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2014 has lit up with a flurry of new products, developments and focus on how businesses can use the Internet of Things (IoT) to improve business processes and the customer experience.

But wait. IoT isn’t exactly the new kid on the block, so why so much activity this year? Michele Pelino, a Forrester Research principal analyst, attributed the rising interest to a dip in communication fees and sensor costs.

“Sensors and microprocessors that once cost hundreds of dollars are now available for as little as the cost of a cup of coffee,” she said. “Communication costs are also experiencing similar declines, with many wireless operators cutting fees to pennies per month per meter for the cellular link to support smart meters. On the other hand, expanding network availability in mature markets has enabled solution deployment.”

A long way from connected toasters and vending machines, experts predict that IoT will become a $1.9 trillion (Gartner), $7.1 trillion (IDC) or $19 trillion (Cisco) market, depending on which source you believe.

"The $19 trillion, that's a bit over the top, even for Cisco," said Needham & Co. analyst Alex Henderson in a CMSWire interview early this year. "Does IoT and connectivity make sense? Sure. Does it have implications for the numbers for the next two to three years? No. This is something to think about in the next five to ten years."

Henderson may be on to something with that timeframe. According to Gartner’s 2014 Hype Cycle, IoT has reached its peak this year, and will become mainstream in the next five to 10 years.

But let’s leave it to the experts to look forward. For now, join us in looking back at some of the hot IoT topics of 2014.

Bring on the Heat 

1) IoT + Big Data: With between 26 billion and 212 billion devices predicted to be connected by the end of 2020 (again, depending on which source you believe), a great deal of this year’s chatter around IoT is what the heck we’re going to do with all of the data being generated.

In 7 Big Problems With the Internet of Things, Fabrizio Biscotti, research director at Gartner, stated:

IoT deployments will generate large quantities of data that need to be processed and analyzed in real time. Processing large quantities of IoT data in real time will increase as a proportion of workloads of data centers, leaving providers facing new security, capacity and analytics challenges.”

Katharine Frase, Chief Technology Officer with IBM’s Public Sector business, shared her view in a CMSWire article early this year:

In the discussion around the Internet of Things, there is almost a sense that if all these devices have sensors that are reporting their status all the time, that does not automatically make us more intelligent and give us more insight.”

Meanwhile, in a move that positions them to take a big bite out of the IoT market, HP announced a reorganization in August designed to help them align their software business with the emergence of new big data processes and business opportunities.

HP subsequently announced in October that the company would split into two public companies – one focusing on enterprise solutions, and the other on printers and office hardware – further strengthening the ability of the company to handle big data issues that come with the IoT.

We also saw expansion in data center capabilities from Salesforce in March, and most recently from IBM, which patented two techniques to more efficiently analyze data and maximize cloud performance.

2) Privacy: Although a survey earlier this year showed that customers are willing to give up more information for a personalized experience, privacy remains a key concern when it comes to the IoT.

Google’s acquisition of Nest, the maker of the Learning Thermostat and the Protect smoke and carbon monoxide detector, is a prime example – a move that many perceived as Google’s invasion into the home. 

“Considering Google is a data-centric business that makes billions of dollars by monetizing the data they collect, it is unlikely the data from Nest will be limited to only the homeowner and those who directly support the devices," said Rebecca Herold, president of Rebecca Herold & Associates, in a CMSWire article early this year.

Privacy concerns are not limited to Google, however. In an Appinion report, published in July, privacy and security were two of the most commonly discussed issues — both online and offline — around the IoT.

Dana Blouin, a PhD candidate and researcher at SIIT—Thammasat University in Bangkok, Thailand, sums up the privacy issue in the article, The IoT Challenge: Protecting Privacy in a Connected World:

The IoT is mind-blowing — and its potential will be even more amazing if we find ways to extract value from the data it generates while simultaneously ensuring the privacy of all users.”

3) Security: A major concern among consumers and enterprises alike, security has been a recurring theme throughout this year’s IoT coverage. Despite this, consumers don’t seem to be taking any action to protect their data.

In November, CMSWire reported on the 2014 ISACA IT Risk/Reward Barometer, which revealed that, while three-fourths of those surveyed say recent data breaches of major retailers made them more concerned about their personal data, only a few changed their online shopping habits to protect themselves from a similar breach:

  • Less than half of shoppers changed their PIN or online shopping password
  • Only 15 percent scaled down their mobile purchases
  • A mere 28 percent stopped purchasing from retailers that had experienced a data breach

On the enterprise side, it appears as though there’s a lot of work to do until businesses are ready for the IoT.

In July, CMSWire reported on two studies that showed enterprise infrastructure isn’t strong enough to support the IoT, and that security, in particular, is holding back IoT development. In fact, 63 percent of IT leaders surveyed indicated that the IoT poses a threat to network security. They also said it’s becoming increasingly difficult to stay on top of which devices are being added to enterprise networks.

4) Wearables: We knew wearables would become hot this year when the 2014 International CES made it a focal point, along with the rest of the IoT. Sports and activity trackers, smartwatches, wearable cameras, health devices, and loads of other wearable tech have taken the spotlight.

A recent BI Intelligence report gives a snapshot of the growing market, stating that 33 million wearable units will be shipped in 2014, with smartwatches leading the way. The report estimates that this year, smartwatches will make up 59 percent of total device shipments, increasing to 70 percent of all wearable shipments by 2019.

Indeed, we’ve already witnessed this year’s surge in smartwatches. In September, we had the much-anticipated reveal of the Apple Watch, which begins shipping in 2015. Then came the cross-platform Microsoft Band in October (which flew off the online shelves). And, throughout the year, Samsung released a slew of new smartwatches.

Blurring the smartwatch line, as does the Microsoft Band, fitness bands continued to add to the IoT with new models from Jawbone, Fitbit and others.

And, of course, let’s not forget the much-hyped release of Google Glass.

While the consumer market is an obvious fit for wearables, there has been much speculation this year about how wearables fit into the workplace.

Just last month, Mike Karlskind, vice president of product marketing at Burlington, Mass-based ClickSoftware gave us a glimpse into how wearables could improve the customer experience:

Wearables can help employees and businesses in general provide a quicker and more customized response to customers. This is because interactions with wearables is seamless, and empowers workers to quickly, without much hassle, gain crucial information in the moment they need it."

5) Home Automation: In July, marketing influence platform provider Appinions revealed that the most influential IoT products came from the home automation category.

Following up on Google’s acquisition of Nest in January, Nest went on to announce that it was buying home-monitoring camera developer Dropcam in June.

June also saw the introduction of Apple’s HomeKit, its smart home service operating through Siri, that allows users to adjust thermostats, lock doors and dim lights using their iPhone or iPad.

Microsoft got into the act in August with the announcement that it had selected 10 startups for its new home automation acceleration program.

And in that same month, Samsung announced plans to buy SmartThings’ open platform that allows users to monitor devices in their home from a mobile device.

Other influential IoT products named by Appinions include software platforms, connected devices, and security products.

6) Agility: Gartner predicts that by 2017, half of all IoT solutions will be created by companies that are less than three years old.

The research giant made it clear during their 2014 Symposium, that entrepreneurs, and not large companies, will lead the Internet of Things.

“Your next competitive advantage is going to come from a maker — someone who is not hindered by the way you do business today — someone who is not constrained by return on investment analyses, but sees a problem, sees an opportunity and then seizes that opportunity,” said Pete Basiliere, research vice president at Gartner.

Named as one of Gartner’s Top 10 Strategic Trends of 2015, David W. Cearley, vice president and Gartner Fellow, also highlighted the opportunity IoT brings for developing new business models around operations management, monetization, remote operation and extension of existing products. He also stressed embracing the “maker culture” to continuously come up with innovative solutions.

London-based Reply, a consulting, systems-integration and digital services company, apparently agreed with Gartner. In October, they established the Breed Reply Incubator, which will fund, accelerate and support IoT startups across Europe and the United States. 

All of this is not to say that larger enterprises will be left behind. In 5 Tech Trends We’ll See More of in 2014, Frank Palermo, senior vice president, Global Technical Solutions Group at Virtusa, discussed how the IoT will help businesses improve their processes and enhance decision making:

The emergence of ‘smart machines’ and embedded sensors will bring new contextual awareness to computing, enabling sensor-driven business models. These sensors will allow better tracking of behavior and movements of product and interactions with those products, allowing business models to be fine-tuned based on this behavioral data.”

IoT in 2015

It’s been a wild ride for the IoT in 2014, and judging from the sheer numbers predicted for connected devices and the value they’ll bring, there are no signs of stopping.

Let’s wrap up our look back with a quick peek into the year to come for the IoT, offered by Frank Gens, senior vice president and chief analyst for IDC:

About a third of the solutions for the IoT will be from the automotive, health and energy verticals. The investments and business potential here are still enormous and that’s where the really interesting part of this is going to be. We’ll be watching for other industries expanding in this area."

Title image by Lead Beyond  (Flickr) via a CC BY-NC-SA 2.0 license.