Original academic paper by Jules Becci de la Riviere , reviewed by Kings College London Graduate Summer School back in 2016 (awarded 71%), published in "Market Mogul" (now Mogul News) in 2018:
The Internet of Things:
Recently, the number of objects connected to the internet has become greater than the global population. Ubiquitous computing is on its way: micro-computers and sensors will soon be standard elements of our environment. By embedding sensors in items that surround people, data is collected, sent and analyzed, all this without the need of human interaction. The Internet of Things (IoT) is the extension of the internet to the objects of the physical world. As a simple example, a mainstream connected watch tracks heartbeats, sends data to a smartphone that will, in turn, provide daily reports. The IoT is an example of bleeding edge technology. Although it is becoming widely available, it is not yet ready for widespread and efficient use. The software and hardware at its core are still highly unreliable and encounter compatibility issues.
Disruptive Transistors Progress
In the past decades, Moore’s Law was the reference for computing technology progress. Nowadays, the status-quo is challenged: disruptive computing and dedicated education might be the main drivers for the IoT’s widespread adoption. Thanks to computing components, production costs drop, IoT devices become more affordable, therefore leading to a quasi-exponential increase of connected objects. This tendency will keep on going at a rising pace.
However, a complete change of paradigm is occurring concerning the drivers of the power/price improvement of transistors and chips. Moore’s law refers to the doubling of computing power every two years at a steady price. Whilst this argument might appear persuasive and reliable, there is a potential flaw in this position. Although this may be true until now, in 2016, 51 years after Gordon Moore pronounced his law, he stated that "transistors can be shrunk further, but they are now getting more expensive". Mr. Moore recognizes them himself through saying: "it can’t last forever". There is, in fact, a fundamental physical barrier: the limit of miniaturization of transistors is the size of an atom, and society is getting closer to this stage. In other words, the economic era of Moore's law is now seemingly over, despite its recent climax.
Disruptive innovation seems more promising in providing a new impetus to create cheaper and better technology. What is next could be more exciting. Radically different technologies such as 3D and ADN chips or quantum computing are potential future solutions, currently at the centre of attention of R&D laboratories. Such innovative solutions will reduce the production cost of the IoT.
The provenance of this breaking new tech will come from a human capital specialized in the IoT field. An example, among plenty others, is the recent inauguration of Smart Cities and Urban Analytics MSc at University College of London. Forming a generation of engineers of a new kind will satisfy the upcoming hunger in innovation. As shown above, IoT’s economic deployment on a large scale relies on disruptive innovation and on forming dedicated human resources, rather than on the traditional improvement of traditional transistors.
A Revolutionary Energy Management
IoT interacting with energy consumption could be a game-changing technology in the way energy is managed. As an example, Google managed to reduce its data centres’ energy consumption by 15% from one day to another, thanks to the combination of algorithmic (Artificial Intelligence) and data collection (Internet of Things ). The money saved on cooling down its data centres will finance the companies' growth ambitions, and therefore create economic value. Alphabet, Facebook, Apple, Microsoft and other tech big players are betting on IoT to become pioneers in tech energy efficiency, exactly as car manufacturers are converting to electric engines for the same reasons.
Thus, IoT brings modest convenience to households for now, while it implies a promising economic improvement to the industry, thanks to, for example, emerging optimized energy solutions. The industrial applications are numerous: connected objects can improve security, feedback, reduce response time within the organization, replace human labour or assist R&D process. There is a myriad of other possibilities: in general, IoT dramatically increases productivity.
Nonetheless, in order to have an optimum economic impact, the devices part of the IoT will have to operate correctly. To do so, the devices have to be able to communicate, therefore to be compatible with each other. The compatibility of devices within a network is called interoperability. Free and unlimited exchange of information’s is the economic benefit of interoperability.
However, there will be a complex struggle before such a technological utopia is reached. Internet of Thing’s emergence means an ever increasing importance of open standards. Indeed, we are about to witness an era where households will soon own tenth, to hundred times the current amount of connected devices : « to reach the threshold of 2 trillion devices connected to the Internet (…), each person would need to have thousands of their possessions talking to the Internet », says The Economist’s author Valery.N It is important to realize that such a number of connected objects is extremely unlikely to be manufactured by the same corporation because the IT industry is composed of thousands of companies.
Logically, some points out the urging need of federalism in cloud platforms, in order to enjoy the benefits of interoperability. In fact, if the devices are not interoperable on a market, the result may lead to be trapped in the services of one dominant provider. This would lead to a monopoly, a form of market failure. In this case, IoT would be preponderantly serving the oligopolistic companies economic interest, leading to a price rise of the good manufactured trough extremely high margins. A similar market situation as the smartphones ones. Apple is an example of a company that turned to be a monopoly of IT’s marketplace by controlling closed standards. Most of the developed countries’ households are about to account hundreds to thousands of connected objects, that will be manufactured by different corporations.
To ensure a perfect data portability between such a diversity of objects from is a real challenge. Thus, it is crucial that IT manufacturers find a middle ground by ceding intellectual property in order to embed the Things of the Internet in a single operating software. In the opposite case, IoT will remain an untapped economic potential, reproducing then today’s IT marketplace failure, illustrated by the control Apple and Microsoft have on standards.
Avoiding Market Failures
With this in mind, policymakers have to make sure IoT is operational and harmless so that it meets public acceptance, therefore to widespread economically. Through the support of privacy, security and interoperability, policymakers have to make IoT trustworthy, to create ideal conditions for an efficient market.
Firstly, privacy concerns the legitimacy of the collection and use of personal data. Indeed, ubiquitous computing also means an ever-present risk when it comes to data theft. Europe is a leader and pioneer in the setting of a governance for IoT. It federates different stakeholders to enable synergy. As an illustration, the Member State were invited by The European Commission in order to find a consensus concerning the respect of IoT ‘s user’s privacy, in « a lawful, ethical, socially and politically acceptable way ».
Secondly, security concerns the data protection from unwanted interlopers. Households and industrial market respectively fear personal and professional data leakage. It was pointed out that data leakage due to a lack of security and privacy solutions is a main source of rejection of IoT .If judged negatively overall , should it happen trough ignorance or carelessness, the internet of things could be hobbled before it gets out of the gate," some members said at the Advanced Computer Theory and Engineering Conference. This would consequently lead to a fewer positive economic impact than expected. To solve this problem , the European Research Cluster on the Internet of Things (IERC) was created to allow a “secure, safe and privacy preserving deployment of IoT in Europe.
Thirdly, until now the main enterprise to achieve IT interoperability was led by associations such as Engineering Task Force whose members are volunteers. Policy makers are taking the relay as they are more empowered to achieve such a duty. Legislators either support, or sometimes impose interoperability in order to avoid market failures. Legislators’ interoperability support can happen by providing funds, the EU “is investing €192m in IoT research and innovation from 2014 to 2017 » (European Commission, 2016) But policy makers can as well impose it. Microsoft was sued by European Commission because of it was developing not interoperable systems on purpose, thus abusing of its monopoly position. In the past months Google and Apple were sued for the same reasons. IoT ‘s success will depend on the emergence of an efficient ecosystem, that will definitely not be a natural outcome of supply and demand.
Consequently, IoT needs to be framed by policy makers- during its shaky first years at least. Policy makers have the responsibility to ensure that the privacy, security and interoperability become quality labels of the IoT.
Otherwise its economic potential will remain untapped.
To sum up, IoT is on its way to provide ubiquitous optimization. The possibility to embed sensors around the world is endless. They will provide insightful data on the global perspective. Computers' progress and dedicated engineers are at the root of the ongoing revolution.
The road ahead is still long and rocky- a combination of market failures followed by reactive corporation solutions and appropriate policymakers' propositions is the way to fully tap IoT’s economic potential. It is strongly advisable not to develop IoT in a hasty manner.
Whether it is a state, an individual or a business, any stakeholder could cause potential harm trough the distorted use of IoT. Ruling bodies' main priorities should be the emergence of standards and to look after the privacy and security concerns.
IoT must be considered as the cornerstone of the 4th industrial revolution.
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