For years, tech visionaries have spun dreams of a world of connected, communicating machines -- what they call the Internet of Things. Some gurus predict that within a few years, there could be more gizmos chattering away over the Net than there are people. New wireless technologies such as Wi-Fi and ZigBee that can link computers, consumer electronics, vehicles, and millions of other devices are vastly speeding the process. "This is going to be very big," says Ian Barkin, managing director of researcher FocalPoint Group in San Francisco. By 2008, he figures, machine-to-machine (M2M) communication could drive a $180 billion annual business in hardware, software, and services, up from about $34 billion today.
These talkative devices need an on-ramp to the Internet to share their information. And that's where mobile-phone companies see opportunity. Equipment makers such as Nokia Corp. (NOK) and Sony Ericsson Mobile Communications are churning out tiny cellular radios that cost as little as $30 -- half the price of a few years ago -- that can be built into everything from cars to home heart monitors. Once fitted, the devices could send status reports or cries for help. Large mobile operators such as Sprint PCS Group (PCS) and Singapore Telecommunications (SGTSY) are waking up to the market. FocalPoint thinks carriers could score $2.5 billion in revenues this year and $10 billion in 2008 from transmitting M2M data.
Nobody has pursued machine-to-machine communications harder than France T?l?com's (FTE) mobile subsidiary, Orange. On Apr. 8, the company rolled out an ambitious program called M2M Connect that offers lower data prices and a suite of software tools to help European companies jump on the M2M bandwagon. It's a big step from a few years ago, when overpriced services and immature technology made M2M a nonstarter for carriers. Philippe Bernard, vice-president of Orange Business Solutions, figures M2M applications could hit 20% of the company's data traffic in three years.
Large corporations already are discovering new applications for wireless. Nestl? (NSRGY) is installing hundreds of ice-cream vending machines in France and England that send daily reports on their sales and notify drivers if they're running low on Maxibon sandwiches or Extr?me cones. Canadian train and plane maker Bombardier Inc. (BBD.B) has fitted 1,000 railcars in Britain with radio devices that transmit reams of preventive maintenance data. And Dutch giant Royal Philips Electronics (PHG) wants to put wireless links in all of its products, from entertainment gear to medical systems. It's even developing technology that links light fixtures using ZigBee radios. That will let companies monitor and control usage without building costly wired networks. ZigBee systems can even be tied into the mobile network. That way, if the lights are left on over the weekend, the building manager could be notified with a text message on his mobile phone -- and he could message back to turn them off.
Making big M2M applications fly is still tricky. The toughest problem is tying scads of connected gizmos into legacy corporate-data systems. Solving this problem is spurring companies to collaborate. Software giant SAP (SAP) struck a partnership with Coca-Cola Enterprises Inc. (CCE) in February to help it link a new automated bottle-delivery system to its central databases. And Nokia is teaming with Hewlett-Packard Co. (HPQ) to develop computer systems that are better able to track and manage wireless-enabled assets.
In the end, companies likely will harness a mix of wireless systems. Packages in the back of a truck might talk to the driver using a ZigBee network, sending a warning if something tips over or breaks. At the loading dock, signals could be gathered and sent to tracking systems via Wi-Fi. On the road, the data would phone home over the cellular network. It's that enticing mix of local and remote communications, all seamlessly linked together, that's inspiring a rush to construct the new Internet of Things. By Andy Reinhardt in Paris