Last week I had the privilege of attending the “Industry of Things” conference in San Diego, California. My aim was to assess the potential of this market and its current maturity in the hearts and minds of corporate IT leaders. I was very impressed and excited about the potential here.

Before I share some of my observations lets start by defining exactly what is the “Internet of Things” (IoT)? I like to think of every new technology as an iteration of what has come before.

Computing – If we think of the history of computing over the past 75 years we have moved from monolithic mainframes to distributed systems (x86 servers) to personal computers to mobile devices and most recently nanotechnology. The most compelling fact here is that while computing hardware has become pervasive looking at “Moore’s Law” its relative price/compute power has grown exponentially. On the software side of the equation over the last several years we have made huge strides in developing an ability to analyze huge amounts of data efficiently (Big Data) allowing for real-time analytics to reach affordability.

The Internet and Connectivity – In addition to computing we have also seen the Internet grow from a private Pentagon project in 1963 (Intergalactic Computer Network) to a true World Wide Web. Over the last 25 years Internet connectivity has become significantly more affordable allowing over 80% of citizens in developed countries and 34% of citizens in developing countries to get “online”.

Sociology – Lastly, as a society we have shown a willingness to embrace the open Internet and publicly share more about ourselves in return for convenience (i.e. Facebook, Twitter, LinkedIn). An entire business model has been built on the premise of “free apps” offering convenience in exchange for personal data.

These 3 factors combined have evolved to create a new opportunity which we call the “Internet of Things”. The potential here is virtually unlimited and the benefits are substantive.

• For consumers and citizens it presents the opportunity for a better quality of life
• For government it presents an opportunity to drive significant efficiency in public works and safety
• For corporations it presents an opportunity to build a deeper level of engagement with their consumers and the potential for new long-term business models based on “consumption” rather than the traditional “one-time buy”

The most inspiring part of all of this is that its real and its happening across a variety of industries. During last week’s conference we heard from a wide variety of corporations already leveraging IoT to deliver value to their consumers. Here are a few examples

• In Transportation a large train operator working with SAP to leverage over 2,000 sensors to drive improved safety, lower maintenance and an better experience for their customers
• In Agriculture a large manufacturer of heavy machinery driving a closer relationship with farmers by helping them to maximize their harvest through careful analysis of planting depth, soil conditions and environmental factors (water, sun, wind)
• In Consumer goods a large beverage products company driving a better vending machine experience with their consumers by creating “on demand” one of >1,000 made-to-order beverages from a single machine

The opportunity in this space is endless and it will force companies to think about how they engage with their consumers and how they can fully exploit it to drive a sustainable competitive advantage. This transformation will not be easy and will be as much about “People/Process” transformation as Technology.

No doubt there are real obstacles to delivering against the promise of the “Internet of Things” including security, privacy and common standards but the potential returns and impact to our future are reason enough for us to pursue solving them.