Forget B2C, B2B or even P2P – the future is M2M – machine to machine communication.

And forget virtual world vs. real world, in this M2M Internet of Things, the two are fused together in synthesis.

These are the two central messages of a useful special report out today by the Financial Times: The Connected Business 2013.

  • The next wave of online innovation for the “network of networks” is M2M – machines connecting, communicating and collaborating with machines.
  • By 2020, the Internet of Things will include 50bn connected objects, this is already creating new business models, improving business processes, and reducing costs and risks (GE predicts that M2M will remove $150bn in waste).
    • In healthcare, swallowable M2M smart modules will check internal health, whilst smart implants will monitor health (BP, drug delivery) and connect to body/brain care specialist.  M2M technology can also help with ‘compliance’ – taking right medicine regularly at the right time, with smart dispensers – typically pill cases and inhalers (WHO estimates that 1 in 10 hospital admissions are due to non-adherence/non-compliance)
    • In automotive, the EU has called for all vehicles to be fitted with M2M technology by 2015 – to request maintenance automatically, warn when components are in danger of failure and dial emergency services in the event of a serious accident, giving the vehicle’s location.
    • In retail, stores and malls now contain “Experience Stations” and other interactive POS devices, all connected up to the Internet to provide feedback and be managed remotely. Likewise smart connected vending machines can handle secure, cashless payment and check inventory levels and machine functionality.
    • In urban planning, hundreds of thousands of sensors will be embedded city infrastructure designed to create ‘Smart Cities‘ that maximise the efficiency of everything from traffic flows and emergency services to electricity consumption and energy storage. Objects as traditional as lamp posts are being given IP addresses and fitted out with M2M modules (In Northern Portugal, Cisco and Living PlanIT are prototyping a new smart city)
    • Within five years, most homes will have 200 devices linked to the internet from lightbulbs to washing machines
  • The key technology involved are cheap machine-to-machine “modules” that have a sensor  (e.g. temperature, pressure or movement) and communications electronics (e.g. GSM, WiFi) that allow data to be sent and received. These modules have fallen in price by 2/3 from $65 to under $20 in the last 4 years
    • In Germany, over 100m vending machines, vehicles, smoke alarms, and other devices are sharing information automatically as part of an M2M initiative launched last year by operators including Deutsche Telekom.
  • A key challenge – and opportunity – is to master the massive amounts of data produced by the M2M Internet – a single 787 flight generates half a terabyte of data – data is the fastest growing commodity on our planet.  Smart analytics will need to be predictive and adaptive - learn from experience and constantly improve.  The data challenge of M2M is more about filtering out the irrelevant than finding the golden nuggets.
  • A second key challenge/opportunity is standards - devices will need a common language in order to talk to each other – right now the data tower of babel is a cacophony of  languages; ZigBee, JenNet-IP, KNX, Digital Addressable Lighting Interface, WiFi and Near-Field Communication.
  • Finally, data security is the third challenge and opportunity – data theft, identify theft and hacking.  Already in London, of the 100,000+ wireless networks in London, 27% had few or no security.