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Internet of Things: How did it come to be?

M2M (machine-to-machine communication) connects our world; be it in healthcare, manufacturing, logistics or even in everyday life. Connected cargo containers, cars, heating systems and production plants are almost self-evident. Until now it was mainly about the connectivity of single end devices, such as machinery or production plants. In the time to come, it will be more about the larger grid of connected machines and everyday objects - or rather the rise of the Internet of Things.

Smaller, energy-saving hardware at low cost

This process is mainly driven by smaller, less energy-requiring modules, sensors and actors at low prices. Even seemingly banal everyday items like a desk will soon be connected. Nowadays, next to nobody would buy a box the size of a cigarette packet to integrate a piece of furniture in their smart home - especially when the box can cost upwards of £50. But it would be different if the box were an inconspicuous coin-sized device that costs only a few pounds. Then, all of a sudden, items that we had previously never given a second thought to will become “smart”.

For this expansion of connected things to happen, developers don’t have to reinvent the wheel. Rather, they have to upgrade the existing base. But they need to understand old interfaces and know how they can be served by appropriate modules. Without the cooperation with industry experts (from manufacturing or the healthcare sector, for example) this would be a nearly impossible challenge. Suitable solutions can only be realised along the value chain by means of partnerships that speed up the integration of objects into the Internet of Things and drive the market.

Connection enables additional services

All connected solutions aspire to one goal: they must provide additional benefits. As soon as the devices are connected, opportunities for additional services are opened up. Take vending telemetry, for example. In the first step, operators begin with obvious optimisations of their everyday business. They can check filling levels remotely and thereby reduce filling and maintenance costs.

On this basis, operators can explore further innovations, such as mobile payment or locally accessed Wi-Fi for their customers. It would also be possible to embed the vending machine in social media marketing strategies. For a limited time, customers could pay for everyday things like soft drinks with a tweet or a like, for example. All these applications generate large volumes of data. Evaluating this data shows operators exactly when and where customers decide to buy which products and creates an entirely new basis for decision-making.

Data is the new oil

Therefore the handling of data is gaining more and more significance for business. In the next years, enormous amounts of data from all areas of industry and life will pile up. Even a year ago, the evaluations of large amounts of data was still in its early days. Nowadays we have the technological know-how and specific solutions in different segments with which to undertake evaluation on a massive scale.

Self-learning systems, for example, recognise the wear and tear of generators in pump systems’ motors. They observe processes by means of sensor technology over a long period of time and thereby identify even gradual, creeping changes. Such algorithms are forecasting with increasing precision when components need to be replaced or maintenance work is required. Within the next year, we will see more and more companies obtaining competitive advantages by using big data analytics and machine learning.

Merging data promises new value

Additionally, the connection of previously separate data silos promises great potential. It is almost impossible to predict what possibilities will emerge from analysing combined data records for, say, climate research or the development of smart cities. When data from different sources is combined, entirely new services can be generated. Therefore combining machine data with data from the Internet, such as data from social media channels or news websites, has especially great potential.

While M2M has become indispensable in business environments, in 2014 the consumer market will grow significantly. Companies that previously focused on the B2B market are now increasingly opening up for wider-ranging M2M solutions in all areas of life. They include, above all, telecommunications providers. Up to now they used to be seen purely as bit pipe suppliers. Nowadays they are playing the role of pioneers in networked ecosystems. Apart from connectivity, they provide comprehensive networked solutions for nearly all industries, including end customers. They offer, for example, wearable technologies like smart watches or augmented reality glasses and products such as burglar or fire alarm systems for smart homes.

Benefits of the emerging culture of sharing

While business applications must deliver an economical benefit, consumer products can simply focus on fun and entertainment. In a world that is covered by all types of sensors, consumer devices that interact with these sensors in interesting ways will increasingly emerge. An early example of pervasive games like this is geocaching – a new type of treasure-hunting. Participants use GPS or other navigational techniques to hide and seek containers anywhere in the world.

Parallel to the increased networking of our lives, nowadays we observe a growing culture of sharing everyday objects such as cars, bicycles and flats. This culture applies both to digital goods and to connected items and machines, as the concept of free-floating car sharing, for example, only became possible by M2M. Thanks to a tracking box, users can locate the vehicles all over the city using an app and providers can use the transmitted data for determine users’ bills.

Such approaches give us a glimpse of what is possible, but we are still in the early stages of a comprehensive change process. Over the next few years we will still have to answer a series of new questions, particularly regarding privacy or data security. At the same time though, finding answers to these questions provides an opportunity to shape the future development of the Internet of Things.

Jürgen Hase is the vice president of the M2M Competence Centre, Deutsche Telekom.

Images courtesy of Zdnet and Venitism.