In a low-key announcement at Cisco Live this week, Cisco showed that it clearly believes its own hype with the launch of a new Cisco Internet of Things (IoT) business unit that aims to turn its keynote demos and pilot projects into actual products. The unit, to be jointly headed by Cisco VP Robert Soderbery and Wim Elfrink, executive VP of industry solutions and chief globalization officer, is an amalgam of several existing product groups that currently focus on industrial, energy/utility and physical security markets.
According to published reports, the group will start out with 500 people and a $200 million R&D and marketing budget. Product plans are non-existent, or at least non-public so far. Cisco has forecast $14.4 trillion of potential economic value for businesses during the next decade due to the emergence of the Internet of everything. So, if it's going to make good on its idealized future of smart buildings and cities that automatically adapt to changing conditions, evolving into social networks of machines that resemble networked living organisms, $200 million is but a tiny opening bid on the kind of investment ultimately necessary to tap a big piece of that $14 trillion.
By virtue of the firm's dominant position in networking, Cisco is a logical leader in the IoT sweepstakes, but delivering on the vision will take much more than network prowess. IoT is really about applications that combine big data analytics, mobile devices, sensors of all types (geo-location, local position, temperature, etc.), cloud infrastructure and, yes, machine-to-machine (M2M) communications. This last realm plays to Cisco's strengths, but even here the complexity of connecting billions of devices exposes myriad relatively mundane challenges, including data security, network reliability and QoS, particularly operating in harsh, noisy environments. Another challenge is network scalability, where packet processing silicon must continue to follow Moore's Law and IPv6 is a necessity.
In fact, we're already seeing firms specializing in M2M communications platforms, such as Silver Spring Networks, Sensinode and Connode. So far, the M2M/IoT market has focused on the energy, utility and building automation markets, but as Cisco pushes the technology into other industries, I wouldn't be surprised to see one or more of these IoT pure-play vendors become an acquisition target.
Although the IoT talk at Cisco Live was still long on vision and short on products, formation of the new business unit, along with Cisco's previously announced sponsorship of an Internet of Things World Forum this October, are clear commitments to action. Maybe, just maybe, we actually will be measuring LeBron's vertical leap on our iPad while watching the next NBA Finals.