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What Is "The Internet of Things"? We Traveled 9,000 Miles to Find Out

"Industrial Internet could add a sizable $10 [trillion]-$15 trillion to global GDP -- the size of today's U.S. economy."
-- General Electric

"We estimate the potential economic impact of the Internet of Things to be $2.7 trillion to $6.2 trillion per year by 2025."
-- McKinsey & Company

The numbers surrounding the "Internet of Things" are astonishing, and with each passing week more and more companies are planting their own flags on the emerging trend. 

Earlier this week, the Financial Times broke a story: Apple  (NASDAQ: AAPL  ) planned to embrace the Internet of Things by creating a new app to control smart home devices. 

Apple wasn't the first large Silicon Valley to embrace the trend. Google  (NASDAQ: GOOG  ) spent $3.2 billion to purchase Nest earlier this year in its own "smart home" play. Most of Silicon Valley is racing to reorient its marketing around the term, which is causing a buzz for everything Internet of Things-related. 

Yet while the hype around the Internet of Things is getting deafening, it's still an esoteric term for many investors. The most basic question investors want to know is, simply, "What is the Internet of Things?"

At its core, the Internet of Things is simply taking devices that previously weren't connected to our digital world and giving them connections to the Internet.

But that's an overly broad explanation for the far-reaching implications of a trend that promises everything from automating our homes to creating "smart cities." We wanted to provide a clearer look at what exactly the Internet of Things is, and even in the infancy stages of the trend, how it's already in play across the world around us. 

So, we wanted to make the Internet of Things real. We went to visit companies on the bleeding edge, inventing the future in places you might not expect. In the dead of winter, we flew to a place many would call crazy. We flew to the Arctic Circle and visited a company powering some of the devices we wear. Its Internet of Things category saw 1,425% sales growth in the past year, and the category expects another 300% growth in 2014.

We also visited a city that's being built from the ground up as a smart city. Along our journey, we'll travel 9,000 miles canvassing the Nordic region for innovation where you least expect it. 

So join us in the preceding video, as we dive into what the Internet of Things is, and how it can transform our world. 

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Read/Post Comments (6) | Recommend This Article (47)

Comments from our Foolish Readers

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  • Report this Comment On June 01, 2014, at 1:51 AM, Zendwell wrote:

    Nice work!

  • Report this Comment On June 02, 2014, at 4:47 PM, hbofbyu wrote:

    The internet of things makes sense on an industrial level. I'm not as convinced on the consumer side of things. In the next 5-10 years, they're going to try and "internet" every conceivable device. Most will fail and likely go back to being "dumb" in the next iteration. A few of them will turn out to be cool and enhance our lives in some minute way.

    Does anyone really want to troubleshoot their microwave oven's connectivity? Upgrade the firmware? Appliances have longer life-spans than cell phones and wi-fi devices.

  • Report this Comment On June 02, 2014, at 5:14 PM, TMFPennyWise wrote:

    Quite a trip! Eric! (And I bet your travel agent got a headache after he put together your trip because of all the remote destinations--did he have you drive across the ice bridge? Or, don't say it, you used Trip Advisor and did the planning yourself...?)

    Anyway, your look at the Scandinavian innovation was fascinating. I looked up a couple of those companies and they are on pretty small stock exchanges like the Oslo and Helsinki Exchanges which makes it a challenge to buy them. You make it sound like it may be worth the trouble to seek out a broker who can do the deal though. And then there's always Nokia...

    hotbotbyu has a point though. My audi is so wired up (I think using ARM Holdings technology) that it gives me a fright every time I back up or try to make a phone call. So I may go back to my stripped down Dodge Charger next time!

    Great story and I hope we hear more about your findings around the Arctic circle.

    ha det


    long on SWIR and INVN

  • Report this Comment On June 02, 2014, at 5:59 PM, TMFRhino wrote:

    Thanks for the comments.


    With regards to making more sense on an industrial level, I think that's correct... But, it also doesn't need to be mutually exclusive to the consumer side.

    When you think about factories, wiring them up to gain a cost advantage will breed fast imitators. That sort of competition is the best way of spurring adoption. The really beneficial economics is what has led to recent deep IoT inroads into industries like Oil & Gas.

    Next steps with things like cities... While most cities aren't flush with cash, and that won't change anytime soon, so... Projects that can demonstrate an ROI to the city will be prioritized.

    Likewise with health, its an industry that still uses copious amounts of paper...So, there are challenges to wider adoption, yet the economics are often too tantalizing to pass up. On a recent San Francisco trip I visited a company that puts ingestable sensors in pills and is working with national health organizations on a wider roll-out. The benefits far outweigh the costs, so its a hard offer to ignore even for entrenched industries.

    On the consumer side, people will always reject bad projects. A company like Samsung making a connected microwave is solving their business problem: they want you to buy a new microwave and replace them more frequently.

    That's obviously not an idea with great potential.

    Yet... Just as an example from what we've seen today: Apple's presentation at WWDC shows some real "greenshoots" on what a better consumer product would be. In the connected home, it's about connecting *intelligent* devices. Nest is successful because they've successfully marketed it as something that saves money and is good for the environment. Apple's early attempts to create a connected home development kit enable better controls of all these devices so you don't need to worry about 10 different apps. Along the way to broader adoption, those advancements would be needed.

    Likewise, their HealthKit push is interesting. I watched the WWDC presentation today and they specifically put a big push behind how data stored from health monitors working with Apple's new Health app could be used by larger healthcare companies. That's real utility to both consumers and the healthcare industry. Having better data when you come to the doctor versus describing your symptoms is win/win.

    So, I think it's a very early market. Most of the wearables we see today will be fads. Yet, with some really great health software, medical wearables could be a breakthrough winner.

    In the home, connected toasters and fridges currently don't add much value. Connected products with a 5-15 year lifespan are tricky. Yet... I'd bet designs over time will get a bit more modular. A car with a tablet in it that essentially runs most of its infotainment and controls that could be swapped out every 5 years makes a lot of sense. Beyond infotainment though, there are a lot of unseen benefits to a connected car. IE- Maintenance. Tesla avoided a major recall by pushing out a software update. Other competitors with non-connected cars had to issue massive recalls. That's a headache for consumers and a major expense for the companies.

    My guess would be that areas like lighting/HVAC/music systems/proximity sensors where different devices can use "learning intelligence" and connections between one another to function at a much higher level could be huge winners. Time will tell how large... The addressable market there is definitely much smaller than industrial, healthcare, and city-wide markets.

    Okay, I've prattled on long enough. Thanks again for your thoughts, hope that helps broaden some of my thinking on the topic!


  • Report this Comment On June 03, 2014, at 11:27 AM, SkepikI wrote:

    <Projects that can demonstrate an ROI to the city will be prioritized.> Eric if you actually believe this, I have a non-existant bridge to sell you over the Columbia River. It cost nearly $200 million and not a stone was turned nor a yard of concrete poured...what's the ROI of $200 million for, well nothing?

    While that may SEEM a non sequitur, its quite a good parallel for an internet of things project that has a more nebulous hard to measure payoff than a bridge.

    AND I wonder just how fast penetration will be when the first hacker attack is widely publicized, and people start to fear for their already vulnerable privacy. Just wait till someone figures out how to have your blender attack your light fixtures...;-) or your furnace alternate between 35 and 95 degrees everyday till you pay ransom....

    Now where HIGH value and reduced risk predominates (remote access to security systems and cameras say) that will adopt pretty quickly.

  • Report this Comment On June 03, 2014, at 11:29 AM, SkepikI wrote:

    ^ I just saw a news story where a homeowner remotely accessed his cameras on warning from his smart phone, then saw the intruder, and accesses his speakers to yell at the intruder to get the hell out... it worked, he left and saved the homeowner some money and angst...

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Eric Bleeker

Eric started at The Motley Fool in 2008 working in the Tech & Telecom sector. Today, he's the General Manager of You can follow him on Twitter to stay up to date with his tech industry analysis.

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