For those who aren’t convinced that the Internet of Things phenomenon is real, allow Intel’s Q1 earnings to give you an IoT reality check.
The PC chipmaker reported its earnings earlier this week (April 14), which showed that its Internet of Things Group grew 11 percent to $533 million, year over year, from Q1 of 2014. Intel attributed that growth to “strength in the retail and digital security market segments.” And while its revenue for the quarter was flat, profit rose 4 percent, year over year, to $2.6 billion. The IoT double-digit growth is a bright light in Intel’s search for growth outside of the PC business – a segment that hasn’t exactly done Intel’s earnings any favors lately.
Overall, Intel’s Data Center, Internet of Things and NAND technology made up 40 percent of Intel’s revenue and two-thirds of its overall operating profit in Q1.
Looking toward its 2015 forecast, the IoT segment will continue to play a major role in boosting the company’s overall revenue as the company works to align its investment strategy with those that fit into its IoT goals — especially with a decline in the PC market.
But that is one company and the tip of a very, very deep iceberg known as the Internet Of Things. An iceberg that a new report “IoT Megatrends 2015” concludes isn’t so much about “things” as much as it is about the data and devices that drive consumers to interact with those “things” that happen to be connected to the Internet – and that represent a multi-trillion dollar opportunity over the next few years.
Whether it’s the wearables being developed by Android, Samsung, Google or Apple, or what automobile manufacturers are doing to enable connected cars, it’s clear companies are targeting the IoT as a way to connect (literally and digitally) to the consumer. The questions that remain for those who are pursuing an IoT agenda include:
How can commerce be enabled in a secure and private fashion?
What will the companies do with all the data that is generated as a result?
How will IoT change the way consumers interact with products and, therefore, merchants and brands?
We’ll have to wait and see, but in the meantime, here’s a look at how some of the early adopters of IoT strategies are going about it.
Last week (on April 6) it was announced that Ingenico and Intel have partnered to enable mobile payment capabilities into a wide array of connected devices – intelligent vending machines, kiosks and digital signage.
Ingenico will provide payment acceptance capabilities and Intel will use its CPU tech and its Intel Data Protection Technology for Transactions in order to secure them, a security protocol that was a key contributor to Intel’s top ranking in the Pii360 Payments Innovation Index’s Security segment. Intel’s push into payments using the IoT concept will start with a mobile tablet that uses the Intel Atom processor and supports EMV and NFC payments.
“This is a great example of how innovation can simplify the purchasing experience and further enhance the merchant-consumer relationship,” Ingenico CEO Philippe Lazare said in a news release about the partnership. “Bringing secure payment into connected devices will root our payment acceptance expertise in the Internet of Things.”
Alibaba has its hands in just about every industry one could think of — entertainment, payments, commerce, retail, finance, technology. Recently, it announced it would move into the smart living side as well. Getting into the Internet of Things, big data analysis and cloud computing services has been among the major goals of Alibaba as it looks to expand its own ecosystem and stay a step ahead in competitive space of key competitors, including Tencent and Amazon.
Alibaba’s most recent efforts will bring the IoT concept into all of its products — everything from home goods, televisions, appliances and even cars that will be hyper-connected to a user’s device – and all enabled by Alibaba’s own payments engine, Alipay.
Alibaba has said that Smart Living will be made available via its Tmall site, which will enable companies to add Internet capability to home products, such as electrical appliances. Alibaba also announced it would be opening up its Taobao marketplace for business owners wanting to sell Internet-connected goods.
Last month, Amazon acquired 2lemetry, a Denver-based startup focused on software to manage smart networked devices and the IoT.
While not much is known about the terms of the acquisition, the company’s product lines suggest what would draw Amazon toward the startup. One of 2lemetry’s products, 2lemetry Incoming, “enables location and proximity sensing, facial recognition, and geofencing for people, places and things.” That could combine beacons with age-and-gender-based analytics for conventional (though more advanced than usual) in-store customer tracking.
And then there’s the Dash button, Amazon’s toe in the water with connected commerce. In late March, the eCommerce giant rolled out Amazon Dash, the small device that offers consumers the chance to buy products they use frequently at the touch of a button — literally. The Dash Button, or buttons, depending on how many products the customer is looking to order, is an actual device connected to a specific product. They come with adhesive to stick on, or near the product, to remind customers to reorder when they get low. Whether it be a specific laundry detergent or daily coffee pod, the Dash smart button instantly buys the product for that specific button through Amazon’s app that’s connected via Wi-Fi between the button and the smartphone. The little device is aimed at connecting consumers to commerce in an entirely new way, while still helping Amazon go after one of its top goals: driving up their Prime membership.
Facebook’s F8 developer conference in San Francisco last month showed that it’s getting into new programming tools for the IoT, using the Parse mobile app development toolset it bought in 2013.
Parse’s new IoT software development kit — helpfully named the “Parse for IoT SDK” — makes it (relatively) easy for programmers creating network-connected devices to make a connection with a mobile app and send data back and forth with, say, a smart thermostat, garage-door opener or even a smoke-detector battery. In the case of Facebook and the IoT, it’s more about the backend, data and using the cloud for its developing platform to enable more programming tools. One of Parse for IoT’s first users is Roost, a startup making a lithium battery with a Wi-Fi radio inside that will send an alert to a user’s smartphone if the alarm goes off or the battery charge is low.
While it may not happen in the next few years, all signs point to the fact that Facebook is looking toward the developer side of how the IoT will impact the social media site and the devices it connects to.
“Facebook is making a major play in positioning themselves as a central cloud backend for IoT,” Roost CEO Roel Peeters told Forbes in an interview, adding that the social network “is embracing a new category of devices that will be coming online over the next 10 years.”
The IoT revolution will create a world in which companies no longer have to rely on consumers telling them how they interact with devices; they will have the ability to use technology to sift data from those devices to show them what consumers actually do – and then initiate an action based on that behavior. And that unleashes vast treasure troves of data that will become an invaluable resource for companies seeking to drive smarter business decisions. As Seth Priebatsch said in a recent interview with MPD CEO Karen Webster, payments is all about the data. In an IoT world, that couldn’t be more true.
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