The Internet of Things

Data from Embedded Systems Will Account for 10% of the Digital Universe by 2020

There have been three major growth spurts for the digital universe in modern memory. The first was when digital camera technology replaced film; the second, when analog telephony went digital; and the third, when TV went digital.

Now comes a fourth growth spurt – the migration of analog functions monitoring and managing the physical world to digital functions involving communications and software telemetry.

Call it the advent of the Internet of Things (IoT). Fed by sensors soon to number in the trillions, working with intelligent systems in the billions, and involving millions of applications, the Internet of Things will drive new consumer and business behavior that will demand increasingly intelligent industry solutions, which, in turn, will drive trillions of dollars in opportunity for IT vendors and even more for the companies that take advantage of the IoT.

Why the IoT heralds a new era of computing is a matter of math. All earlier eras involved the computerization of enterprises or people, of which there are a finite number on the planet. This era involves the computerization, adding software and intelligence, to things – things as varied as cars and toys, airplanes and dishwashers, turbines and dog collars.

Yes, there is a finite number of things – at least big things – that might be computerized. But, by IDC’s count, that number is already approaching 200 billion. And the number of sensors (e.g., the accelerometer in your smart phone) that track, monitor, or feed data to those things is already more than 50 billion, with scientists talking about trillion-sensor networks within 10 years.

Of course, not all of those 200 billion things are actually wired and communicating on the Internet, but some 20 billion are. And, by 2020, this number will grow by 50% to 30 billion connected devices.

Total Number of Connectable Things: 187 Billion in 2013, 212 Billion in 2020

IDC describes the IoT as a network connecting – either wired or wireless – devices (things) that is characterized by automatic provisioning, management, and monitoring. It is innately analytical and integrated, and includes not just intelligent systems and devices, but connectivity enablement, platforms for device, network and application enablement, analytics and social business, and applications and vertical industry solutions. It is more than traditional machine-to-machine communication. Indeed, it is more than the traditional Information and Communications Technology (ICT) industry itself.

The IoT will, in fact, subsume the ICT industry over time – and to good effect. The compound annual growth rate for spending on traditional ICT from 2013 to 2020 is just under 4%. Vendor revenues tied to the part of IoT that are not already in traditional ICT spending will grow at three times that rate. And that’s just the revenue to the supply side. To the buyers and users of IoT technology and services, the payoff should be at least twice that – perhaps many more times.

The IoT, however, comes with its own challenges, including a lack of standards, the ability to scale globally, security concerns, and an immature ecosystem. For vendors, there is no homogeneous IoT market – each industry and application is different. For users, especially IT organizations, there can be issues of managing operational systems in an organization that might be culturally designed as a support organization, as well as dealing with the real-time demands of many IoT applications.

IoT Specific vs Traditional ICT 2012-2020

EMC and IDC see the IoT creating new opportunities for business in five main ways by enabling:

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New business models

The IoT will help companies create new value streams for customers, speed time to market, and respond more rapidly to customer needs.

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Real-time information on mission-critical systems

Enterprises can capture more data about processes and products more quickly and radically improve market agility.

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Diversification of revenue streams

The IoT can help companies monetize additional services on top of traditional lines of business.

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Global visibility

The IoT will make it easier for enterprises to see inside the business, including tracking from one end of the supply chain to the other, which can lower the cost of doing business in far-flung locales.

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Efficient, intelligent operations

Access to information from autonomous endpoints will allow organizations to make on-the-fly decisions on pricing, logistics, and sales and support deployment.

IoT Embedded Systems as % of the DU

The impact of the IoT is already visible in the digital universe. Data just from embedded systems – the sensors and systems that monitor the physical universe – already accounts for 2% of the digital universe. By 2020 that will rise to 10%.

Information Containers in the DU

There is one final way to look at the importance of embedded systems – the load they will put on the IoT in terms of management. Computers don’t just have to manage megabytes, they also have to manage the containers, or software-based digital “files” that the megabytes come in. Some containers are big, like a digital camera image or a 30-minute loop on a surveillance camera. But some are small. RFID tags and sensor “containers” may contain as few as 32 bytes. Because of this small signal size, the number of containers that must be managed from these embedded systems will dominate the digital universe in 2020. We’re talking 99% of all “files” in the digital universe.

Because of the growth of embedded systems data in the digital universe, the number of “containers” is growing faster than the number of petabytes, from 28 quadrillion in 2010 to 4,200 in 2020.

Finally, a good portion of the digital universe will be generated by mobile devices and people – from 17% in 2013 to 27% in 2020 – but the percentage of mobile “things” in the IoT will be more than 75% by 2020.

Mobile Connected Things Generated 17% of DU in 2013. In 2020 it will grow to 27%.

Every few years in this industry we witness the emergence of a new “next big thing.” The IoT is surely the next big thing in 2014.