The Internet of Things must reinvent itself as the "Economy of Things"

CommunicAsia Show Daily

The first wave of the so-called Internet of Things is well underway, but reaching the second wave will require a radical rethink in terms of architectural design and business models to the point that the “things” themselves become part of the new digital economy.

Or, put simply: “The Internet of Things needs a reboot,” said Rob van den Dam, Global Telecommunications Industry Leader at IBM, at the CommunicAsia2015 Summit on Tuesday.

While the IoT is already technically here in the guise of services like smart meters and monitoring airplane engines, overall demand has been slow. Only 30% of heavy industrial equipment is networked. And only 10% of smart TVs are being used for Internet viewing.

And it’s not going to get much better in the long run under the industry’s current trajectory, said van den Dam. “The current approach to IoT is designed to connect billions of devices, but that approach won’t scale to hundreds of billions of devices.”

For a start, the cost of supporting all those devices is too high, especially when you calculate factors such as the cost of the device vs its lifecycle, which could be decades for things like connected cars, airplanes and railway systems. “Even a doorknob is something you’re not going to change every three years,” he said.

Another problem with IoT Mk 1 is the lack of inherent privacy designed into it, which has led to a lack of trust among consumers.

There’s also a lack of functional value - and therefore lack of a business model - because many “things” for the IoT are adding connectivity and intelligence for the sake of it, van den Dam said. “A smart toaster is only valuable if it gives you better toast.”

That’s why the second wave of the IoT will have to follow three architectural design principles, he said: radically lower cost, real privacy, and business model endurance.

Also, the IoT will have to be more open and decentralized in order to be as secure and scalable as it needs to be, he said. “Today, we have IoT based on open access networks and a centralized cloud. In 2025 and beyond, we will need to have a distributed cloud in which the device itself is the edge of the cloud.”

Van den Dam listed several principles that could change the model of internet services and security: autonomous device coordination, secure distributed file sharing, and trustless peer-to-peer messaging.

That doesn’t mean everything has to be decentralized, he noted - that decision can be made depending on value of the asset and its longevity. Generally, the lower the value and higher the longevity, the more decentralization makes sense.

“By empowering devices to function autonomously, the edge will become a frontier of new economic value,” he said. “You can create a new marketplace hosted by peer exchanges, and transform devices into points of transaction and value, creating an ‘economy of things’ - enabling things to participate in this new digital economy.”

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