The Internet of Things: Toward a Two Trillion Dollar Industry


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September 03, 2014 10:33 EDT

Smart gadgets that help users in their daily lives need three things to succeed.

Nine months ago, Google paid $3.2 billion for a little company called Nest. To put that sum in perspective: $3.2 billion is roughly equivalent to the GDP of the British Virgin Islands, American Samoa, and Greenland – combined. Why would Google pay that much for a thermostat and smoke alarm company? Perhaps because market research firms such as Gartner think the market for the Internet of Things – in which Nest is included – will be worth over 600 times that (~$2 trillion) by 2020. Given this summer’s $555 million acquisition of Dropcam, the “plug-and-play” wifi-enabled security camera, it looks like Google and Nest are starting to hatch their own Internet of Things.

Gadgets and Communication

The Internet of Things will succeed by taking three steps. First, when it makes things connect in ways that are easy for us to use; second, when it creates things that are deeply valuable; and third, when it makes the Things likeable.

Before we start prognosticating, though, what is the “Internet of Things”? It consists of gadgets and their communication with you, and it consists of the communication of those gadgets with each other. Consider Nest’s smoke and carbon monoxide detector, re-released on June 18 for $99, down from its $129 launch price. It is specific, minimally annoying, and it provides information you can access anywhere. When you install the device in a room, it knows which room it is in, and you can always check what it is detecting on your smart phone app. Under normal conditions, it shows a green light and makes no sound. If some smoke is detected, a calm, human-sounding voice intones: “Heads up: There is smoke in the kitchen.”

If conditions worsen, the device flashes red and says: “Emergency: There is smoke in the kitchen.” Even if you are at the office, you will be alerted through your mobile app if there is a fire. Contrast this with the traditional smoke detector that constantly emits low beeps that keep you up at night and then deafens you with panicked cries if you burn the toast even slightly. In the latter scenario, you risk becoming a sad statistic, since over half of all fatal house fires actually had disabled detectors in them. They were disabled because they were so annoying. Also, because traditional detectors have no mobile app, you could be two blocks away and be blissfully unaware that your house is burning down.

Although Google’s $3.2 billion would sound crazy to most, $99 seems reasonable for a product that could help keep your house fire-free.

Now, back to predictions. For the Internet of Things to take off, use of it will have to be effortless. We don’t need more remote controls than we have hands. In a world of smart phones, what you can pull out of your pocket is more valuable and weighs a fraction of what a pile of board games, a filing cabinet, a telephone, a notebook, and a stereo would. We have already replaced physical objects with apps. The next question is: Can we thoroughly digitize physical objects, too? Revolv ($299 on Amazon) comes close – you get a remote control house through your phone: control your music, lights, temperature, shades, even door locks. Again, all through your phone. Not all home devices are compatible with Revolv, though.

Smart Things Talk to Each Other

Liat Ben-Zur, Senior Director of Product Management and Software Strategy at Qualcomm, wants to make the Internet of Things even easier. At this year’s MIT Technology Review Digital Summit, Ben-Zur quipped that we are still trapped in the era of “the Internet of Thing, not the Internet of Things.” Liat Ben-Zur’s solution is an open source project called Alljoyn. It “lets the compatible smart things around us recognize each other and share resources and information across brands, networks, and operating systems.”If it succeeds, smart Things will be easier to use, because they will talk to each other before they bother us.

How might a truly easy Internet of Things help? Take weight loss for an example. Many individuals become overwhelmed by the sheer overhead of tracking and analyzing everything they eat, every workout they do, and every pound they gain or lose. Sure, it’s great to have a smart weight scale, a wearable pedometer, a heart rate monitor, a smart plate and bottle tracking how much of each food and beverage type you consume. But each of these devices typically has its own app you must manage independently. Imagine how much better it would be if all of the relevant devices worked together to create a single, streamlined daily report. You might not give up on your weight loss plan so quickly. Progressing past the Internet of Thing stage to the Internet of Things stage could help you get healthier faster.

Something about the way we relate to machines changes when they exhibit a sense of humor. If your smoke alarm cracked jokes from time to time, might you be less likely to unplug it if it annoyed you with its occasional false alarm?

Beyond ease of use, the Internet of Things will succeed when it poses more value than it raises concerns. Security cameras (Dropcam) provide some peace of mind, but they also provide a portal for companies to spy on us in our own homes. In contrast, energy and health pose fewer immediate privacy concerns but still offer tremendous value. We spend around half our monthly energy bills on heating, cooling, and lighting, so carefully controlling the temperature and enabling light bulbs to turn off when we are not present makes both financial and environmental sense. Nest’s thermostat already addresses this nicely, as do a handful of other products.

Some health startups aim to ease dieting in deep ways. Although the Fitbit products, Nike’s FuelBand, and Jawbone’s Up have captured the attention of many fitness tracking fanatics, newer companies target more intuitively valuable applications. For instance, My Diet Plate is a physical plate that helps you to follow your desired diet by communicating with your smart phone and visibly highlighting – on the plate itself – the exact portion that you should devote to meat, vegetables, carbohydrates, and dessert for your current meal. Myvessyl tracks the type and calories contained in each drink you consume throughout the day via a physical bottle and an iPhone app.

Other startups are providing valuable, low-cost medical diagnostics. The potential replacements for prohibitively expensive and cumbersome medical devices include an ECG monitor by Alivecor and an ultrasound device by Mobisante. Both are mobile and available for fractions of the usual in-clinic price (only $200 for Alivecor’s monitor). Finally, Google’s contact lens promises to help control diabetes by detecting glucose levels and communicating its findings via RFID to nearby devices. These are terrific applications, but it is hard to imagine developing an emotional attachment to your contact lenses.

Cuteness Saves Lives

Finally, the Internet of Things must be likable. Who says computers shouldn’t have a sense of humor? Consider the dry and responsive wit of Jarvis (the Artificial Intelligence in Iron Man’s armor):

Jarvis: The [paint] render is complete.

Tony Stark: A little ostentatious, don’t you think?

Jarvis: What was I thinking? You’re usually so discreet.

Tony Stark: [gazes at 1930s hotrod] Tell you what. Throw a little hotrod red in there.

Jarvis: Yes, that should help you keep a low profile.

Sure, that’s just fiction. But how far have we come in real life? Queue the stand-up comedian, Data. Data is a wise-cracking little robot built by MIT and Carnegie Mellon trained roboticist Heather Knight. Data actually responds to the audience’s laughter and adapts which jokes he tells, just like a human comedian would. The following is excerpted from the 2010 TED talk:

Data: The Swiss have an interesting army. Five hundred years without a war. Pretty lucky for them. Ever see that little Swiss Army knife they have to fight with? “Come on buddy, I have the toe clippers right here. You get past me, the guy behind me has a spoon.”

[Laughter from the audience ensues. Perhaps emboldened by his success ragging on the Swiss, Data moves onto New Jersey hunters]

Data: A couple of New Jersey hunters are out in the woods. One of them falls to the ground. He does not seem to be breathing. The other guy whips out his cell phone and calls 911. He gasps to the operator, “My friend is dead. What can I do?” The operator says, “Just take it easy. I can help. First, let’s make sure he’s dead.” There is a silence, and the operator hears a shot. The guy’s voice comes back on the line, “Okay, now what?”

[Laughter and applause ensue; Data analyzes and prioritizes this joke in his database]

A few weeks ago, a supposedly Artificially Intelligent chatbot dubbed Eugene successfully fooled 33% of a human panel into thinking that he was real after conversing with him online. Although overblown claims of human-like intelligence have been made and refuted over and over (Ray Kurzweil’s response to Eugene), this particular chatbot’s pseudo-humor is memorable. The panelists were told he was a 13-year-old Ukrainian boy, and in this interchange, he demonstrates what might rightly be interpreted as the sarcasm or hedging of a teenaged boy.

Human: I live in the capital of the United States. Do you know where that is?

Eugene: Every nerd knows that the capital of The United States is Washington.

[later in the chat]

Human: If I have two marbles in a bowl and I add two more how many marbles are in the bowl now?

Eugene: Not too many. But I can’t tell you the exact number, I forgot it.

Something about the way we relate to machines changes when they exhibit a sense of humor. If your smoke alarm cracked jokes from time to time, might you be less likely to unplug it if it annoyed you with its occasional false alarm? If so, its cuteness might just save your life.

Google Glass, one of the first consumer wearable headset computers, seems to be aiming at easy to use (just slide it onto your face), potentially deeply valuable (current apps range from exercise to social media), but heading toward fun (voice activation aims it in the right direction). Even if you are not ready to pay $1,500 for Google’s computer headset, you can still begin creating your own Internet of Things at home.

Using a tool by startup company Integreight, the 1Sheeld allows you to manipulate the sensors that come with your smart phone (using its microphone, camera, GPS, etc.) and connect them to a microcontroller, such as an Arduino. Amr Saleh, Integreight’s CEO, reported that in less than ten minutes, one meditation expert with minimal software/hardware experience was able to create a health app to reduce anxiety. It sensed stress in the user’s voice and sent out a positive, affirming message via text. If the person continued to exhibit stress, a 20 second meditation audio clip played.

As you build, remember the three key ingredients for success: Your Internet of Things will need to provide real value and be easy to use. Don’t forget to make it likable, too – for its sake and for yours.

*[If you’d like to interact with some hilariously bad chatbots, click here.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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