The document discusses rebooting the Internet of Things (IoT) by moving away from centralized cloud-based models and toward decentralized architectures. It argues that for the IoT to scale sustainably, solutions need lower costs, stronger privacy protections, and durable business models. The author envisions an "Economy of Things" where connected devices can autonomously transact with each other via open-source technologies like peer-to-peer messaging, file sharing, and blockchains. Telecom providers are encouraged to develop analytics capabilities from IoT data and expose assets via APIs to collaborate in IoT ecosystems.

1. Rebooting the IoT
From the Internet of Things to an Economy of Things
Rob van den Dam
Global Telecom Leader
IBM Institute for Business Value

2. IoT is IBM’s # 1 research area
Telecommunications Solutions Lab (TSL)
Telecommunications Research Lab
TSL China &
Telecom Research Lab
(Beijing)
TSL North
America
(Austin, Texas)
Japan
(Tokyo
Satellite TSL)
TSL Israel &
Telecom Research Lab
(Haifa Satellite TSL)
Telecom Research Lab
(New Delhi)
TSL LATAM
(Sao Paulo,
Brazil Satellite TSL)
TSL Europe
(La Gaude &
Montpellier, France)
TSL Russia
(Moscow Satellite TSL)
South Africa
(Johannesburg, Satellite TSL)
ASEAN
(Kuala Lumpur
Satellite TSL)
TSL India
(Bangalore Satellite TSL)
Centers of
Excellence
Institute for
Business Value
Research
Labs
Almaden c
 Big Data &
Analytics
 Storage
 Nanotech
Healthcare
Watson
 Semiconductors
 Systems
 Software &
Services
 Big Data &
Analytics
c
Dublin
Smarter
Cities
Internet of Things
Smarter Cities
South Africa
(Johannesburg,
Satellite TSL)
Worldclass
Partner
Ecosystem
Industry
Solutions Labs

3. Future
Agendas
Value Realization
Studies
3 to 10 year industry outlook
with action oriented next steps
In-depth assessment of today’s
critical issues, opportunities, etc
CXO
Surveys
Chief Officiers studies – CEO,
CIO, CMO, CFO, CHRO, etc.
IBV: Developing thought leadership
Consumer
Surveys
Country specific profiles &
CSP benchmarking

4. 2015
February 2015
June 2015
October 2015
February 2016
Customer
Experience
Big Data &
Analytics
5,247 interviews
in 70+ countries
295 Telecom
CxOs
Redefining
Boundaries

5. Content
 Discussing the Internet of Things
 The role of Telecom Providers in IoT

6. The IoT is poised to changed everything
The Internet is evolving to connect
people to physical things and also
physical things to other physical
things … all in real time. It’s
becoming the Internet of Things
(IoT): Billions of interconnected
smart devices measuring, moving,
and acting upon all the bits of data
that make up daily life.

7. ARMONK, NY - 31 Mar 2015: IBM (NYSE: IBM) today
announced that it will invest $3 billion over the next four years
to establish a new Internet of Things (IoT) unit, and that it is
building a cloud-based open platform designed to help clients
and ecosystem partners build IoT solutions.
IBM Investing $3 Billion in Internet of Things

8. 07/15/15
IoT-based consumer devices such as wearables
and smart appliances receive a high degree of
media attention.
IDC surveyed organizations that are actively
pursuing IoT initiatives. IoT is helping businesses
better manage very complex systems.
Consumers, businesses and governments recognize
the benefit of connecting devices to the Internet
61%

9. 9
1
2
3
Unlock new revenue from existing products
and services
Inspire new working practices or processes
Change or create new business models or
strategies
IoT offers a transformative business opportunity
and is changing how businesses operate

10. However, challenges regarding security, privacy,
and common standards must be overcome
Malicious actors intent on taking
control of data, identities, and
passwords will exploit Internet-
connected devices that are not
securely developed, making them
easier targets than traditional
PCs, laptops, or tablets. – IBM X-
Force Threat Intelligence

12. “By 2020, each human being will
have an average of 5.1
connected devices”
Frost_Sullivan
“28.1 billion in 2020” IDC
“40.9 billion forecasted for 2020”
ABI Research
“By 2020 exceed 26 billion
units worldwide.” Gartner
We are at the threshold of a massive explosion in
the history of computing

13. The first wave of the IoT is already here. It’s the
Internet of billions of Things
Proportion of Smart
TVs being used for
Internet Viewing
Continuous
Monitoring of
Jet Engines
Automated
Smart
Meters
We have seen visible successes
in high value applications
But demand has been slow to
take off in many other areas
Proportion of Heavy
Industrial Equipment
Networked
10%
30%

14. Market expectations are enormous, but IoT business
models are already broken
The Internet of
Things
already needs
a
REBOOT
Video

15. IoT solutions that work for billions of devices won’t
necessarily scale to hundreds of billions of devices
 High Cost
 Lack of Privacy
 Not future proof
 Lack of functional value
 Broken business models

16. High cost of supporting and maintaining hundreds
of billions of smart devices will be substantial
Support
agreements
High buy prices,
short life cycles
Low margins,
high life cycles
Mismatch between cost and revenue

17. Lack of Privacy; the Internet is no longer a place
of trust
 Centralized authorities become
single points of failure
 No trusted partners on the
InternetThe Internet was original build
for convenience and on trust

18. Not future-proof; average life of IoT devices will
be decades
Cost of maintaining smart devices can outlast
product and manufacturer obsolescence
Average Expected lifecycle
18 to 36
months
± 10 years
± 40 years
> 40 years

19. Lack of Functional Value; connectivity and
intelligence is a means to a better product, not an end
Simply enabling connectivity does
not make a device smarter or better
A smart, connected toaster is
of no value unless it produces
better toast

20. Broken business models > as a result profits
remain elusive
Lack of sustainable business
models is holding the IoT back
And ask yourself a
few questions ……
Imagine the connected
toaster of the future .....

21. To see how unrealistic the expectations are with
current business models, just apply the “toaster test”
 Would you be willing to pay an annual subscription
for software updates to your toaster?!
 How much time are you willing to spend updating
the software in your toaster?!
 Would you be comfortable seeing advertising burned into your morning
toast?!
 Are you willing to only buy bread from the company making the toaster?!
 Do you trust the toaster maker (or the NSA) not to sell data about your heavy
consumption of Pop Tarts to your health insurer (who may then choose to
charge you higher premiums for unhealthy behavior) ?
If it doesn’t work for the toaster, it may not work for your
door lock, garage, light switch, toothbrush or toilet bowl.

22. To get the ‘second' wave of the IoT, it needs to be
redesigned based on 3 architectural principles
Architectural
principles
Design for radically lower cost:
Embrace distributed computing, peer to peer networks
and device based analytics eliminating costs associated
with the IoT cloud
Design for real privacy: Privacy and
anonymity ensured by design, opt-in only, open source,
transparent encryption for secure messaging and file
transfers
Design for business model
endurance: Transfer ownership and maintenance
responsibility from manufacturers to networks of self
maintaining devices

23. To be secure and scalable, the IoT will evolve to be
more open and decentralized
Before 2005 Today 2025 and beyond

24. A truly decentralized IoT solution will require 3
foundational functions to be supported
File
Transfer
Messaging
Device
Coordination
Trustless
Peer to Peer Messaging
Secure
Distributed File Sharing
Autonomous
Device Coordination

25. The set of foundational principles is an opportunity to
change the model of Internet services and security
Trustless
Peer to Peer Messaging
Secure
Distributed File Sharing
Autonomous
Device Coordination
No single arbiter of roles and
permissions
• Owner/user defined interactions
• Autonomous transaction processes
• Trustless network of interactive devices
No cloud based file transfers
• Secure file and data sharing
• Software/firmware updates
• Device based analytics reporting
No centralized broker of messages
• Trustless encrypted messaging and transport
• Low latency, guaranteed delivery
• Store and forward capabilities, hop-ons

26. A secure and scalable IoT solution can be built on
open-source technology
No single arbiter of roles and
permissions
• Owner/user defined interactions
• Autonomous transaction processes
• Trustless network of interactive devices
No cloud based file transfers
• Secure file and data sharing
• Software/firmware updates
• Device based analytics reporting
No centralized broker of messages
• Trustless encrypted messaging and transport
• Low latency, guaranteed delivery
• Store and forward capabilities, hop-ons
P2P messaging
protocols
P2P decentralized
filesharing
Blockchains
Example
Example
Example

27. Not every system needs to be centralized,
however
Device Longevity
Device Value

28. Democracy of Devices
By empowering devices to
function autonomously, the edge
will become a frontier of new
economic value, creating an
“ECONOMY OF THINGS”

29. Devices on the edge can be empowered to function
autonomously in the IoT

30. New Marketplaces hosted by peer exchanges can
provide liquidity for transactions between devices
Similar to financial exchanges,
peer exchanges can
match
supply and demand

31. MUSIC NEWS WEATHER TRAFFIC MAPS
The Internet created liquid markets
of the digital world
The digital world

32. REAL ESTATE MANUFACTURING AGRICULTURE RETAIL TRANSPORTATION
The Internet of Things will do the same
for the physical world
The physical world

33. Creating liquid marketplaces of physical assets by en-
abling real-time discoverability, usability and payment
Physical
world
The liquification
of the physical
world

34. The economic models can be constructed around the
three vectors of disruption from the IoT
3 Vectors
of disruption

35. So ... what is the role CSPs (communications service
providers) in this transformative business opportunity?
What are the means by which CSPs can
extract value from the IoT?
What will be the likely impact of the ‘Economy
of Things’ on different industry players?
How can the telecom industry play a
key role in this transformation?

36. CSPs have a strong position to capitalize on data in eco-
systems in which connectivity plays an important role
600
350
270
250
245
225
105
100
75
40
0 100 200 300 400 500 600 700
Connected Car
Clinical Remote Monitoring
Assisted Living
Home and Building Security
Pay-As-You-Drive car Insurance
New Business Models for Car Usage
Smart Meters
Traffic Management
Electric Vehicle Charging
Building Automation
Global market value for connected devices
US$ Billion

37. Data and analytics: the vital spice in the IoT

38. 38
90% Volume of data created at the edge of IoT that is
never captured, analyzed or acted upon.
60% Amount of that data that loses its value within
milliseconds of being generated.
Source: IBM
http://www-03.ibm.com/press/us/en/pressrelease/46453.wss
To innovate, operate, and engage at the next level,
data must be turned into insights

39. Today
In a few
years
‘Systems of Insight’ can be created by unlocking
DATA from billions of interconnected devices
IoT is expected to create 100ZB
of data per year in China alone
by 2030. – IDC
41% of decision makers
surveyed say their organizations
plan to collect and process IoT-
related data close to the point of
creation. – IDC

40. 07/15/15
Personalized and instant are the new
expectations for engagement.
Internet of Things gives businesses access to
product usage data they’ve never had before.
Personalized services designed from usage
data creates opportunities for new sources of
revenue.
Insights that lead to new ways to engage; mobile and
social are changing expectations on engagements

41. Advanced
analytics that
consumes
data, analyzes
it and
generates
actionable
insights in
context
41
What did
I learn?
How do
I improve?
What is
happening?
Why did it
happen?
What could
happen?
What action
should I
take?
To potential of Internet of Things lies with
intelligence

42. Developers
ISVs
Banking
Consultant
s/SIs
Healthcare
Media
Social
business
Personal
comms
Security
Policy
Analytics
M2M
Etc… Etc…
Managed
customer
interface,
services,
platforms
and
networks
Service providers
and partners CSP solutions
Consumers Business
Government/
Industries
Putting CSPs in the middle of the IoT ecosystem
CSPs data/analytics
access models:
(Big) Data as a
Service (DaaS)
Analytics as a
Service (AaaS)
.

43. APIs will be the driver for this model

44. Evaluate opportunities and roles in IoT
ecosystems
Develop capabilities to turn IoT data into smart
actionable insights
Expose assets via APIs and begin the journey
for collaborative value
Recommendations for CSPs

45. Thank you
Rob van den Dam
Global Telecom Industry Leader
IBM Institute for Business Value
rob_vandendam@nl.ibm.com
www.ibm.com/iibv