Navigant Research Blog

IoT Momentum Is Building—Even if Trend Is Overhyped

— October 12, 2015

Momentum keeps building for the Internet of Things (IoT) market—even if the concept is overhyped. Recent moves by market stakeholders point to significant investments and noteworthy strategies. In addition, there are important implications for the utility sector, particularly the residential segment.

Google’s strategy combines hardware and software elements for connecting things in the home. The company is expected to release Brillo, a slimmed-down version of the Android operating system designed for smart home applications, by year’s end. Brillo will be coupled with Weave, a protocol developed by Nest Labs, which is to be integrated into OnHub, a router that can control IoT devices. As part of Nest’s initiative with Weave, General Eletric (GE) and Procter & Gamble will be partners in the effort.

Comcast has made the IoT a key part of its strategy over the past year. Executives with the cable giant have said they want to become the conduit, or highway, that carries all the data back and forth among IoT devices. Also, the company’s Xfinity service is being positioned as a platform for IoT functionality, with the company having announced partnerships with Nest, August (locks), and Lutron for lighting.

Also, Intel is acquiring chipmaker Altera for nearly $17 billion with the aim of enabling new classes of products “that meet customer needs in the data center and Internet of Things (IoT) market segments,” according to a release. Altera is an attractive buy for Intel because its chips are used widely for networking and wireless applications. Similarly, United Kingdom-based Dialog Semiconductor, which supplies chips to Apple, announced in September its acquisition of Atmel for $4.6 billion in a deal to strengthen both companies’ efforts to compete in the IoT space.

Furthermore, the Smart Grid Interoperability Panel (SGIP) says it will expand its cooperation with the Industrial Internet Consortium (IIC) to focus on technologies and testing to promote the adoption of the IoT in the energy sector. The two organizations plan to identify ways members can take part in an array of new and established testing activities.

Among utilities, Commonwealth Edison (ComEd) in Illinois has a partnership with Comcast to leverage the interconnectedness of smart thermostats in a demand response program. The program, similar to other bring-your-own-thermostat (BYOT) setups, is a basic example of linking things, thermostats in this case, with as service that can increase energy efficiency.

With this kind of momentum, it seems clear the IoT trend has legs, but there are hurdles that could inhibit market adoption. First, there are many protocols in play, such as ZigBee, Z-Wave, Bluetooth, and Wi-Fi. These present interoperability issues. Second, many IoT devices are more costly than current alternatives, such as high-end smart thermostats. Third, some consumers have real concerns about potential loss of privacy or security breaches when so many devices are interconnected.

Despite these hurdles, the IoT market drivers seem strong, and important companies are placing big bets on it. Navigant Research expects global revenue attributed to residential IoT devices to grow from $7.3 billion in 2015 to $67.7 billion in 2025, based on our own focused definition on the built environment of things. For those interested in learning more about the IoT market, Navigant is hosting a webinar highlighting IoT trends on October 20 at 2:00 PM EST. My colleague Ben Freas, senior research analyst, will bring his building automation perspective, and we will be joined by Matt Smith, senior director of utility solutions at Silver Spring Networks, who will discuss the utility’s role in the connected IoT home.


Smart Cities Initiative Provides Added Boost to Growing IoT Market

— September 29, 2015

Coinciding with Smart Cities Week in Washington, D.C., the Obama administration announced an investment of over $160 million for a new Smart Cities Initiative on September 14. The initiative focuses on federal research and will leverage over 25 new technology collaborations to help municipalities address key challenges such as reducing traffic congestion, fighting crime, fostering economic growth, managing the effects of climate change, and improving the delivery of city services.

The initiative shows the U.S. government following other national governments in supporting smart city initiatives, including the United Kingdom, India, and South Korea. This is further evidence of how the smart city concept is being fully embraced in North America.

The Obama administration has broken down the investment allocation as follows:

  • More than $35 million in new grants and over $10 million in proposed investments assigned to build a research infrastructure for smart cities, led by the National Science Foundation and National Institute of Standards and Technology.
  • Nearly $70 million in new spending and over $45 million in proposed investments allotted to unlock new solutions in safety, energy, climate preparedness, transportation, health and more, by the Department of Homeland Security, Department of Transportation, Department of Energy, Department of Commerce, and the Environmental Protection Agency.

IoT Segment Growing Quickly

This announcement comes at a time when interest and activity in smart cities technologies and solutions is higher than ever. There is a growing focus on the intersection of smart cities and the Internet of Things (IoT). In the context of smart cities, IoT refers to a network of physical objects within a smart city that are embedded with electronics, software, sensors, and connectivity to enable these objects to collect and exchange data.

Just over the past few weeks, several high-profile developments in the IoT market have taken place. General Electric announced the creation of a new business unit with the aim of becoming the leader in the IoT; IBM appointed Harriet Green—the former CEO of Thomas Cook Group in the United Kingdom—to lead its new IoT business unit (IBM is expected to invest $3 billion over the next 4 years in this unit); and Salesforce announced a new IoT Cloud platform. According to the Smart Cities Initiative, these developments in the IoT market reinforce the importance of its focus on “creating test beds for ‘Internet of Things’ applications and developing new multi-sector collaborative models.”

Array of Things

Several cities in the United States have been evolving to add more IoT concepts to smart city projects. For example, the University and the city of Chicago are engaged in a joint venture named the Array of Things (AOT) with the Argonne National Laboratory. This project will provide real-time, location-based data through sensor boxes that will be deployed in the Chicago area. The sensors will detect temperature, light, vibration, carbon monoxide, pedestrian and vehicle traffic, and surface temperatures to work with applications that use the sensor data to alert residents to areas with traffic congestion, pedestrian traffic, and icy patches on sidewalks. Data collected by the AoT project will be free and open to the public, a key feature of the program. The National Science Foundation is providing an additional $3.1 million to the AoT project, derived from the White House’s Smart Cities Initiative funding. The impact of IoT on smart cities will be explored in more depth in Navigant Research’s upcoming Smart City Street Management report.


Speed Bumps on the Road to the Smarter Home

— August 20, 2015

While more smart home technology keeps rolling out from manufacturers, some of the targeted customers are finding the systems do not always satisfy their expectations or have shortcomings. This was pointed out recently in a Wall Street Journal piece that noted the downsides of the latest systems that control lighting, door locks, and thermostats, among other things.

Not Worth the Trouble?

One of those people is a professor of mechanical engineering who is also head of the Berkeley Energy and Climate Institute at UC Berkeley. He received a smart thermostat as a gift, but has yet to install it because it wasn’t worth the trouble, according to the story. Another is a tech-savvy contractor who finds his smart home control system is too complicated, particularly when things go wrong. He now tells his own clients to avoid automated systems.

These are anecdotal examples, to be sure, and may not reflect the experiences of satisfied smart home technology customers. But these stories do highlight some of the barriers to smart home technology adoption and the related Internet of Things (IoT) trend, which has gripped many in the high-tech, home automation, and energy sectors. These barriers (as noted in Navigant Research’s IoT for Residential Customers report) include complexity, pricing, and data security.

Moreover, a Bluetooth Special Interest Group survey released earlier this year underscored what consumers consider as key factors in deciding what to purchase. More than half of the survey respondents (54%) said smart home solutions need to be straightforward to use and 41% said they should be easy to set up; 4 in 10 of the respondents (42%) said offering products at competitive prices is important; and an equal number (42%) said keeping their data secure is essential.

Too Complex

While conducting research into IoT trends, many of the vendors and stakeholders I spoke with mentioned complexity as a barrier for smart home tech adoption. It is an age old problem: How to solve thorny problems, like increasing energy efficiency in a home, with improved products that don’t require the consumer to do too much? In other words, bring the benefits but hide the complexity.

Some manufacturers have done this. And despite the professor mentioned above who has yet to bother with his, smart thermostats from Nest, Honeywell, and ecobee (to name just a few) can boost efficiency without sacrificing comfort and without too difficult a setup. They aren’t perfect answers, of course, and tend to be more expensive than common offerings. But other hardware and solutions providers should take note: It is possible to conceal the complexity behind smart home devices. And it should be a top priority in designing solutions, especially when even geeks among us are reluctant to engage.


The Internet of Things Invades Garbage Cans

— July 20, 2015

The Internet of Things (IoT) is a trend that is seeing a lot of recent attention in the residential, utility, and the commercial and industrial (C&I) spaces. Through home automation, the IoT can make consumers’ lives easier and more efficient. Meanwhile, it’s allowing utilities to increase equipment effectiveness, reduce cost of compliance, enable real-time decisions in demand response (DR) events, and improve customer experiences. The IoT can also help C&I  businesses heighten asset performance, mitigate supply chain risks, and ensure product quality and consistency. 

Now, the IoT is hoping to make life easier in the Big Apple, specifically in New York’s Times Square. But the IoT isn’t on Broadway or the big screens (yet). Instead, it’s been finding use in one of the most humble, overlooked, and under-appreciated parts of New York City—in garbage cans. Bigbelly, a waste management company offering unique solutions for public spaces by leveraging solar energy and information technology, is applying for a grant from the Mayor’s Office to install Wi-Fi garbage cans in underserved neighborhoods.

Bigbelly’s garbage cans were smart before the company added Wi-Fi to them, as they are solar powered, have sensors to detect how full and smelly they are, notify trash collectors when it’s time to empty them, and some can automatically compact trash when the cans become too full. Now, with enough bandwidth to run a small business, upload 200 pictures in 27 seconds, or download an HD movie in 9 minutes, these garbage cans are becoming even smarter—and more valuable. While the Wi-Fi upgrade is certainly a big benefit, these IoT containers can provide priceless waste management and operations data, or even display public service announcement and alerts.

More to the Market

Bigbelly is not the only company expanding the IoT into public spaces and garbage cans. The city of Santander, Spain, with a population of 185,000 people, participated in a pilot project sponsored by the European Union to test sensor network technologies and other aspects of the IoT on a city scale. Over the course of the project, roughly 12,000 sensors were deployed around the city, measuring parking spaces, the amount of trash in garbage cans, traffic flow, carbon monoxide levels, and pedestrian traffic. The $9.6 million project resulted in a 25% cut in energy costs and a 20% reduction in garbage pickup costs, effectively helping the city of Santander manage some of its expenses.

In Panama City, an advertising agency partnered with Telemetro, a local news agency, to enable potholes across the city to tweet to the government for maintenance. El Hueco Twitero (The Tweeting Pothole) has Tweeted messages like, “I feel horrible, I just caused tire damage to an old lady’s car. @MOPDePanama [the Twitter account for Panama’s Ministry of Public Works], See what you made me do.” This strategy effectively annoyed the city government until it began fixing potholes.

While the IoT is still a relatively new concept for consumers that is still working to gain traction, it is beginning to have a farther reach. From residential thermostats and commercial lighting to potholes in Panama and garbage cans in New York City, this can only leave me wondering where to next.


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