The Internet Of Things: The Next Big Market

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Always-on broadband access has already changed our relationship to computers, telephones and TV. Now it is transforming our relationship to everything else. Welcome to the Internet of Things, a world in which everything from cows to bicycles is connected to the Internet. The cost and complexity associated with connecting everything to the Net is dramatically decreasing, thanks in part to innovations by European and U.S. start-ups. Some of the best companies in this space will be demonstrating their products and services on the stage at Le Web, an annual Internet conference in Paris organized by Loic and Geraldine Le Meur.

So called smart homes, filled with appliances that could call repairmen automatically when they start to break down or refrigerators that would automatically order groceries when the milk runs low, have been hyped since the 1980s. But most of us are still being put on hold by Darty or Sears when the washer is on the fritz, or resignedly trudging to the grocery store when the fridge is empty. Connecting everything promises to transform our lives, spurring entirely new ways of interacting with the world. In Frog Design’s report,“Coming Zombie Apocalypse,” user experience expert Scott Jensen describes a world of devices that are able to proactively join forces to solve problems for people on the fly. He predicts we will have a display on our phones or devices that lists and potentially ranks nearby things, which will have their own interfaces, and will create an experience on demand and in context. “The idea of a user downloading, managing and launching apps will be just plain silly,” says Jensen.

It is a nascent area that is ripe for innovation and promises to reap rich rewards for start-ups that get it right. The IoT and machine-to-machine communication market is projected to be the fastest-growing technology segment in the IT sector in the next three to five years, according to a report by marketandmarket, a research firm. The report predicts that the sector will be worth $290 billion by 2017, up from $40 billion in 2011. In 2011, Europe accounted for about 30% of global revenue, and is expected to grow at a compounded annual growth rate of 27.4% from 2012 to 2017. The Asia-Pacific and North American markets are projected to contribute $92.8 billion and $56.3 billion, respectively, by 2017.

The task of connecting virtually everything takes the concept of scaling up to unprecedented levels. A chief challenge is bringing down the cost of connecting billions of new devices. SIGFOX, a company based in Toulouse, France, which is being billed as the first operator of a cellular network fully dedicated to machine-to-machine (M2M) and Internet of Things communications, thinks it has that problem licked.

SIGFOX, which raised a $10 million series B round in September led by Intel Capital, together with existing investors Partech International, Elaia Partners and IXO Private Equity, has developed patented technology which it says allows it to use narrow band technology to provide connectivity for objects at a fraction of what it costs telecom operators. It says it can cover all of France with 1,000 antennas for around $2 million.

“We have found a way of sending data with little energy and very cheaply,” says SIGFOX founder and CEO Ludovic Le Moan (pictured on Informilo’s home page), a scheduled speaker at Le Web. “Traditional telecom operators can’t do the same.”

SIGFOX isn’t just connecting cows. It is tracking rhinos in southern central Africa and will soon web-enable selected goats and birds. It is also connecting mailboxes so that they can send an SMS whenever people receive snail mail. It is also web-enabling smoke detectors, which can alert the user when there’s smoke and let the insurance agency know whether or not the detector is functional. During Le Web, SIGFOX will announce a partnership with a large insurance company focused on the consumer market, says Le Moan.

SIGFOX is already working with Clear Channel, a company specializing in outdoor advertising, such as rotating billboards. Advertisers are often angry — and threaten to pull their campaigns — when rotating billboards break down. Until recently Clear Channel had to randomly send drivers to check if they were operational. Now the billboards proactively signal the company when they are broken. The Internet of Things will offer efficiency and cost savings for lots of different sectors, Le Moan says.

Opportunities are not limited to connectivity. New types of connected devices need to be designed and here, too, French start-ups have taken a leading role. French entrepreneur Rafi Haladjian, a scheduled speaker at Le Web, had a vision of Wi-Fi connected objects throughout the house more than six years ago. His company Violet developed a Wi-Fi rabbit called Nabaztag that was able to read out e-mails and mobile phone text messages, provide alerts to stock news and offer traffic updates through Internet feeds from a Wi-Fi network.

While Nabaztag was ahead of its time, Withings, another French company that designs Internet of Thing objects, is hitting the market at a time when the building blocks for the iOT are being put in place. Its products — which focus on health and fitness — are being sold in Apple stores and are also available at other retailers such as Best Buy. So far it has developed a Wi-Fi body scale, a new blood pressure monitor for iOS devices, as well as a web-enabled baby monitor that not only detects sounds but can also track sleep patterns.

“We need to show the end user that they can be empowered by these devices,” says Withings CEO and co-founder Cedric Hutchings. “Without changing your daily routine you can start logging and generating knowledge about your health and wellness and can also leverage this knowledge to take positive action.” For example the Wi-Fi body scale doesn’t just help pinpoint fluctuations in your weight, it can connect you to the right third party, such as your doctor, a nutritionist or your fitness instructor.

Another company that is scheduled to demo its products at Le Web is the U.S.’s SmartThings, which aims to make home automation much more affordable. Its users can monitor, control, automate, and have fun with objects from anywhere. For example, they can be notified immediately if a pet runs out of the house with the “Oh No, My Pet Is Loose!” SmartApp. Or receive an early warning or directly contact a plumber when there is a leak in the bathroom or basement before damage gets out of hand with the “It’s Leaking!” SmartApp.

Up to now home automation providers have been focused on expensive systems for the home, with most of the money going into home theater. “We’re seeing more moves toward starter sets and controlling things people do all the time like heat and lights,” says Phil Windley, founder and chief technology officer of Utah-based Kynetx, a platform-as-a-service company that has developed its own scheme for connecting everything on the Internet of Things.

“My beef with all of these systems is that they are closed,” says Windley. For this to really be useful, we need any-to-any peer-to-peer interactions. I don’t want to buy into a system that later on requires that I buy an LG dishwasher rather than the GE I really want because the system’s manufacturer didn’t do a bizdev deal with GE.”

Kynetx makes cheap, smart tags that don’t require RFID or any other sorts of tech. It uses virtual computers — personal clouds — to serve as proxies, enabling anything to become “smart” right now, including dumb objects and things manufactured years ago. “Personal clouds are a way to bridge both smart and not-so-smart devices and bring everything onto the Internet of Things today,” says Windley.

Kynetx has initially chosen to use tags equipped with QR codes as the means of identifying objects and linking them to personal clouds, because it is the cheapest and most convenient way to affix an identity to things right now. It acknowledges that as more phones have NFC capability they will likely be the preferred method for discovering a thing’s identity; some applications might be better suited to RFID. And, of course, smart devices with embedded computers will have their own identities that can be used to link them to a personal cloud.

SquareTags can be affixed to almost anything and their functionality can change depending on what they re affixed to and how the owner configured them. Unlike a QR code that goes to a website with static functionally, SquareTags are associated with a general-purpose virtual computer and the functionality they display is determined by the apps that are running behind the SquareTag.

For example, a bike code might tell us the bike’s make but it can’t tell us the owner, or that it had its drive train replaced last spring, or that it was in Monaco on June 16th at 4:30 p.m. To do that, the bike needs an identity that is independent of every other bike and this unique identity must be tied to a means of computation — a personal cloud. “The computer doesn’t have to be in the bike,” says Windley. “The computer can be in the cloud. Any bike, even one you bought years ago, can be made smart by giving the bike a personal cloud. Personal clouds, cloud-based virtual machines, can be created that are cheap and facile enough to literally make every thing smart,” he says.

The company is already running trials in which tags are affixed to students’ bikes at universities in Utah, making it easier to reunite bike and owner, and it says it plans to launch a wider program in December. In the Utah university experiment if a policeman finds an abandoned bicycle he can take out his smartphone and scan the tag on the bike. A screen will pop up that says, “This bicycle was reported missing, please contact the owner,” along with a red button labeled “push to contact.” When the policeman pushes the red button on the screen a form appears that he can fill out telling the owner how to retrieve the bike. The message is delivered to the owner using a channel of the owner’s choosing. The owner receives the message and happily recovers her bicycle.

So how long will it take before all of us can start doing really useful things like retrieving our misplaced pair of eyeglasses or car keys? Start-ups demonstrating their products at Le Web swear it will be soon. “Our aim is to reinvent everyday life,” promises Withings’ Hutchings. “Within a few years’ time we will be able to count the objects that aren’t connected.”

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