10 march 2016

How the Internet of Things Changes Life of People. Results of CSR “North-West” Research in the Article Published in Kommersant Dengi Newspaper

Your refrigerator  has watched TV, checked the status of your bank account and offered you a menu for dinner?  It sounds rather exotic, but in a few years the Internet of things is expected to perform much more sophisticated tasks. And the relevant market will reach $ 1.7 trillion by 2020

New Technology Platform

The Internet of things is the future-facing development of the Internet. Personal computers appeared in the 1980s, the Internet - in the 1990s , smartphones - in the 2000s  and  the years of 2010-2020 are becoming  the era of the Internet of Things. In a way, a smart phone is also an Internet of Things device. Some 15 years ago it was hard to imagine that it would be feasible to use a mobile phone to access the Internet. So, every time you are surprised when you see a washing machine connected to 4G (or 5G, but this is another story), think about your favorite "dialer".

The fundamental difference between the Internet of Things and the Internet per se is that devices can communicate with each other and make decisions without human participation.

Those interested in getting broader descriptions of the term may refer to Gartner, Inc., an information technology research and advisory company specializing in IT markets. Gartner Inc. defines the Internet of Things (IoT) as the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.  One gets the impression that the objects have certain “mental capacity” - however,  the Internet of Things  should not be confused with artificial intelligence. It hardly has any.

Igor Agamirzyan, head of Russian Venture Company (RVC), calls the Internet of Things “the next generation platform”. "The Internet of Things will become a platform like digital communications became a communication platform in the last 30 year”, said Igor Agamirzyan in his interview with “Dengi”

The Internet of Things is a basic horizontal-type technology platform," agrees the first pro-rector of the Higher School of Economics Leonid Gokhberg. " An umbrella type, if you like. Therefore, in our research we do not regard the Internet of Things as an independent technology trend." Almost every new research direction has an element related to connectiveness ".

 

Teaching Speaking

The Internet of Things has not come out of the blue. “Communication” between objects  became possible due to emergence of  certain technologies.

The first step is to make an item "tell us" about itself, preferably from a distance. The oldest method is a barcode. A shop assistant “rings up “ a purchased item on a cash register, the information appears on the screen, the computer retrieves the price from a database and displays the price. The next big thing is QR codes : black squares arranged in a square grid - a fancy item which some enthusiasts put on historical buildings or even on business cards. They have the same principle: they take a photo, and a special application loads a link to an article in Wikipedia, or displays a name, phone number and address. Compared to barcodes, QR-codes can hold more data - up to three megabytes (barcodes - only up to 100 bytes)

All these technologies require a personal contact - a reader must be brought close to the code. But clever people invented less capricious sensors - RFID tags (Radio Frequency Identification). To understand how the tag looks like, tear open a metro card. Inside you will find a very small rectangular microchip and  six oval-shaped metal tracks around the edge -  an antenna.   An electronic reader at a turnstile captures the information and the cost of the fare is deducted from the card balance. RFID tags can also record data, like ticket office clerks or ticket vending machines do. They are also used to return or check a book in libraries: you put the book on a terminal, press the “return” key and the self-checkout machine communicates with the library's computer to update the main database.

Another advantage of RFID technology is that a direct contact with the tag is not required -   RFID  tags can be read from a distance.  It can be read inside a  closed case, carton, box or other container – that is why they are widely used in logistics. Industrial readers are able to "ring up" thousands of products with RFID tags simultaneously in a split second. It can cause revolution in grocery supermarkets:  a customer no longer needs to lay out items at the cashier counter; he just goes through the gate frame with a full cart and gets a check. This experiment was carried out by German Metro AG in several hypermarkets in Germany.

At present RFID tags are used  mostly in security systems, employee control and logistics. A worker has busy hands? No problem. If he has a RFID card in the pocket the doors will open automatically. Hopefully, one day RFID will help to combat real evil, like, turnstiles in Moscow trams and buses.

Teaching Feeling

RFID tags are passive. However, for the Internet of Things  we need something more sophisticated and "self-thinking", capable of "telling"  us not only about itself, but  also about the surrounding world. Detectors and sensors already available in large quantities on markets is just what we want.

Light sensors can make street lights “smart”. At present, street lights are switched on at certain time, as decided by an authorized  person. Sensors will turn on the lights only when it's really dark. Moreover, the system may not necessarily turn on all the lights, but only every second or  every third light. "Intelligent" lighting can be installed inside buildings:  the detector senses motion and if there is no activity detected inside the office for half an hour, it means there are no occupants in the space and so no light is needed. Similar devices are used in “smart home”.

The most common type of sensors are the sensors that collect data, for example, from water meters in apartment buildings. They transfer data via the LPWAN (Low-Power Wide-Area Network) - a wireless network that operates at low frequencies and allows small amounts of data (data transfer rate is just a couple of hundred bits per second) to be transmitted over long distances (up to 10 km) . The sensors run on batteries which could last for over a decade.  Consumption data is read every two hours and transferred to the service provider.

Similar sensors can be embedded in the soil to monitor moisture level and turn on the "smart" irrigation system (or monitor and regulate room temperature autonomously). They can be attached to a car windshield, to transmit information  on traffic conditions and congestion to traffic lights, to monitor deterioration of bridges, communications or car parts for timely repair and maintenance services. Or one more area  is "smart insurance" , when sensors record driving data ,the customer pays only for how much he drives (pay-as-you-go system) and the rate depends on his driving behavior.

 Road traffic sensors are a key technology for creating "smart" unmanned vehicles. Although, of course, unmanned "KamAZ" on Russian roads is a good reason to consider giving up your own car. 

A real revolution sensors and detectors can do in the sphere of healthcare, but concrete steps in this direction are being made only Europe and the US. For example, Swiss pharma giant Roche has created the Accu-Check View package based on SAP  HANA platform. The device collects live data from patient-worn sensors. The attending physician can monitor the patient's condition, react promptly to changes in vital signs and make timely changes to the course of treatment

"A large amount of anonymous data collected by sensors makes it possible for us to compare our indicators for your group, i.e. people of your age, living in the same district or neighborhood and having similar lifestyles”,  says Igor Bogachev, Vice President and Executive Director of the Information Technology Cluster at the Skolkovo Foundation.   “Any departure from average is a good reason to start worrying about your health and visit the doctor. However, in Russia the healthcare system is overregulated, and remote treatment is prohibited”.

Bogachev proposes  a simple algorithm that shows how the Internet of Things works. First come sensors and detectors, which trigger the massive influx of the huge amount of data – the Big Data. Then there arises a need for data transmission technology , and after that – for data  collection and storage  technology. Next comes the software, which analyzes huge amounts of data and discards the unnecessary. It is followed by predictive analytics software that uses the data collected . Finally, the analysis becomes autonomous and the M2M (machine-to-machine) market emerges, when machines exchange data and make their own decisions after processing the data.

 

Market volume

Igor Agamirzyan finds it difficult  to evaluate the Internet of things market because it is not very clear what  areas should be considered. Evaluation of the device market is one thing.  Evaluation of the volume of telecommunications services is different.  Evaluation of the volume of services and applications based on these technologies is quite another matter.

Nevertheless, some attempts have been undertaken. In 2015, CSR North-West collected the available data (most figures  in the article are based on their survey). The emerging picture shows that the revolution is now in full swing.

IDC (International Data Corporation) estimates the global market size at $ 655 billion and forecasts that it will grow to reach $ 1.7 trillion by 2020. Gartner estimated that in 2015  there were a mere 5 billion connected devices, and  by 2020 there will be 25 billion  connected “things” in use (according to Ernst & Young’s forecast  -  50 billion). Moreover, the  market share of traditional devices such as smartphones, computers and tablet computers will be about 30 percent. Russia’s market size, according to J'son & Partners Consulting, is rather modest – $ 527 million, and the number of  connected devices is 75 million (2015). In five years, the market could grow from 93 million “things” to $ 980 million, i.e.0. 05 percent  of the global market.

The biggest share of value added will be concentrated in services - platforms and applications (about 30-40 percent, according to different estimates). For example, according to BI Intelligence, Internet of Things software sales generated  $ 44 billion in revenues in 2015, which is 19 times more than sales of devices. 

This is a huge and rapid growth. In 2015 IBM corporation announced plan to invest $ 3 billion in a new “Internet of Things” unit . According to BI Intelligence, companies are prepared to make biggest investments  in manufacturing, warehousing and logistics infrastructure, information, wholesale trade and health care.

At present, the most promising areas include "smart" city, "smart" home, portable devices (smart watches, etc.) and health care. Thus, the Smart City market size valued at $ 506,7 in 2012 is expected to grow  to $ 1.26 trillion by 2019, according to Transparency Market Research. Among the companies currently operating on this market are Cisco, Oracle, Ericsson, General Electric, Intel, Hitachi, IBM, etc.

In recent years Google has invested a lot of money in the Internet of Things, acquiring promising companies. In 2013 it spent $ 966 million on Waze acquisition (provider of a mobile map application) to foster development  of Google Maps in connected cars sphere . Next acquisition was WIMM Labs (smart watches manufacturer). In 2014 Google purchased Nest Labs ($ 3.2 billion) and Dropcam ($ 555 million), producers of home “smart” thermostatssmoke detectors, wireless video cameras and online data warehouses. Another company acquired by Google is Revolve, a company creating "smart" home platforms.

 

Barriers to overcome

The problem of the Internet of Things is an ethical problem rather than economic or technological issue. Christian churches opposes RFID tags and chips embedded in human bodies  because it represents  “the mark of the Beast". And human rights activists do not want retailers to have access to Internet-connected toys  because it can expose children's privacy and  identities. Many people are afraid that Big Brother will use the IoT to spy on them.

Another problem is vulnerability. If a computer can be hacked, then all Internet-connected devices can be hacked too. In the US the FBI accuses hackers of hacking into the controls  of planes and automobiles via the entertainment systems.  Smart homes and smart healthcare are even more vulnerable.

In Russia the issues challenging the IoT are institutional. According to a survey conducted by the "CSR North-West" Foundation among local IT experts in 2014, the main barriers to the IoT adoption are the lack of competent staff, sanctions and insufficient technology maturity.

Source: The Kommersant Publishing House