Internet of things no longer about things

The IoT, as defined by McKinsey and the GSA, refers to sensors that communicate over the Internet without human intervention. That definition includes wearables and smartphones, both of which communicate autonomously if allowed. It also includes smart devices for cars, homes, and cities, and for healthcare and industrial equipment.

Looking ahead, the benefits and growing ubiquity of connectivity appear likely to make "smart" the default for objects of significant value. Perhaps the term will even disappear as it becomes the norm, to be replaced by "dumb" (or something less pejorative like "silent") for those rare instances when objects can't communicate.

Just about every business will become an Internet of things (IoT) business. The convergence of the digital and physical worlds makes this inevitable. When the products companies sell are connected 24/7/365, dynamic and ever-improving value can be delivered to customers throughout the product’s life cycle.

This will become the norm. Therefore, launching a successful IoT business requires a fundamental shift, a transition from product-centric to service-centric business models.

Companies looking to capitalize on IoT will become IoT service businesses. Operations dependent on one-time product sales will become obsolete as business value moves from products to the experiences they enable. This transformation will fundamentally change how businesses operate, interact with customers and make money.

Those who recognize that the Internet of things isn’t about things but about service will be positioned to meet these new customer demands, unlock new sources of revenue and thrive in this connected world

But several challenges may delay that future, and the McKinsey/GSA survey sees six obstacles of note.

1. Security and data privacy. "Overall security is only as good as its weakest point," said one executive interviewed for the report. Certainly weak points are abundant on the Internet today.

This explains why Samsung spent considerable effort at the recent Internet of Things World conference emphasizing the presence of Secure Element hardware in its new ARTIK line of IoT modules.

The report lumps security and privacy into a single concern. That's arguably the ideal case -- owner-controlled encryption -- but typically security and privacy diverge. Companies that keep data secure may define privacy to mean "private to other companies but available to us." Those making IoT devices need to understand that security and privacy can't be an afterthought, or a single idea.

The automatic communication of IoT devices makes privacy more difficult by encouraging a usage pattern where communication consent is given in advance, rather than at a contextually relevant moment.

2. Customer demand. At least in the consumer market, the report anticipates that the IoT market will grow through a variety of applications, rather than via a single killer app. The report advises that semiconductor companies help developers create compelling IoT products and guide businesses with an interest in IoT deployment.

Part of the problem is that IoT products may be more interesting to their makers -- by providing companies with data and customer engagement -- than to customers. Users of IoT devices need to be able to derive real, repeatable benefits from the technology, or they just won't bother with it.