I’ve been following the proceedings of Parks Associates’ Smart Energy Summit this week, and by all counts, it has been a great week of workshops, keynotes, and panels. Among some of the interesting statistics coming from the conference include:

• Kevin Meagher from Lowe’s says that their Safe & Secure kit outsells their Iris Comfort & Control kit by a 4-1 margin;
• Five percent of U.S. broadband households switched to a time-of-use (TOU) electric plan in the last 12 months in an effort to lower their monthly bill, according to Parks Associates’ research;
• Eleven percent of U.S. broadband households now own an Internet-connected thermostat; and
• According to Ecobee’s Stuart Lombard, one-half of all thermostats sold will be communicating. Parks Associates is anticipating a 20% growth in connected thermostats by 2017.

The astonishing rate at which devices and systems are becoming interconnected to each other and to the Internet is impacting not only the business of generating and delivering energy, but pretty much every industry and market today. Whether it’s appliances, consumer electronics, healthcare, transportation, manufacturing, and agriculture (I was recently introduced to a company called Clear2There), the linkage among sensors, actuators, control units, and “Big Data” promises to usher in greater efficiency, safety, control, productivity, cost savings, and a wealth of other benefits in coming years.

Sizing the “Internet of Things”

This is the promise of the “Internet of Things” (or “IoT”), probably the biggest buzz that came from the 2014 International Consumer Electronics Show. Cisco System’s John Chambers, for example, said that the “Internet of Everything” will generate $19 trillion in new revenue by 2020. And, as CBS reported, when the common household toothbrush becomes a connected device, you know you’re looking at either a surging market or a huge bubble.

Although concepts such as connected toothbrushes and crockpots may not be ready for mainstream adoption as of now, there are plenty of statistics that point to a massive market for device connectivity. For example:

• Ahead of next week’s Mobile World Congress (MWC), the GSM Association (GSMA) reports that global machine-to-machine (M2M) connections reached 195 million in 2013, growing at nearly 40% between 2010 and 2013. M2M connections are expected to reach 250 million this year. M2M accounted for 2.8% of all global mobile connections at the end of 2013, double the 1.4% share recorded in 2010.
• In the United States, Parks Associates anticipates that the number of connected cars on the roads will reach nearly 18 million by 2017. A GSMA report for the global market shows similar growth, with annual sales of nearly 36 million vehicles with embedded connectivity sold in 2018.
• In just consumer electronics alone (smart TVs, networked audio, game consoles, Blu-ray Disc Players, smartphones, tablets, etc.), Parks Associates anticipates that global shipments will increase by nearly 75% between 2013 and 2017, a compound growth rate (CAGR) of about 15%. In 2017 alone, more than two billion connected consumer electronics will ship.
• Overall, Cisco’s Internet Business Solutions Group (IBSG) predicts that 25 billion devices will be connected by 2015, and 50 billion by 2020.

The Challenges of the Internet of Things

The IoT is poised to increase the efficiency of everything from healthcare to energy management. Some numbers that indicate the potential savings and improvements from IoT deployment include:

• A Cisco analysis predicts that the Internet of Everything (IoE) is poised to generate $4.6 trillion in Value at Stake for the public sector over the next decade (compared with $14.4 trillion for the private sector over the same period).
• GE asserts that the oil and gas industry can save $90 billion through the use of what it calls “Industrial Internet” applications.
• Another GE report indicates that a 1% reduction in system inefficiencies could save the healthcare industry $63 billion over 15 years.
• Cisco anticipates that – with greater visibility into their operations – companies and organizations can reduce energy costs by as much as 60%, amounting to a savings of approximately $25 billion.

However, these gains are not without risk, particularly in terms of security and privacy concerns and the potential to significantly increase support costs. The next two sections provide detail on these issues.

Security

Since computers started getting connected to the Internet, malcontents have been busy figuring out ways to hack them for nefarious purposes. The Center for Strategic and International Studies released a study in 2013 that posits a $100 billion annual loss to the U.S. economy and as many as 508,000 U.S. jobs lost as a result of malicious cyber activity.

With the Internet of Things now multiplying the number of connected devices infinitely, the same type of malicious activity can take place on an even wider scale. It’s already happening, and it’s quite personal. For example, Proofpoint, a security-as-a-service provider, released information in January that indicates that smart TVs and refrigerators have already been hacked and used to send malicious e-mails. Also, findings presented at a recent Black Hat conference show how smart TVs can be hacked and turned into spying tools.

Energy providers should also be aware that their network-connected meters are vulnerable to hacking. As early as 2010, the Federal Bureau of Investigation (FBI) reported that hacks to smart energy meters used by a utility in Puerto Rico may have cost the company hundreds of millions of dollars. Mocana, a security vendor specializing in mobile, enterprise, and device security, notes that the rollout of smart grid products and services means that there will be more than 500 million hackable end points by 2015. Hacks could can be used for anything from bringing down the grid to mining consumer's private data.

Until now, there has been little to no standardization work in securing the IoT. However, in December 2013, Mocana and a group of companies (including SAP, FireEye, McAfee, and Wind River announced the formation of the Mobile App Security Working Group (MAS). The intention of the alliance is to determine common metrics that enterprise users and IT administrators can employ to compare the security postures of different mobile apps, independent of platform, developer or security vendor. The alliance will also work to standardize on security solutions that cross traditional corporate and national boundaries.

There are a host of companies that specialize in both security and device management solutions for M2M applications, many of which will be on display at next week's Mobile World Congress. Among companies offering M2M security solutions are ABO Data, Axeda, Gemalto, Giesecke & Devrient GmbH, ILS Technology, Numerex Corp., Sierra Wireless, Verizon Enterprise Solutions, and Vodafone.

Device Management

Numerous Parks Associates studies have detailed the headaches experienced by both consumers and small- and medium-sized businesses (SMBs) in confronting technical problems. Between lost productivity, expenses, and costs to service providers for rolling trucks to address problems with computers, mobile phones, broadband service, and a host of other problems, individuals and companies stand to lose plenty when it comes to technical problems. Now, expand the millions of computers and smartphones into billions of other connected devices, and costs to service and maintain the IoT could be overwhelming.

To address the challenge of device management and remote maintenance for non-traditional IT equipment, a number of companies have entered the market with unique solutions. For example:

• UpdateLogic has a device management solution known as NetReady™. The company has found a market in supporting smart TVs and other connected consumer electronics. The company has announced deals with JVC, Vizio, D-Link, TCL, Sharp, and Hisense.
• ihiji  provides remote network management solutions for smart home and other control solutions.

We are now seeing cross-over in security and device management efforts from what might be traditionally called data-centric solutions for broadband modems and home networking modems to include the entire Internet of Things. For example, just this past week, a consortium calling itself the AllSeen Alliance announced that ten more companies – AT&T Digital Life, Affinegy, GOWEX, iControl Networks, Kii, Muzzley, Patavina Technologies, 2lemetry, Tuxera, and Vestel Group – have joined the initiative. Affinegy is a great example of a company crossing the boundaries between the data-centric device command and control solution (such as TR-069 Auto Configuation (ACS)) to a more holistic framework of device management.  AllSeen participants are collaborating on an open software framework, based on the AllJoyn open source project, that allows devices and systems to seamlessly discover, dynamically connect and interact with nearby products regardless of brand, transport layer, platform, or operating system.

Many remote management solutions for the IoT market come from companies that have traditionally been involved in monitoring and management mobile devices on the enterprise level. The Mobile World Congress will be a showcase of additional device management solutions from companies such as Axeda,  Bosch, Gemalto, ILS Technology, KORE TELEMATICS, Mformation, RacoWireless, Sprint, Wyless, and a slew of others. Many of these companies have taken enterprise mobile management solutions and applied them to the M2M space. Mobile M2M management solutions areused in many different sectors - from healthcare to manufacturing - and they are responsible for device provisioning, managing the transmission and receipt of data, applying configuration settings, conducting diagnostics, and other device management services.

How Lessons Learned in Traditional Consumer Technical Support Translate to the IoT

Parks Associates webcast – Supporting the Connected Home: Preventing The Internet of Broken Things – provided specific insight into the challenges of deploying connected home systems. Parks Associates' Tom Kerber highlighted the challenges inherent to growing the smart home market, including problems with device set-up (such as configuration complexities, functional glitches, and user errors) and troubleshooting. The support implications, Kerber notes, are significant, as the installation process requires the incoration of customer orientation.

Support.com's James Morehead used the webcast to introduce attendees to the company's Nexus® Service Platform as a complete solution for marketing and administering a technical support program. Both Morehead and Kerber assert that elements such as automated device provisioning as well as troubleshooting are critical elements in building profitable support solutions that deliver high customer satisfaction. One key element of the Nexus platform is its ability to quickly diagnose and troubleshoot technical support issues with Android-based smartphones and tablets.

By implementing an integrated platform approach to delivering high-quality technical support services, Support.com is now providing a profitable technical support service while growing its revenues more than 300% since 2009. Through three quarters of 2013, Support.com's revenues were up approximately 20% over the first three quarters of 2012.

The question of which organizations (mobile operators, third-party security and device management companies, technical support providers, etc.) will be the dominant players in securing and managing the Internet of Things. What is clear, however, is that the opportunity in the market is explosive, given the billions of devices expected to be connected over the next few years. What is important is to get security and management solutions right so that the value of IoT applications can be fully experienced.