies like GE ing products and servicing them. light off when no one is there. “We expect for years that they can’t be in the software to spend 70 percent less on light, because Revenue in billions ($) in 2013 n Products business,” Immelt said last year. “We’re too n Services systems [give] us much more control,” slow. We’re big and dopey. But you know says Erik Ubels, chief information officer 30 what? We are extremely dedicated to win- at Deloitte in the Netherlands. Additional 25 ning in the markets we’re in. And this is sensors in the LED fixtures can monitor 20 a to-the-death fight to remain relevant to temperature, humidity, carbon dioxide, 15 our customers.” and heat, turning the lights into a kind of 10 Peter Evans, then a GE executive, was building-management system. 5 given the job of shaping what he calls the Prices for LEDs are high but falling “meta-narrative” around GE’s big launch. quickly. A “dumb” LED that puts out as Q1 Q2 Q3 Q4 Industrial companies, which prize reliabil- much light as a $1.25 incandescent bulb ity, aren’t nearly as quick to jump for new now sells for $9 (but uses one-sixth the energy and lasts much longer). That’s down from $40 each a couple of years ago. A con- “This is a to-the-death fight to remain relevant to our nected LED bulb from Philips’s Hue line customers.” retails in the U.S. for $59. But these will —General Electric CEO Jeffrey Immelt get cheaper, too. Philips says a third of its lighting revenue now comes from LEDs, and about 1.7 percent from the newer LEDs that can connect to the Internet. Internal surveys had discovered that technology as consumers. So GE’s indus- Many other uses are being explored. A GE sold $4 billion worth of industrial soft- trial-Internet pitch was structured around department store in Dusseldorf, Germany, ware a year—the kind used to run pumps the huge economic gains even a 1 percent is using LEDs to send out light frequen- or monitor wind turbines. That’s as much improvement in efficiency might bring to cies that communicate with shoppers’ as the total revenue of Salesforce.com. But a number of industries if they used more smartphones. Philips has placed street these efforts were scattered and not always analytics software. That number was fairly lights in Barcelona that react to how many state-of-the-art. And that gap was turning arbitrary—something safe, “just 1 percent,” people are strolling by. —David Talbot dangerous. GE had always believed that recalls Evans. But here Immelt’s marketing since it knew the materials and the physics skills came into play. “Not ‘just 1 percent’,” of its jet engines and medical scanners, no he said, flipping it around. GE’s slogan Leaders one could best it in understanding those would be “The Power of 1 Percent.” machines. But companies that specialize In a stroke, GE had shifted the discus- in analytics, like IBM, were increasingly sion about where the Internet was going GE’s $1 Billion spooking GE by figuring out when big- next. Other companies had been talking ticket machines like a gas turbine might about connecting cars and people and Software Bet fail—just by studying raw feeds from toasters. But manufacturing and industry gauges or vibration monitors. account for a giant slice of global GDP. To protect lucrative business servicing This was no small thing. GE sells $60 “All the appliances in your home could be machines, GE turns to industrial Internet. billion a year in industrial equipment. But wired up and monitored, but the kind of its most lucrative business is servicing the money you make in airlines or health care ● To understand why General Electric is machines. Now software companies were dwarfs that,” Immelt remarked. plowing $1 billion into the idea of using looking to take a part of that pie, to get There is another constituency for the software to transform industry, put your- between GE and its largest source of prof- campaign: engineers inside GE. To them, self in the shoes of Jeff Immelt, its CEO. its. As Immelt would later say, “We cannot operational software isn’t anything new. As recently as 2004, GE had reigned as afford to concede how the data gathered in Nor are control systems—even a steam the most valuable company on the planet. our industry is used by other companies.” locomotive has one. But here Immelt was But these days, it’s not even the largest in In 2012, GE unveiled its answer to betting they could reinvent these systems. America. Apple, Microsoft, and Google are these threats, a campaign it calls the “You do embedded systems? My God, how all bigger. Software is king of the hill. And, “industrial Internet.” It included a new boring is that? It’s like, put a bullet in your as Immelt came to realize, GE is not that research lab across the bay from Silicon head,” says Brian Courtney, a GE man-

great at software. Valley, where it has hired 800 people, ager based in Lisle, Illinois. “Now it’s the GE OF COURTESY GE; SOURCE:

6 MIT TECHNOLOGY REVIEW BUSINESS REPORT — THE INTERNET OF THINGS TECHNOLOGYREVIEW.COM JULY/AUGUST 2014

hottest job around.” At the Lisle center, year—barely a flicker next to the billion or part of GE’s Intelligent Platforms divi- Emerged so smartphones sold in 2013. sion, former field engineers sit in cubicles Wearables are still looking for their monitoring squiggles of data coming off killer app. Now some people have begun turbines in Pakistan and oil rigs in onetime The Internet to imagine that the Internet of things will Soviet republics. Call this version 1.0 of provide it. If indeed our houses become the industrial Internet. On the walls, staff of You filled with smart devices like door locks, a hang pictures of fish; each represents a watch or wristband may be the most con- problem, like a cracked turbine blade, that As wearable devices get better-looking venient way to control them or let them was caught early. More and more, GE will and more powerful, we’ll trust them to know our needs. be using data to anticipate maintenance monitor and control more of our lives. “Your car should know that you’re needs, says Courtney. tired because you didn’t sleep that well, A challenge for GE is that it doesn’t ● The Internet of things typically con- so it should be alert to that, how awake yet have access to most of the data its jures images of “smart” light bulbs and are you when you’re driving, those things,” machines produce. Courtney says about automatic door locks. Yet with an ever says Hosain Rahman, the CEO of Jaw- five terabytes of data a day comes into larger number of smart watches, activity bone, a 14-year-old company that makes GE. Facebook collects 100 times as much. trackers, and head-worn computers hit- earphones, speakers, as well as wrist-worn According to Richard Soley, head of the ting the market, we’re becoming part of fitness trackers. “I just think that things Industrial Internet Consortium, a trade the Internet of things, too. that are on your body—wearables—ulti- group GE created this year, industry has Slowly but surely, a few wear- mately will [control] all the smart been hobbled by a “lack of Internet think- able devices—mainly high-tech stuff and be kind of at the center ing.” A jet engine has hundreds of sensors. pedometers like those from Fit- 19 point.” But measurements have been collected bit and Jawbone—are catch- Jawbone is among the first only at takeoff, at landing, and once mid- ing on with consumers, and million to try to turn a wearable into Number of watches, flight. GE’s aviation division only recently many researchers and com- such a lifestyle remote. Jaw- bands, and other found ways to get all the flight data. “It panies are certain that body- wearables expected bone’s Up24 wristband can act sounds crazy, but people just didn’t think worn computers will become to ship in 2014 as a trigger for the Web service about it,” says Soley. “It’s like the Internet second nature—sensing, recording, IFTTT (“If This, Then That”) by revolution has just not touched the indus- and transmitting data to and from our using its low-energy Bluetooth radio to trial revolution.” bodies, to networks around us. share the data it gathers about you with GE is trying to close that gap. Its soft- For the most part, wearables still an app on your smartphone. For now, it ware center in San Ramon created an lack wide appeal. Some, like Google does only simple things. If you have an adaptation of Hadoop, big-data software Glass, elicit ambivalence. IDC estimates Internet-connected heater, the wristband used by the likes of Facebook. GE also that manufacturers will ship 19 million can signal it to turn on when you get up in invested $100 million in Pivotal, a cloud watches, bands, and other wearables next the morning. The idea is that the environ- computing company. On the crowdsourc- ment reacts to you. ing site , it launched public compe- Such ideas are in their infancy. Many titions to optimize algorithms for routing Wearable Wireless companies are still struggling to get airline flights, which can save fuel. Wireless electronic devices are gathering anyone to put a wearable computer on. All this could sound familiar to anyone useful data about people. Another problem is power. With Google who works with consumer Internet tech- Glass, for instance, you’ll get a few hours nology, acknowledges Bernie Anger, gen- OMSignal OMShirt (gathers of use before it needs to be recharged. $240 biometric data) eral manager of GE’s Intelligent Platforms And the biggest power draw is usually division. But he says GE is thinking about Jawbone Up24 wireless wrist- the wireless chip that lets these devices what to do next to use connectivity, and $150 band activity tracker communicate. That’s why MC10, a startup more computers, to inject “new behavior” manufacturing soft, thin electronics, is into machines. He gives the example of a OMG Life Autographer wear- experimenting with “every novel form field of wind turbines that communicate $399 able camera of power source,” says cofounder Ben and move together in response to changes Schlatka. One possibility comes from a Google Glucose-sensing in wind. “We are moving into big data, research stage wireless contact lens project at Columbia University called but it’s not because we want to become Enhants. Researchers there are devel- Google,” he says. “It’s because we are dra- Proteus Biomedical Battery-powered oping small, flexible tags that harvest matically evolving manufacturing.” research stage drugs energy from light or as they are shaken

SOURCE: MIT TECHNOLOGY REVIEW TECHNOLOGY MIT SOURCE: —Antonio Regalado by movement. In an upcoming

7 MIT TECHNOLOGY REVIEW JULY/AUGUST 2014 TECHNOLOGYREVIEW.COM BUSINESS REPORT — THE INTERNET OF THINGS research paper, they describe outfitting are saying ‘What is next’?” says David 40 people with flat sensors attached to Global Wireless Boom Blaauw, a professor of engineering at the different parts of their bodies while they Devices that make up the Internet of things University of Michigan. Blaauw builds walked, ran, or relaxed. Sensors were able will compete for space on networks dominated­ millimeter-scale wireless computers that by phones, games, and video. to harvest enough energy to transmit data he believes may one day report data from continuously at a rate of one kilobit per Wirelesss traffic, in terabytes per month just about anywhere, even from inside a second. That’s not much, but it could patient’s tumor. be enough for simple applications like 12,000,000 A SigFox base station can serve a authenticating someone’s ID or reading Phones radius of tens of kilometers in the coun- the local temperature. Enhants researcher 8,000,000 tryside and five kilometers in urban areas. Peter Kinget,­ a professor of electrical engi- To connect to the network, a device will neering at Columbia, says enough energy 4,000,000 need a $1 or $2 wireless chip that’s com- can typically be harvested to wirelessly link Tablets patible, and customers will pay about $1 a sensor on your body to a smartphone— Things in service charges per year per device. something we’re already comfortable car- 2013 2014 2015 2016 2017 2018 By reaching into the Bay Area first rying everywhere we go. —Rachel Metz (with expansion to tech hubs such as Austin, Cambridge, and Boulder in its Luke D’Arcy, director of SigFox’s opera- sights), SigFox hopes to catch the inter- Emerged Technologies tions in the U.S. est of a region where venture capital- SigFox’s network will cover the San ists poured nearly $1 billion into startup Francisco peninsula from its urban tip companies focusing on the Internet of Silicon Valley to the sprawling Silicon Valley region 40 things last year, according to the research miles to the south. It will be the compa- firm CB Insights. One of those startups, to Get a Cellular ny’s first U.S. deployment of a network Whistle, makes a fitness-tracking collar technology that already covers the whole for dogs. It has raised $6 million and is Network, of France, most of the Netherlands, and located in a corner of San Francisco that’s parts of Russia and Spain. SigFox built been called “IoT Town” thanks to its pro- Just for Things those by adding its own equipment to fusion of similar ventures. existing cell towers and radio antennas. Ben Jacobs, Whistle’s CEO, says the A French company plans to build a Customers include the French insurance collar communicates by Bluetooth to a wireless slow lane for small, low-power company MAAF, which offers smoke and phone, or via a home Wi-Fi router. That devices. motion detectors that notify homeown- limits what it can do. But a new version ers with a text message on their phones using SigFox’s technology will have a con- ● San Francisco is set to get a new cellular when a sensor is triggered or needs stant Internet connection any­where network later this year, but it won’t help a new battery. in town, letting it act as a bea- fix the city’s spotty mobile-phone cover- The Silicon Valley network 100 con for lost pets. Previously, age. This wireless network is exclusively will use the unlicensed 915- bits per that would have required an for things. megahertz spectrum band second expensive and power-hungry The French company SigFox says commonly used by cordless Speed at which objects cellular phone on the collar. it picked the Bay Area to demonstrate phones. Objects connected to connected to SigFox’s SigFox is in a hurry to a wireless network intended to make it SigFox’s network can operate at network can operate get its network in place before cheap and practical to link anything to the very low power but will be able to competitors arrive. Jacob Sharony, Internet, from smoke detectors to dog col- transmit at only 100 bits per second— a principal at the wireless consultancy lars, bicycle locks, and water pipes. slower by a factor of 1,000 than the net- Mobius Consulting, says large wireless Regular mobile networks are jammed works that serve smartphones. But that companies are preparing machine-only with traffic from phone calls and people could be enough for many applications. networks as well, and these may operate downloading videos. But for the Inter- Indeed, semiconductor companies at much higher speeds. A new long-range, net of things to become a reality, similar like Intel and Broadcom are also in a low-power Wi-Fi standard that has the capabilities will need to be extended to race to make far cheaper, far smaller, and backing of some major U.S. companies, billions of objects, many of them embed- much-lower-power wireless chips. Sev- including Qualcomm, could hit the mar- ded in the environment and powered by eral showed off these “miniature comput- ket in 2016. “It will likely be a major con- small batteries. “If you want to get to bil- ers” at the Consumer Electronics Show tender even though it is somewhat late to lions of connections like that, you require this year. “They saw the cell phone turn the game,” says Sharony.

a completely new type of network,” says into the smartphone, and so companies —Tom Simonite INDEX NETWORKING VISUAL CISCO SOURCE:

8 There’s a way to do it better. Find it. – Each year, over 35,000 companies As engineers, you have the power to solve today’s biggest challenges. This includes choose a better approach to developing cyber-physical systems that will better connect our world through measurement and control. advanced technology.

This emerging technology infrastructure is known as the Internet of Things, and its use of

massive data sets is poised to improve daily life through predictive and real-time analysis.

But bringing it to life is going to take integrated software and hardware platforms that

simplify and accelerate application design, development, and deployment.

Find them at ni.com.

©2014 National Instruments. All rights reserved. National Instruments, NI, and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies. 17198 Each year, over 35,000 companies As engineers, you have the power to solve today’s biggest challenges. This includes choose a better approach to developing cyber-physical systems that will better connect our world through measurement and control. advanced technology.

This emerging technology infrastructure is known as the Internet of Things, and its use of

massive data sets is poised to improve daily life through predictive and real-time analysis.

But bringing it to life is going to take integrated software and hardware platforms that

simplify and accelerate application design, development, and deployment.

Find them at ni.com.

©2014 National Instruments. All rights reserved. National Instruments, NI, and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies. 17198 MIT TECHNOLOGY REVIEW JULY/AUGUST 2014 TECHNOLOGYREVIEW.COM BUSINESS REPORT — THE INTERNET OF THINGS

Industry Guide Bell’s Law for the Birth and Death of Computer Classes: A Theory of the Computer’s Evolution The Internet of Things Microsoft, 2007 Gordon Bell Industry resources, key executives, and companies to watch. In this technical report, Microsoft researcher Gordon Bell describes the evo- ods on batteries or even just with energy lution since 1940 of widely used types of Reports snatched from the environment. computers, arguing that new versions have consistently been 10 times more numerous Internet-of-Things Market, Value than their predecessors at a tenth the price. Networks, and Business Models: Cisco Visual Networking Index: State of the Art Report Global Mobile Data Traffic University of Jyväskylä, 2013 Forecast Update 2013–2018 Books Oleksy Mazhelis, et al. Cisco Systems, 2013 Rethinking the Internet of These Finnish computer scientists have There is already 18 times more mobile data Things: A Scalable Approach to organized many of the key data sets traffic than there was traffic on the global Connecting Everything related to the Internet of things into a Internet in 2000, and over half a billion Francis daCosta freely available report that is thick with new mobile devices were added to the net- Amazon Digital Services, 2013 detailed breakdowns of expected changes work in 2013, mostly smartphones. The to Internet traffic and wireless protocols. report predicts that by 2017, the number This technical e-book describes an of networked devices will be three times approach to extracting meaning from the global population, and wireless devices the billions of new data sources that are Industrial Internet: Pushing such as tablets, TVs, and phones will emerging as more computers communi- the Boundaries of Minds and account for 55 percent of Internet traffic. cate on the Internet. The author asks what Machines General Electric, 2012 Who We Are Following Peter C. Evans and Marco Annunziata

GE launched its push into the Internet of James Chevalier Founder, CityStrides @TheIoT things with this white paper, which dis- cusses potential economic savings if the Tom Coates’s house Tweeting home, San Francisco @houseofcoates “industrial Internet” leads to an efficiency Beth Comstock Chief marketing officer, GE @bethcomstock gain of just 1 percent across industries. Alexandra Deschamps-Sonsino Interaction designer, Designwarm @iotwatch

Smart Everything: Will Intelligent Dave Evans Chief futurist, Cisco Systems @DaveTheFuturist Systems Reduce Resource Use? IBM Smarter Cities @IBMSmartCities Annual Review of Environment and Jeff Moad Research director, Manufacturing @JM32 Resources, 2013 Executive Jonathan G. Koomey, H. Scot Matthews, and Eric Williams Christine Outram Associate director of invention, @cityinnovation Deutsche For everything to be smart, everything needs a computer. And those computers Bill Ruh Head, GE Software @BillRuh_GE will have to be powered. Stanford Univer- SmartCities Platform European Commission @EUSmartCities sity energy specialist Jonathan Koomey and colleagues describe long-term trends Anthony Townsend Author, Smart Cities @anthonymobile that are leading to a “new class of com- puting device”—cheap, connected, and so Web of Things @webofthings low-power they can operate for long peri-

12 MIT TECHNOLOGY REVIEW BUSINESS REPORT — THE INTERNET OF THINGS TECHNOLOGYREVIEW.COM JULY/AUGUST 2014 these simple new devices (a temperature sensor or rain gauge) will do and con- Where We Are Going cludes that they’ll mostly need to commu- nicate very small amounts of information, W3C Workshop on the Web of Things Designers of Things or “chirps.” He takes a contrarian view, June 25–26, 2014 September 23–24, 2014 Siemensdamm 50 San Francisco arguing that they shouldn’t be burdened Berlin www.designersofthings.com/sanfrancisco/ with all the technology involved in the lat- www.w3.org/2014/02/wot about est Internet protocol, IPv6. Machine2Machine Evolution Internet of Things 2014 Conference & Expo October 6–8, 2014 August 11–14, 2014 MIT The Zero Marginal Cost Society: The Rio Cambridge, Massachusetts The Internet of Things, the Las Vegas www.iot-conference.org/iot2014 Collaborative Commons, and the www.m2mevolution.com Eclipse of Capitalism iOT360 and URB-IOT 2014: First Shenzhen International Internet of International Conferences on IoT in Jeremy Rifkin Things Expo Urban Space Palgrave Macmillan, 2014 August 14–16, 2014 October 27–28, 2014 Shenzhen Convention & Exhibition Center Rome This view from the political left is worth Shenzhen, China http://iot-360.eu, http://urbaniot.org/2014/ reading not because of the author’s (often www.iotexpo.com.cn show/home wrong) predictions about technology but because of what he wants from it. Exam- ining some hot trends, like 3-D printing, other “cyber physical” systems. As part of sharing services such as Airbnb, driverless Service Business Development: an informal industry group known as the cars, and ubiquitous sensors, Rifkin con- Strategies for Value Creation in Kitchen Cabinet, Arnold was influential cludes that capitalism will be replaced by Manufacturing Firms in establishing the commercial Industrial a new “collaborative commons” in which Thomas Fischer, Heiko Gebauer, and Internet Consortium this year. NIST’s energy and goods, just like information, Elgar Fleisch 2014 budget request included $18.8 mil- will become nearly free. The result, he Cambridge University Press, 2012 lion to study cyber-physical systems and predicts, is that “capitalism will remain their security. Arnold is a veteran of Bell with us, albeit in an increasingly stream- In this guidebook for manufacturers fac- Labs and the coauthor of one of the ear- lined role.” ing shrinking profits, Swiss academics liest examples of chess-playing software. summarize 12 years of research on how networks can let manufacturers create Social Physics: How Good Ideas new services tied to their products. Gordon Bell Spread—The Lessons from a New Researcher emeritus, Microsoft Research Redmond, Washington Alex Pentland Executives to Watch Penguin Press, 2014 Back in the 1960s, Bell networked main- George Arnold frame and minicomputers for Digital Dubbed the “presiding genius” of big data, Director, Standards Coordination Office, Equipment. Later he helped establish MIT professor Alex “Sandy” Pentland and national coordinator, smart grid Microsoft’s research lab and joined describes a new science that he calls social interoperability, National Institute of Stan- it in 1995. In 1998 he anticipated the physics—built by collecting and analyzing dards and Technology quantified-­self movement by starting an the digital crumbs we leave behind, par- Gaithersburg, Maryland effort to record every e-mail, tens of thou- ticularly from our smartphones. Pentland sands of photographs and phone record- expects to develop new insights into how On the Internet of things, standards and ings, all his computer use, and everything people actually behave and what kinds of protocols will determine winners and los- he owns, even while writing lengthy mem- rewards motivate them. He even imag- ers. That makes George Arnold a quietly oranda on Microsoft strategy in regard to ines mathematical models of civic behav- important player. As a smart-grid czar network, smartphones, and the Internet of ior. His approach to studying human at the federal National Institute of Stan- things. One prediction from 2007: “Tens affairs by gathering digital traces, some- dards and Technology, Arnold is involved of billions of dust-sized, embeddable wire- times called reality mining, is the basis in setting standards for how digital tech- lessly connected platforms that connect for numerous startup companies spun nologies will affect the politically and stra- everything are likely to be the largest class out from his lab. tegically important electricity grid and of [computers] enabling the state of every-

13 MIT TECHNOLOGY REVIEW JULY/AUGUST 2014 TECHNOLOGYREVIEW.COM BUSINESS REPORT — THE INTERNET OF THINGS thing to be sensed, effected and communi- He’s taken on the job of organizing GE’s ity. To capture this market, in 2013 Broad- cated with.” software operations, which, though scat- com introduced a “turnkey” system, called tered, do $4 billion in sales and employ WICED (consisting of a small processor about 10,000 people (as many as work and Wi-Fi chip), that device manufactur- Beth Comstock at Adobe). That takes a technical vision. ers can embed into objects to make them Chief marketing officer, General Electric Ruh’s has been to create a new software into wireless nodes. Fairfield, Connecticut and R&D center in San Ramon to central- ize GE’s efforts. Since he joined in 2011, Beth Comstock likes to call GE the GE has created Predix, a standard system Cisco Systems “world’s oldest startup.” Her job is to for doing analytics on industrial data that Founded: 1984 make sure the 132-year-old company acts GE says has generated more than $800 San Jose, California like a startup. As head of marketing, she million in new sales. Vital statistics: $48.6 billion in annual oversees high-budget, high-concept cam- sales and 75,000 employees paigns like the “industrial Internet,” GE’s effort to invest in data analytics. She over- Companies to Watch Cisco is one of the loudest cheerleaders for sees GE Ventures, the company’s in-house the Internet of things. No wonder. Every venture capital shop, as well as efforts to time someone connects a new device to stir up innovation through open competi- Founded: 2004 the Internet, Cisco stands to make more tions partnering with startups. San Jose, CA money selling switches, routers, and Vital statistic: $173 million in funding from Wi-Fi equipment. “The more devices Norwest Venture Partners, Bay Partners, there are, the better for us,” said a Cisco SAP Ventures, and Third Point executive. By Cisco’s estimate, only 4 per- Founder and CEO, Nest cent of devices on factory floors are con- Palo Alto, California Apigee helps develop mobile apps and nected to the Internet. In the next seven application programming interfaces, or years, Cisco estimates, 27 billion devices Tony Fadell created the first recognizable APIs, for big companies that want to open will be connected to a network, mostly consumer brand of the Internet of things, up their data streams for the world to plug machines like solar panels, engines, and the Nest Learning Thermostat. Formerly a into, just as Facebook or do. Help- trucks. designer and executive at Apple, Fadell cre- ing big companies “master the art and sci- ated the first 18 versions of the iPod under ence” of the app economy will matter as Steve Jobs. In 2008 he left Apple and cre- these companies try to turn light bulbs and Electric Imp ated a true garage startup to replace the automobiles into information technology Founded: 2011 $29 “beige box” thermostat with a $249 platforms and business ecosystems. Apigee Los Altos, California version capable of collecting detailed infor- is to carry out an IPO in 2014. Vital statistic: Raised $8 million from mation about what goes on inside a house. Redpoint Ventures and Lowercase Consumers cheered; sales topped 50,000 ­Capital, among others units a month by early 2013. When Google Broadcom bought his company in 2014 for $3.2 bil- Founded: 1991 How do objects get connected to the lion, it was partly to get hold of Fadell and Irvine, California Internet? One new option is the Imp, a his skills in consumer gadget design, nota- Vital statistic: $8.3 billion in revenue system developed by former iPhone engi- bly lacking at Google. Fadell, a computer neer Hugo Fiennes that makes it relatively engineer, holds over 300 patents. You may not have heard of Broadcom, but easy to “Internet-enable” any product. The crack open any Internet of things device, Imp is a small computer with a proces- like the MyQ garage door opener or a Hon- sor and wireless Wi-Fi chip; then there’s William Ruh eywell smart thermostat, and you’re likely software to program the Imp and run it Vice president and global technology to find a Broadcom wireless chip inside. from the Internet. The Imp is becom- director, General Electric The chip maker says 99 percent of Internet ing a favored test bed for gadgeteers and San Ramon, California traffic passes through its products, which entrepreneurs launching novelty products are also found in set-top boxes, smart- on sites like . It is also find- When GE needed to fix its sprawling soft- phones, and routers. Unlike Intel but like ing its way into commercial products like ware operations, it needed a big name. It chip makers such as Texas Instruments, the Lockitron smart lock and the Rachio picked Bill Ruh, a well-established soft- Broadcom is targeting the low end of the smart sprinkler, which permits people to ware executive from Cisco. Around GE, market, which is expected to grow quickly control lawn watering from their smart- Ruh’s name is uttered with reverence. as more products require cheap connectiv- phones. The Imp retails for $30.

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