Headline: What is the Internet of Things?


Body:  I love the commercials with the touch screen on the fridge.   With a stylus, you can write a virtual grocery list, and then have your fridge e-mail it to you when you’re at the store.    I was reading an in-flight catalog (remember those?) and I saw a toaster that would toast the weather forecast on your bread in the morning.  A buddy of mine got an e-mail from his car reminding him that it needs an oil change.     All of these examples are the Internet of Things (IoT).  BTW, there is a fascinating history of the IoT, reaching back into the 1970s where they had dreams of the “pervasive computing.”   I encourage you to read this wonderful (brief) timeline showing that scientists have been wrestling with IoT for decades.  I have decided to not share it here for the attribute of brevity.

OK, so, what is the IoT really?

Really, the IoT is a network of devices that speak with one another.  Your fridge might notice that you are running low on margarine, but, your wearable device notices that your body mass is increasing, and it decides not to e-mail you the idea of buying more margarine.    This really encapsulates both the good and the bad.  It’s good that the fridge will e-mail you a list of things you need to buy.  But, it is sort of creepy to know that  your devices might be changing their behaviors based upon a change in your behavior.   (Remember Furby?  That was a very simple device, but, people felt very odd even holding it upside down.)  This is itself  more than just a little creepy.

This is a little crazy, can you give me some examples?

  1.  Wearable devices (like Applewatches) can be worn to monitor and manage diseases.
  2. At home, robotic vacuums and security systems can be used to keep our homes clean and safe.
  3.  In your vehicle, there are OED codes, and this is not far removed from your car e-mailing you about your car needing service
  4. Cities can use these devices to help adapt traffic (charging different rates based upon  congestion.) and monitoring of environments, like earthquake sensors.
  5. Outside cities, sensors placed inside railroad tracks can tell operators what routes are most direct and clear of traffic.

So where is the line?

Many people have suggested only allowing the IoT to connect to industrial machines.  For example, there is a vending machine, and it notices that the diet Coke  is getting low.   It can e-mail you with a reminder to buy more Diet Coke.  This system would both greatly increase efficiency and cut down on waste.

What are the challenges?

There are 3 main challenges.   First, to truly embrace the concept of IoT, many devices need to be connected and speak with each other.   Because many different devices use different protocols to communicate, connecting these devices logically, is not easy.   Second, and possibly more important, any time that you introduce a set of new connections, you have many new security risks.  Multiply that by MANY and you can begin to see just how big a problem this might be.  Third, this level of surveillance on your life is really creepy, even with the opportunities it brings.   Imagine that your Applewatch could reliably tell that you are having sex?  Might it contact a nearby camera, and SEVERELY interfere with your privacy?  On the other hand, a friend of mine just bought a new Applewatch for his wife.  She started wearing it, and the next day, the watch told her to call 911.   She was in A-fib.  The Applewatch she got the night before, probably saved her life.  These are complex issues.

What dynamics could affect adoption of IoT?

Direction of Likely EffectDescription of Dynamic
Encouraging Adoption of IoT. Adoption will be faster if the regular citizens find value in the advantages offered by IoT.
 Adoption will be faster if technology underpinning IoT is more affordable.
 Adoption will be faster if more people have access to 4G and 5G networks.
Discouraging Adoption of IoT.Adoption could be delayed if the changes required are not managed well.  (Especially important is managing the behavior of end users.)
 Interoperability issues could delay the adoption of IoT.
 If security issues are not solved, then installation will likely be delayed, and IoT advantages will be delayed.

So, are there new standardbearers?

Yes, there are hundreds of standards being worked on, per the IEEE.  There are 2 that appear to be farther along than the rest.  First, Microsoft is working on a standard, and many of the devices running their software will abide by it.   (How much will this add to their monopoly?)  There is another, Hypercat, which is already being utilized by Intel, BAE Systems and Accenture.  Interoperability is the watchword (and currently dream) of all of these standards.

The Verdict

We have traveled a great deal down this IoT road.   So far, in fact, that we are becoming cognizant of just how much further we have to go.  I predict that IoT will be rolled out slowly.   You might see some robust “pervasive computing” at some places like doctors’ offices and universities.   But, as normal citizens begin to see that the benefits are quite impressive, and the risks are beginning to be managed, adoption of IoT will happen.   I sense it.






Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.

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