New — But Not New
Like many technologies that rapidly erupt into the public consciousness, the Internet of Things is actually not new. Intelligent devices that are able to communicate their status have been around for decades. Previously these were the exclusive domain of high-end specialized equipment, such as multi-hundred-million dollar oil rigs and manufacturing equipment. The costs for incorporating this intelligence (in particular embedded computers, RFID, sensors, GPS, and wireless communications devices and services) have continuously fallen year after year, now reaching the point where myriad common objects have the potential to participate in the Internet of Things (IoT).
Examples descriptions of IoT are sometimes fanciful and futuristic, rather than talking about what is practical, with a high ROI, being done today. Here we try to give a sense of which IoT applications are real and growing rapidly today.
RFID — Slap On a Tag to Join the IoT
The range of types and sophistication of IoT devices and applications is enormous. At one end of the spectrum, you have passive RFID tags that can cost less than a dime.1 Because of their relatively low cost, these are being placed on all sorts of inventory, assets, ID cards, and more. In particular, there has been a surge of use in retail, especially with apparel items. These batteryless devices make those items smart enough to announce their presence when they are near an RFID reader, causing them to be powered up by the radio waves emanating from the reader. These item-attached tags communicate whatever information is stored on them, typically a unique ID that can be looked up in a database to identify what that specific item is — both the product type and a unique serial number. Now you know “this item was at this place at this time.”
This is tremendously useful in understanding exactly what inventory you have where, preventing errors in picking, shipping, receiving, restocking, and inventory counting. It is not uncommon for retailers to see their inventory accuracy levels or shipping errors improve by 20 times.2 Use in the logistics processes results in a big reduction in errors and disputes. In fact, when Kevin Ashton coined the term “Internet of Things,” it was his way of describing how RFID will change the world.3
Another big example of IoT is Smart Grid, Smart Buildings, Smart Appliances, and Smart Cities. Electric utilities have been instrumenting the transmission and distribution grid for decades, but recently it has really picked up steam. They are installing Phasor Measurement Units (PMUs) that monitor the phase and amplitude of AC voltage at points in the network. This improves the grid quality and reliability by enabling rapid response to changing conditions, such as containing power outages. Other sensors, such as distributed temperature sensors and electromagnetic signature measurement provide a more complete picture, enabling things like dynamic line rating, congestion and stability monitoring, and power theft detection.
Smart meters have been installed on over 300 million houses and buildings worldwide. In the next eight years, that number is expected to exceed 1 billion, nearly 100% of all connections to the grid in parts of the world. Smart meters can measure site-specific consumption patterns, allowing utilities to set time-of-day/season-based pricing models to encourage shifting to off-peak use and thus postponing the need to build additional power plants. They can also help utilities diagnose power quality issues. When combined with the right end-user tools, they can help the consumer understand and better manage their power consumption. They can be more broadly effective when the smart meter communicates with the smart appliances (or plant machinery) inside the building, so that humans don’t have to actively monitor to tell them when to run or conserve.
The smart home is in its infancy. Lots of Jetson-like descriptions of what is possible belie the duct tape and baling wire nature of integration and the efforts required by early adopters to make it all work. For many of the scenarios that have been painted, we are still a long way from the “it just works” stage required for mass adoption. Nevertheless, we are seeing devices, which already have plenty of smarts in them (such as modern washing machines or microwave ovens), connecting to the internet. Yes, there’s an app for that.
Industrial applications include some of the most advanced and highest ROI applications of IoT. This is where a lot of the real action has been. Multi-million dollar mining trucks, which can haul literally hundreds of tons per load, are bristling with high-tech sensors and communications devices. Often these are monitored at a central location where technicians determine that repairs or maintenance are needed before the drivers even know. The latest generation includes driverless trucks being used in Australia and elsewhere. Factories of course have been instrumented and connected for over half a century (the first digitally controlled factories appeared in the 1950s). The same is true about oil rigs, which started being instrumented and using telemetry in the 1920s and being monitored remotely not long after. Precision agriculture is another hotbed of IoT, with wireless-connected farm equipment enabling extremely precise placement of seeds, fertilizer, and increasingly precious water.
Accelerating the Pace
Until recently there have been few tools specifically designed to develop Internet-of-Things devices and applications. Projects were largely ‘start from scratch’ when it came to integration of all the pieces (diverse physical devices, protocols, and back office systems that need to be stitched together) and development of applications and user interfaces. That is changing. A great example is ThingWorx, which was founded in 2009 and just recently acquired by PTC (on December 30, 2013). They have created a platform aimed at rapid development and deployment of scalable IoT applications.
ThingWorx says their customers can develop and deploy IoT applications 10X faster than the do-it-yourself mode. That is a pretty aggressive claim, but having briefly seen their system, I think it is entirely possible. They have a very well-designed application modeling environment and drag-and-drop mashup UI builder that lets you do a lot without writing any code. In addition, they are designed to intake and store large amounts of events, time series, structured, and social data, all of which make traditional relational databases struggle mightily. All that IoT data can be searched and analyzed.
The ThingWorx acquisition is a natural extension of PTC’s long-term strategy, complementing PTC’s acquisition of Servigistics a year earlier, which really cemented their leadership in Service Lifecycle Management. Many of the industrial and home appliance applications of IoT have a strong service component to them. Think about the last time your washer (or office copier or plant machinery) needed repair. The service tech usually comes in to diagnose the problem and figure out what parts he or she will need, then comes back at a later date with the parts to do the actual repair. An IoT-enabled machine is smart enough to often know what is wrong with itself and can communicate that back to the service provider, saving the repair tech a trip, the service provider a lot of money, and making a much happier customer with shorter downtime and half the repair visits required. Furthermore, IoT machines with the right sensors and smarts will be able to detect when preventative maintenance, or replenishment of fuel or supplies is needed. That type of visibility allows scheduling of the onsite visits to be really optimized.
PTC is wisely letting ThingWorx remain a largely autonomous separate subsidiary — more like a technology provider to PTC. This lets ThingWorx continue to sell into other industries and areas where PTC does not currently have a presence and even independently into industries that PTC serves.
Bumps in the Road
Lest we get too carried away, there are some key concerns about IoT adoption. Security is a huge concern. With the IoT, cyber threats go beyond just crashing our computers, stealing our data, credit cards, and identity. Now hackers can potentially take over our machines, homes, and infrastructure. Imagine bad actors being able to wirelessly hack and take control of cars, planes, the power grid, or traffic lights. This is not just the stuff of Hollywood, it is already happening. The other big concern is privacy. With connected sensors, appliances, vehicles, and homes, there exists the ability to peer into your life in an extremely intimate way.
The IoT is Here
Security and privacy concerns show no sign of slowing the deployment of IoT. We still expect the enablers to far outweigh inhibitors to adoption. Many IoT enablers have fallen in place; such as plummeting costs for sensors, RFID, wireless communications, and GPS. Many of these cost literally 100th of their cost only a decade or two ago. Further, wireless infrastructures have become increasingly ubiquitous. Platforms like ThingWorx now put one more piece in place to help this market boom, providing lubrication for the growth of the market. The IoT phenomena is here to stay, and you should expect to hear a lot more about it for years to come.
1 Passive RFID tag prices depend on many factors, including form factor (e.g. labels vs. hard tags), memory size, special properties (like working near metal), and whether they have sensors. — Return to article text above
2 For example, most retailers have inventory accuracy around 80%, whereas with RFID several retailers have achieved 99% or better. — Return to article text above
3 Not to say that Mr. Ashton was not aware that IoT was broader than just RFID — just that was his focus at the time he coined the phrase. — Return to article text above
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