2016 could be the year for the Internet of Things

With their traditional product lines under pressure from cloud-based upstarts, some of Silicon Valley’s legacy tech giants are looking at the Internet of Things to increase their bottom lines.

The IoT is still evolving, but it includes connected wearable devices like the Apple Watch, driverless cars and fitness bracelets. That’s the tip of the IoT iceberg. Beneath it are business-to-business applications and data center technology that are likely to dwarf the consumer side in the revenue they generate.

Intel is leading the charge, with a group dedicated to creating consumer and other devices that are connected to the Internet. Along with making the chips that drive the cloud’s data centers, it has been developing small modules that customers can program for different wearable applications.

“We see Intel very well positioned in Iot,” Tristan Gerra, a semiconductor analyst with RW Baird, said in a recent note, adding that the IoT is “the next key driver opportunity for the cloud, with billions of devices, much larger than the current people-driven cloud.”

In 2013, Intel introduced the Quark, a low-power system on a chip for wearables. The Quark features a tiny battery, along with a motion sensor, Bluetooth, and battery-charging capabilities.

The tiny Edison computer for wearables was introduced at CES in 2014 by CEO Brian Krzanich, who showed it running a baby monitor.

Last year, Intel unveiled the Curie, a “module” that customers can tailor to their own wearables.

The Santa Clara chip giant introduced a few Curie-based wearables of its own in 2015, including the MICA fashion bracelet and a sports bra and dress that were more proof-of-concept gadgets than anything designed to set the fashion world on fire. Expect more from this group in 2016.

“Wearables (are) looking to break out in 2016,” according to analyst Daniel Ives with FBR.

Ives said in a note this week that the Apple Watch “helped spearhead a major paradigm shift” in the acceptance of wearable technology. Now, companies are racing to establish themselves as the platform for wearables, he said.

Health applications, especially for monitoring patients with chronic disease, are likely to be a big item in 2016.

Fitbit is a compelling example of the power of the IoT to drive revenue. Founded in 2007, Fitbit currently has a market capitalization of $6 billion, revenue of $1.5 billion and a quarterly revenue growth of 167 percent compared to a year ago.

Cisco Systems and Hewlett Packard Enterprise, the spinoff from HP, have also staked out the IoT with various initiatives. For each, the IoT represents a growth opportunity in their businesses of supplying data centers and clients with the horsepower and networking they need to meet an expanding demand for analytics, storage and speed.

HPE is teaming up with Intel to work on technology for “the edge of networks” catering to the Internet of Things.

The potential economic impact of the IoT was estimated at $11.1 trillion per year in 2025 by global consulting firm McKinsey in a 2015 report.

The firm said that business-to-business applications will create more value than purely consumer applications.

“While consumer applications such as fitness monitors and self-driving cars attract the most attention and can create significant value, we estimated that B2B uses can generate nearly 70 percent of potential value enabled by IoT,” McKinsey said.

But consumers will capture the benefit of IoT applications, it said. The value of improved chronic disease health monitoring could reach $1.1 trillion per year by 2025, according to McKinsey.

Such IoT growth estimates have some experts worried about whether the resources and technology required will be available or whether the lack of them will slow down the pace of IoT adoption.

Investment by the private sector alone “is not sufficient to create the significant advances in IT infrastructure and insight technologies needed for these innovations,” a report by the Semiconductor Industry Association and the Semiconductor Research Corporation recently warned.

Key areas requiring development include energy-efficient sensing and computing; security and safety; memory technology to handle an explosion of storage requirements, and insight computing that will require research in fields such as machine learning and data analytics.

“We are at a tipping point,” the group said. It called for a government-industry partnership to prepare for the looming connected world.

Photo: Intel CEO Brian Krzanich talks about the Internet of Things at the company’s developer conference in 2014. (Courtesy of Intel)


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  • Steve Hammill

    Until any company creating any sort of smart device only releases the product when it is 100% defect free…

    IoT is an extremely high risk proposition…as is the move to eliminate passwords with biometrics.

    The leaders are all talking security, but they’re not moving forward securely.

    • Mike Smith

      Yep, I see a slew of security problems and the products released thus far seem to confirm and reinforce those concerns. More importantly, I see very few product ideas that deliver any meaningful benefits to the purchasers.

      IoT might prove the biggest yawn in technology since the Segway.