Defining the Internet of Things
Mere months after the turn of the century Sharp Electronics produced the J-SH04 – the first camera phone (Hill, 2013). Consumers marveled at its ability to capture and send photos. Companies followed Sharp’s lead, and the evolution of the modern day cellphone began. This sense of connectivity gave consumers an experience they had only witnessed on television shows, such as The Jetsons. The consumers’ need to be connected grew, leading to the creation of the Internet of Things (IoT).
McKinsey & Company defines IoT as, “sensors and actuators embedded in physical objects—from roadways to pacemakers— [that] are linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet (Chui, 2010). In less complex terms, IoT is simply, “the connection of any device with an on and off switch to the Internet,” (Morgan, 2014).
Components of IoT
Physical Object: Also known as the ‘thing’ in IoT. The physical object can be anything from a toaster oven to the lighting in your house.
Sensors: A device that detects and responds to some type of input (usually changes) from the physical environment (Sensors, n.d.).
Actuators: A device that turns energy from a compressed air, electrical, liquid, or thermal source into some form of motion.
Virtual Objects: This can be anything that is shown on your screen and is stored in the device. Examples include e-books, digital tickets and boarding passes, and virtual wallets.
Services: Service providers are responsible for creating and maintaining the applications that IoT devices run. Examples include cloud services such as Google Drive and Amazon Web Services.
Networks: IoT devices are connected by networks that use various wireless and wired technologies, standards, and protocols. Without properly functioning networks an IoT device would fail to execute its function.
Humans (You): IoT devices are made for and controlled by humans. In theory, the main idea of IoT devices is to make people’s lives more comfortable by integrating technology into our daily routines.
Internet: A Brief History
While the Internet is a new technology, it is older than the general population may believe. The first communication between networks dates back almost 50 years ago when ARPANET sent the first host-to-host message in 1969 using packet switching technology (Leiner, n.d.). Over the next few years ARPANET grew rapidly, and in 1972 engineers successfully demonstrated the revolutionary network technology to the public (Leiner, n.d.). Over the next two decades ARPANET eventually evolved into the Internet, and in 1989 Sir Tim Berners-Lee invented the World Wide Web – allowing mass numbers of users to connect with each other (Leiner, n.d.).
Creation of IoT
The IoT ExplosionKevin Ashton, a former brand manager for Proctor & Gamble, is known to be the pioneer who coined the term ‘Internet of Things’ in 1999 (Press, 2014). Ashton worked closely with engineers at Massachusetts Institute of Technology in developing Radio-frequency Identification (RFID). RFID is a technology that uses small tags to collect and store data. In Figure 1, a diagram of RFID shows the microchip and antenna that makes up the RFID technology. The microchip collects and stores small bits of information and the antenna transmits the data at a low frequency. At this point in time RFID technology was a new invention that had only been used in loyalty cards at select businesses. Ashton saw RFID as a means to track products – thus the ‘smart package’ was born. Ashton reported that smart packages were only the first of many smart products to come (Press, 2014).
The years following 1999 consisted of consistent growth for smart devices. Cisco estimates the officially “birth” of IoT was in 2009 – a decade after Ashton first coined the phrase. Cisco supports their estimation by arguing the fact that this was the year that “things” connected to the internet outnumbered the earth’s population (Evans, 2011).
Above, Figure 2 visually depicts the past and expected growth of connected devices. The graph shows an exponential growth of 12 billion devices between the years 2003 and 2010. In this time the number of connected devices per person increased from .08 to almost 2 devices. Cisco states the development of smartphones, such as Apple’s iPhone, are a key contributor to this growth (Evans, 2011). A smartphone not only act as an IoT device itself, but also as the central nerve to other devices, such as smart-watches, fitness trackers, and unmanned aerial vehicles (drones).
Economic Impact of IoT
Researchers Adam Theirer and Andrea Castill at the Mercatus Center of George Mason University state that the next big wave of technical innovation will come in the form of IoT. Theirer and Castill go on to state that this wave is already happening at a “breakneck” pace and is expected to continue at a rapid pace (Theirer and Castill, 2014). This wave is predicted to cause an immense influx economically for both consumers and businesses. McKinsey & Company recently estimated the total potential economic impact of IoT to be anywhere from $3.9 trillion to $11.1 trillion per year in 2025 (2015).
In the same report, McKinsey states, “While consumer applications such as fitness monitors and self-driving cars attract the most attention and can create significant value, we estimate that Business-to-business (B2B) uses can generate nearly 70 percent of potential value enabled by IoT,” (2015). McKinsey theorizes this estimation due to the fact that IoT could make business transactions virtually seamless. For example, connected consumer healthcare products are often times linked to B2B systems, such as services that are administered by health-care providers and patients.
This is not to say that the impact of IoT on customers will be a drop in the bucket. In fact, it is quite the opposite – McKinsey estimates that customers could capture up to 90 percent of the value that applications of IoT generate (2015). McKinsey illustrates this point with IoT implementation in healthcare, stating, “the value of improved health of chronic disease patients through remote monitoring could be as much as $1.1 trillion per year in 2025,” (2015).
Chui, M. (2010, March). The Internet of Things. Retrieved November 18, 2016, from http://www.mckinsey.com/industries/high-tech/our-insights/the-internet-of-things
Evans, D. (2011, April). How the Next Evolution of the Internet Is Changing Everything. Retrieved November 19, 2016, from http://www.cisco.com/c/dam/en_us/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf
Hill, S. (2013). From J-Phone to Lumia 1020: A complete history of the camera phone. Retrieved November 18, 2016, from http://www.digitaltrends.com/mobile/camera-phone-history/
Leiner, B. (n.d.). Brief History of the Internet. Retrieved November 18, 2016, from http://www.internetsociety.org/internet/what-internet/history-internet/brief-history-internet
Morgan, J. (2014, May 13). A Simple Explanation of ‘The Internet of Things’ Retrieved November 18, 2016, from http://www.forbes.com/sites/jacobmorgan/2014/05/13/simple-explanation-internet-things-that-anyone-can-understand/#6a4945586828
Press, G. (2014, June 18). A Very Short History of The Internet of Things. Retrieved November 19, 2016, from http://www.forbes.com/sites/gilpress/2014/06/18/a-very-short-history-of-the-internet-of-things/2/#419012076343
Sensor. (n.d.). Retrieved November 18, 2016, from http://www.merriam-webster.com/dictionary/sensor