Horst Jens via Flickr www.iotcup.at

Bill Marcus and Dana Blouin discuss how the Internet of Things will change the lives of millions in the next 10 years.




(FRED ALGER) BILL MARCUS: This is part of the Think Further series, presented by Fred Alger Management. This is Bill Marcus. They can monitor the quality of products coming off an assembly line, secure your home, and even administer medication. Your smart phone is one, and so is your car. Researchers say by 2020, there will be 50 billion of them. They are called the “internet of things”. Objects embedded with software, sensors, and internet connectivity. Dana Blouin is a writer, thinker, and researcher. Blouin researches protocols that power constraining sensor networks. He is currently completing his PhD in information and communication technology, while working as a teaching assistant in Bangkok. Before going to Southeast Asia, he spent a decade working in the tech and telecom industries. Dana, welcome!

DANA BLOUIN: Thanks for having me.

BM: Let’s get right to it. In September, researchers came out with their 2015 global IoT decision maker’s survey. They got responses from nearly 2,500 businesses from countries including China, U.S, India, and Germany. It’s a mixed bag because it contains developed and developing countries. But what they found was over half of the enterprises they surveyed this past summer (58%) and nearly 3 quarters surveyed in the healthcare field (72%) as well as two thirds of transportation and manufacturing firms, say they considered the internet of things key to their success as a business. 24% say IoT will be transformative, and will change the way they do business. Dana, how will IoT do this? Can you give me some examples?

Dana: Sure. Absolutely. I think there’s a number of ways that the internet of things really is going to be transformative to industries, and really, it all centers around data. How we can collect data, and how we can look at data of things; of objects. In healthcare, especially, when we look at the Internet of things and we look at how information of a patient can be tracked through his entire life cycle, something as simple as your cellphone can have all of your information on it. Everywhere you go, your records can be passed along and it’s going to be a complete record that’s continual and always running. Having all that data in one place and as your phone interacts with different devices you’re attached to, or that you’re interacting with- that data is cumulative. I think that becomes an important part of the internet of things. How things interact, and with people.

BM: The healthcare industry; chronic disease patients expects to be a 1.1 trillion dollar industry a year in 2025 just from the internet of things. But Dana, how does that change the way that a healthcare entity does business?

Dana: That’s a great question. I think a big part of it is a health entity- if you look at a hospital or insurance provider, an insurance provider can get much more granule information now. Especially in the U.S, with regulations, it has to be made anonymous and has to be protected. So there’s a lot of built-in protections in the health care industry that make a great model for other industries, because security and privacy is a big issue. So look at the data an insurance company can get and they can get much more granule data on each person and can get a much more realistic snapshot of the mean. If you you’re your health insurance card at the hospital now they have to look up all of your information, whereas if you have digital ones all that information can be stored in a piece of wearable technology or your mobile phone. In that way, all of your health history can always be readily available because it can be stored on one device.

BM: Dana, you’re talking about healthcare and privacy issues. How do you secure privacy, and what impact will that have on the market?

Dana: Yeah, good question Bill. I might lead us back quite often when we talk about privacy and security and the internet of things, because they really go hand in hand. And I always tell people we can’t address security for the internet of things the same way we did in the PC era. In the PC era, we bought a computer and down the road somewhere you bought anti-virus software and you dealt with it after the fact. We can’t do that with the internet of things; there’s too much at stake. So we need to address security and privacy as a fundamental building block of the internet of things. And it needs to be addressed as a design issue at each layer of the process. So, from a privacy perspective everything needs to be autonomous from the user perspective. Obviously, these companies want to link this data back to someone but it needs to be separate from the device collecting this data. Our profiles need to be managed in a separate manner, and then security needs to be dealt with as companies and all the different stakeholders in the internet of things begin to embrace standards and begin to work in investing and developing them. That will really help the surround the privacy space with IoT. Especially that data: that personal data, or that business data, or that spending data, needs to be secured and anonymous. It needs to be dealt with in a way that’s not going to put people at risk. We don’t want to have the same issues with the IoT like we see with some of the large retailers in the U.S that have had security breaches. It puts a lot of people’s information at risk, and we don’t want that same situation with IoT.

BM: So you’re telling me, perhaps some of this 1.1 trillion used in chronic disease category- the health field is probably going towards security because you have to have a walled off network. Or do something with a chip, to prevent a hacker from gaining access to it.

Dana: Absolutely. I think a lot of the money, especially in the healthcare space, is going towards not just security but privacy. Again, I think the whole hippo standard is a great model for that. Because it forces the industry to take privacy and security as a primary concern.

BM: In February, you wrote the Internet of Things will become even more pervasive over the next 12 months. As more sensors are deployed in the world, and more devices come with sensors integrated in them. Richness of location based services will begin to unfold. GPS or mobile powered triangulation, those are fairly power intensive and can put a significant strain on the energy store for sensors that are not connected to an external power source. My question is, are we looking at a need for new kinds of batteries or energy issues?

Dana: Obviously, battery technology, whenever it can be improved will be a huge boom to the tech industry as a whole, and not just IoT. So, having more storage in a smaller battery is great for everyone in tech space. For me, when I look at the power constrain nature of a device, when I look at location based service, or remote sensors- there’s only so much we can with battery technology. Only so much we can do with processing the energy load. And I think processing has come such a long way in terms of reduced energy usage. But it comes down to the way protocols interact in a more power conscientious way. And so, a lot of the networking protocols, a lot of the networking infrastructure we have in place was designed around devices that weren’t power constrained. But now that IoT is bringing devices into this realm of not always having connectivity of a power source or relying on environmental energy for their function, we need approach the way they operate and the way services run on these devices in a more power constrained way. And we need to approach it in a way that takes conservation into mind. Look at it as if it was an economy of motion or an economy of use. And so, it extends the life of a device that doesn’t have the ability to tap into the power of the internet of things.

BM: Let me ask you also about gaining entry to this market; IoT space. You said that the barrier right now is still relatively low, low enough to make it feasible for small players to get in on the action.

Dana: I still stand by that. I think the barrier is low, and it still is very much a do it yourself or startup space for people who do it that way. And you look at some of the rapid prototyping technologies out there. Some of those open source technologies that allow someone to sit at their desk at home and conceptualize an idea and bring it to fruition through a kind of open source platform. And, if you look at any of the crowd funding platforms you’ve seen a lot of things. People came up with this idea and prototyped it in sales. And so I think the barrier to entry is much lower, especially for a consumer side IoT product as opposed to: somebody had a new idea to build an enterprise router. It’d take much more capital and time to develop and proof out a concept like that. But if you have an idea for a new piece of wearable tech, there are platforms available for you to sit down and prototype that and work out a rough design, then get a proof of concept. Pretty quickly, and for a small amount of money.

BM: I think you wrote about a guy on a bicycle or food truck who uses IoT, over there in Thailand?

Dana: Yeah, so one of the things that’s interesting in Asia and I don’t see in the U.S is a messaging application kind of taking the place of SMS. Here in Thailand, there’s one in particular everyone uses. It’s not uncommon to see rather than someone exchanging phone numbers, they swap ID’s on this app. At one of my favorite food stalls, they basically had their ID up and they would add him and put them in his group, so they would always know his location of his food truck. It’s not even really a food truck- it’s a guy on his scooter and he would be wherever with his truck. He’d do a GPS location tag so the group of his customers would know wherever he was in the region that day.

BM: I know living in China, messaging is very popular and more popular than making a phone call. It costs nothing, where there’s a small cost for cellphones.

Dana: It’s the same here in Thailand, where SMS is still very expensive compared to your data plan. Or compared to making phone calls. I’ve probably used less than 30 minutes of voice time in the 3 years I’ve lived in Thailand, but my thumbs are starting to flatten out from texting so much on the phone.

BM: (laughs) People don’t give you phone numbers, they give you their SMS app addresses.

Dana: Exactly, and the popular one here in Thailand uses a QR code. So basically, it generates your own unique QR code and business cards from CEOs, in lieu of their phone number, on their business card you’d flip it over and they have the QR code for their messaging app on the back. So if you wanted to get in touch with them, you’d open your messaging app, scan their QR code and you could add them to your group and start messaging them.

BM: I tell anyone going over China, Thailand, or Japan or Korea, or Taiwan, that they need to make sure that they’re on one of those messaging apps before they get there. People always ask me what they should do to prepare.

It is estimated IoT has a total potential impact of 3.9 trillion to 11.1 trillion by 2025. Those business to business applications will create more value than pure consumer applications. So, how much of this is going to be the enterprise market? And how much of this is going to be the consumer market?

Dana: I think you’re right, and I completely agree the majority of the value driven by IoT is going to be in the B2B space. But, I’m also going to kind of preface that by saying that the majority of the impact we’re going to see and the majority of the media coverage is going to be in the consumer space. I think that’s common for anything; everyone knows no one wants a blackberry handset. But no one knows about their enterprise solution that is still very popular. I think it’s going to be the same thing with IoT; there’s always going to be the near smart watch or the new fitness tracker that gets a lot of media. Well, the enterprise solution, that B2B solution, that’s going to be the real value driver.

BM: You were talking in your writing about wearable tech and the consumer side view. You mentioned partners had published: “Inside Wearables: How the Science of Human Behavior Changed”, offers the secret to long term engagement. It’s simple and the basic thing is its shiny and people like it, but six months later people get rid of it.

Dana: That’s been the trend. 2 years ago I did a whole series with wearable tech and with a fitness tracker. I found the same thing- even though I was motivated writing a year-long series, after six months it became more of a hassle to use something. And so I think a lot of where the wearable space is going now is refining that user interface and refining that user experience into devices that we wear everyday anyways. The reason I got away from fitness tracker- I can do the same thing with sensors built into my smart phone. And I often make the case that any smart phone or any mobile device is really a part of the IoT, if not our primary gateway into IoT. I can run an app on my phone that does the same thing as a piece of wearable tech. I always have my phone in my pocket or bag, so why do I need to also put another bracelet on or wear something else? I think where wearable tech is going now to overcome that engagement issue is to integrate that wearable tech into everyday things. And as we start to push that technology into the things we wear every day or are using every day, whether it be glasses or smart watches. The value’s going to shift, I think, as the UI and the experience become more refined through the next couple integrations of the smart watch. Especially as they no longer need to tether to the mobile device, which is really the primary drawback to a lot of wearable technology. How they need to tether in some way to your mobile phone, whether that be through blue tooth or earlier iterations actually needed to plug in to upload their data. So as we move through that UI and as the user experience becomes refined, the tech moves from something that we have to wear, than just something we wear anyways that has additional function: that engagement will be much longer than we see now.

BM: IoT researcher Dana Blouin, tell me exactly what a “smart city” is, and how they will create economic opportunities for residents.

Dana: Smart cities are kind of tough to tackle. There’s a lot of pieces to that puzzle. To me, a smart city is fundamentally a city that offers connectivity. And that creates an environment for innovation. Let us fundamentally look at smart cities as a city that has connectivity and collects data to improve its services for its residents, or citizens. That’s the fundamental idea in my mind. And that environment creates economic opportunity and opportunity for innovation for individuals in companies to say: well, the connectivity is ubiquitous here now. How can I improve the way something works through data; through connectivity? How can I make trash cans and water systems smarter? And when you get to that level of connectivity with a very open platform where anyone can develop on or anyone can work within, you can now have connected cars that are talking to the city. They know where available parking is. The trashcan will know its full so trash collectors will optimize their routes, and are only collecting from full or almost full trash cans. You have a water system that is able to detect its own usage and knows if it has got leaks compromises in the distribution of the water, so the water system can be kept more secure and cleaner. You’ve got smart grid that’s able to help people to adjust their usage to reduce demand on the grid, and a city will know where to send resources to adequately service everyone so everyone gets the best quality of service possible.

How far from that are we? I guess it depends on the best city.

BM: Dana thanks, it’s been a pleasure speaking to you.

Dana: Thank you very much, it’s been my pleasure.

BM: I’m Bill Marcus and this is part of the Think Further series presented by Fred Alger Management.

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