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The next phase of the Internet of Things, part 1

The next phase of the Internet of Things, part 1

Posted by Michael BarkwayNovember 21, 2014

Michael Barkway from TTP looks at the current state of play for the IoT without the hype and takes a look into the future.

The term Internet of Things, or IoT, encompasses everything from existing developments in machine-to-machine communications to the newest wearable devices. The vision of the IoT world is that every Thing is connected and discoverable from its own IP address, sharing information freely.

But will the future really be like this? There are good reasons to think that it won’t. This article analyses the nature of the IoT and sets out some of the challenges and opportunities for the next phase of its deployment.

The web today is mostly horizontal – pages of open information, with revenues derived directly through purchasing or indirectly via advertising. The cost model in the Internet today is many-to-one – many consumers to one web server. This has driven revolutionary change in social media, search, file sharing, media distribution and more, enabled by the low cost of managing individual connections.

In the IoT, each Thing carries a finite cost; a hardware cost to establish the device and a maintenance cost to resolve and maintain its connection. For the IoT, the cost model is many-to-many and the issue of who pays makes a pivotal difference.

This article will show how industrial applications will be driven by cost of ownership of devices and cloud processing of their output. Devices from lower-cost economies will take value out of the consumer market and the most successful home and consumer products will derive value from information instead. Standards will remain important, but will never fully displace custom radio protocols. We will also show that strong opportunities also lie in cloud processing and truly low-power monitoring.

How open will the IoT really be?

Critical to understanding the IoT, is the spectrum of devices that will be open and those that will not. If an open Thing is defined as one that makes its data freely available on the Internet, and closed is defined as one where the information is tightly controlled, then a third definition is needed too; Leaky Things.

To implement a truly open Thing requires investment to be made that, by its own definition, cannot deliver an advantage to an individual or organisation. This in turn requires a force external to normal market economics. Smart cities and transportation are great examples of this – where investment in infrastructure by civil authorities allows improvement in the environment for many. There are, however, fewer other instances of this than are widely understood. The IoT may not be as open as much of the hyperbole suggests.

Leaky Things collect information that is private to the user, but which is then used anonymously and/or statistically to derive other benefits. Examples of this are traffic information, where the user of a satellite navigation device is at the same time uploading their own traffic speed. Sports applications use the cloud to create virtual competitors. Wired inhalers can indirectly report where air quality is causing problems for asthma sufferers. These represent innovative applications, where the product generates a secondary benefit and income.

Many of these applications are driven by new market entrants, keen to establish dominance in disruptive applications. Nest is a widely publicised example of this, where much of the value of the product and the company is outside of the product itself and in the relationships built with energy suppliers.


In the consumer world, the Smartphone is the dominant communications and information hub for a range of new gadgets and wearables. However, barriers to entry for gadget makers are low, with semiconductor vendors creating sophisticated reference designs. This is encouraging a wide range of low-margin consumer devices from the East, making for a tough competitive environment. Products need to be highly differentiated, or gain secondary value from information to succeed.

In the closed industrial world, Things are being used to derive hard economic value: resource optimisation, service delivery and efficiency. The value of the data is high to an organisation or individual where it’s all about knowing the position and state of assets, to manage each one to maximum efficiency. This data is expensive to collect and differentiating to the organisation. This area will continue to evolve in a closed world, creating a steady evolution in industrial efficiency.

Overall, the next stage of the IoT will be characterised by a steady evolution in the industrial sector and more cheap gadgets in the consumer arena. Those looking to profit from enabling technologies need to look at lowering the cost of ownership of Things and by making maximum value from the information that is collected.

Future opportunity lies in driving the cost of monitoring down and the value of information up.

The next phase of the Internet of Things, part 2

Michael Barkway, Consultant, TTP,

Michael Barkway has more than 25 years’ experience in the cellular and wireless industries, pioneering the development of one of the world’s first GSM basestation designs through very early development work on custom silicon and software for DECT, 802.11, Bluetooth, 3G, HSDPA and LTE. Michael holds an MBA from Cranfield University and a BSc in Electronics from Manchester.

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Michael Barkway

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