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Business Management

Intel buys into the game but the Internet of Things remains on hold

Intel today said it will buy German firm Lantiq, a developer of home networking technologies, in further jockeying for position in the Internet of Things and the connected home. But the truth remains that this is a messy sector where spaghetti may prevail over order for years hence.

The phrase the ‘Internet of Things’ dates back to at least 1999 when the term was used by Kevin Ashton. So, 15 years on, it’s perhaps appropriate that the IoT is going through those difficult adolescent years when the brain can get scrambled, moods swing and everyone gets a bit emotional and defensive. Certainly, despite all the hype, there some serious issues to address before we can say we’ve cracked the IoT.

First, define your terms. The Internet of Things is used to refer to two large trends that don’t really cut across each other all that much. The B2B element covers infrastructure and is a world of its own. From street lighting to surveillance cameras to factory automation, HVAC systems and connected vehicles, this is a vast market (or, alternatively, a vast number of intersecting markets).

The B2C sector, where the connected home comes in, is distinct but also very large, hooking up central heating systems, lighting controls, security locks, TVs, music systems, set-top boxes, gaming consoles and more. Intel believes the total addressable market will be 800 million homes by 2018.

Second, the IoT is a moneyspinner. The companies that can control the levers stand to make huge sums of money. That’s why the big industrial automation players are so keen on the B2B IoT and the big consumer electronics, internet and software names are desperate to control the B2C equivalent. Even Intel is dwarfed in size (or market cap, at least) by rivals here like Google and Apple. This is why a niche company like Nest can be “worth” in the region of $3.2bn to Google. The ecosystem will be big and probably even more valuable than the iPhone world today.

Third, honeypots attract bad guys. Security remains up in the air and nobody in their right mind wants to create a hackable uber-network or one that requires manual patching on a ridiculous scale. So there is understandable caution over what we connect and how we maintain it.

Fourth, all of the above leads to inertia, suspicion, paranoia and sloth-like progress so we still have no clear idea what network protocols, hardware specs, developer environments or operating systems will prevail. Everyone would like to move faster but the only standard (de facto or otherwise) likely to get a free pass from industry giants would be one they themselves sign off. And this politicking and land-grab stage slows down everything for the smart people that have great ideas for products.

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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