We hear a lot about the internet of things (IoT) these days, a bit like how two to three years ago the buzz was all about “big data.” The reality is that the two concepts are intimately related. These things—connected devices on networks—are collecting lots of data. And enterprises and investors are making pretty large bets that the combination of networked devices and the data they collect can be monetized.
But the rub is that connecting devices and collecting data doesn’t really get you anywhere. In a recent San Francisco GigaOM internet of things meetup the consensus among folks from enterprise, investment and startups was that the connected device wasn’t the product; the service was. It’s about what you can do with those devices and that data to save businesses money, drive new business, and provide information to consumers that automates aspects of their lives in service of cost cutting and convenience.
I spent the last couple weeks talking to the team leaders at Microsoft responsible for Windows Embedded 8, which launched last week. I mention it because Embedded 8 is a big bet on the internet of things. Companies like Cisco, IBM, and even Google are all vying to create the base platform upon which the future of connected devices will be built. Software will be needed to power devices and also to create the back end data analytics and intelligent systems that will automate decision making. Certainly in enterprise sectors like retail, health care and manufacturing, the value creation takes place when connected machines combine with intelligent software to help reduce labor costs, reduce error, automate processes, increase manufacturing uptime, and micro target customer relationships.
So what does this mean for cleantech? Actually a lot. Much of the future potential to create efficiency either on the smart grid or in homes comes down to connected devices learning users’ behaviors and automating decisions to reduce power consumption. So here are a few of the top trends in cleantech that involve IoT.
1) The smart grid. The grid is the ultimate IoT platform where two way communication between power users’ and utilities is possible. For example, if a wastewater treatment plant has its building management systems (BMS) networked with the utility, it can respond to surges in demand on the grid during peak usage by automatically turning down its power use (AutoDR). It also can be automated to take more power when renewable energy sources like sun and wind power are abundant.
2) The power efficient processor reigns. In terms of hardware market size, we saw about 30 billion embedded processors in 2011 and ARM CEO Warren East has said he thinks we’ll be at 40 billion by 2016. Power efficiency in processor is really going to matter in IoT because lots of microprocessor with lower power needs will be required to power a networked world of devices.
3) Lighting. It’s early days but LED lighting is coming (see Ucilia Wang’s recent report and forecast on the LED lighting market). LEDs are actually semiconductors themselves and their beauty is that they’re easy to network. Phillips has already issued a software development kit (SDK) for its HUE LED lights. Once networked it becomes much easier to program them and do things like ensure all lights are off when a user is not at home.
4) Home energy management. Smart thermostat maker Nest is cone of the few success stories for consumer cleantech. Utilitizing 5 sensors, it collects data, from humidity to light to activity. And then it uses that data to optimize and automate decision making around HVAC usage. Nest is a complete hardware/software ecosystem but other players are service focused. EcoFactor, for example, can use off the shelf connected thermostats to collect data. It then combines with its back end cloud based SaaS model to deliver optimized thermostat set points to reduce energy usage. It’s always about what can be done with the data.
These are just four applications, and I’m sure we’ll see many more cleantech opportunities in the IoT space. I even think pigeonholing an IoT application as “cleantech” will become a thing of the past. If a manufacturing line automates a production process, which reduces downtime and save power, is that a “cleantech” application? I’m not sure I care, though I do think considerations about power usage and IoT will expand beyond the early categories like smart grid and home energy management that we’re currently seeing.