The IoT Lag

The Internet of Things is falling short of the hype. We need to focus on truly valuable IoT opportunities.

Jim O'Reilly

February 26, 2016

5 Min Read
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Where is the Internet of Things? By now, we were supposed to be awash in sensors and expecting all the dark fiber in the world to light up!

But the IoT is not rolling out as expected. Perhaps the hype is over and reality is setting in, but the sense of excitement is turning into “Blah!” The first sign of trouble was the anemic acceptance of smart watches. While Apple has sold a lot of units, as a percentage of iPhone users, demand for the iWatch is weak. The problem appears to be that it doesn’t actually do much.

Now, one might argue that a product miscue by one vendor doesn’t imply that the whole IoT thing is in trouble, but ask what product is the poster child for the IoT and there isn’t an obvious answer. We’ve gone through a phase of huge excitement and now we have…?

That sums up the IoT problem in a nutshell. The idea that everyone would design sensors, and everyone would deploy them widely isn’t turning out to be true. We should have expected that. But even companies as conservative as Hitachi were swept up in the hype, projecting  total revenue from IoT products in the trillions a year ago.

Reality had to set in, and we’ve see plenty of reports from the last few months pointing to that, including reports on sluggish enterprise IoT adoption and IoT speedbumps.

Another way to look at this is in devices per inhabitant. The blog NetacadEurope reported an analysis from the Organization for Economic Cooperation and Development (OECD) that had South Korea in the lead with 0.37 devices per inhabitant, the US at 0.25 devices, and most of the EU below 0.2 devices. That isn’t anything like we would expect for the amount of hype expended. That’s just one smart sneaker for every four people (not a pair!), though it could actually mean one talking refrigerator per US family.

Realistically, we are not seeing wide acceptance yet for potties that analyze your urine or parking spots that advertise they are empty via your mobile. These are all great ideas, but they are a bit like 3D printing, which seemed stuck in its gee-whiz phase of making orange coffee cups.

But now 3D printing is a growing business; it’s finding niches where its abilities to complete projects in a short time and do unique designs make a compelling proposition. That’s how IoT will deploy. It isn’t a case of what we can do; it’s much more what needs to be done and picking the right use cases.

Internet of Things


Health care is an obvious place for IoT benefits. The IoT approach is converging on new techniques for measuring and predicting disease. A monitor chip that reports heart problems makes sense, as do disease analytics devices such as sensor chips. These save lives and they also reduce healthcare costs, potentially by large amounts. As a vehicle to carry medicine into the less-developed nations of the world, they hold tremendous promise.

This isn’t the consumer-driven “health-centric” world of smart watches, though. There’s only so much that a heart-rate tracker is worth, and the consumer side is showing signs of being tapped out. The idea of an expensive “thing” that doesn’t actually do much isn’t resonating any more.

On the “real” healthcare side, some progress has been made, but mainly in the easier areas. Manual testing and recording in health care are on their way out in the developed world. Adding enough smarts to make those electronic blood pressure cuffs and other devices talk to the clinic network was trivial. Mainly, the issue was getting software in place that could present the data from all the tests to the physician, which took a while to catch on in a conservative profession, more sophisticated monitoring that we’ve discussed for years still eludes us, such as implantable online heart monitors and the spectrum of diagnostic array chips.

The value-proposition test will impact IoT growth in every affected segment. There is no cookie-cutter answer to how fast this occurs. If the cost is low and the benefit is high, we’ll see rapid adoption, but generally we are several years from cheap IoT. This reality is the main reason that the IoT rollout won’t line up with all the hype.

One area where this isn’t true is where smartphones do the communicating, reducing the cost of a thing. This opens up some room for low-cost things to find a market more quickly. Examples are EKGs that retail for less than $200 in Asia today that communicate with a doctor via a phone. Where hospitals are not easy to reach, these can save lives, while being affordable.

There are other issues that complicate IoT roll out. Most cars come with built in call-home options that are smart enough to be able to phone out if there is an accident. The geo-location capabilities could extend to tracking teenagers’ locations and alleviating parental worries, but they also could be used by governments to track every individual or even bug their cars. The Internet of Things is opening up new questions of privacy rights and these issues could delay IoT deployment.

Security is an issue too. If one’s electronic toothbrush can be hacked, it could open up a backdoor into a smart home system. Maybe that allows computers to be hacked, or a smart lock to be opened…the list goes on. Sadly, in the rush to match the hype of IoT, the security questions have not been properly addressed.  We already have cars that can be hacked and lose power while on a freeway. This isn’t a good situation and also will slow deployment of IoT.

IoT is inevitable, and a good thing, but it requires sorting real opportunities from all the hype and providing a real value proposition to justify deployment. In the end, as the computer industry ends up mainly in the cloud, IoT will be the major market of electronics. It just will take more time than the pundits predicted.

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To learn more about IoT and its impact on IT, attend the Internet of Things Summit at Interop Las Vegas this spring. Don't miss out! Register now for Interop, May 2-6, and receive $200 off.

About the Author(s)

Jim O'Reilly


Jim O'Reilly was Vice President of Engineering at Germane Systems, where he created ruggedized servers and storage for the US submarine fleet. He has also held senior management positions at SGI/Rackable and Verari; was CEO at startups Scalant and CDS; headed operations at PC Brand and Metalithic; and led major divisions of Memorex-Telex and NCR, where his team developed the first SCSI ASIC, now in the Smithsonian. Jim is currently a consultant focused on storage and cloud computing.

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