Monday, January 6, 2014

A look back at 2013 and 3 predictions for the IoT in 2014

A quick look back at the 2013 year in IoT and three predictions for 2014.

I started this blog in May 2013 just when the “Internet of Things” was heating up and you may remember my post using Google trends in September showing a huge increase in interest on the phrase “internet of things” over time and that continued to a new peak in November (December traffic drops due to the holidays).  Here is the latest chart:

I expect it to hit even new highs this January as the annual CES show in Las Vegas jumps on the bandwagon and the media feast on IoT.  One interesting side note to the trend chart is that interest in IoT is even higher in China and India (by searches) than it is here in the US which goes to show it’s a global phenomenon and the US isn’t the leader.  Looking back at 2013 I don’t think we can call it the year of IoT because so few concrete examples of the IoT are in action and I’m not sure 2014 will see a flood of IoT applications but I predict 2015 will be the first year when IoT becomes a force in technology.  

Many pundits have weighed in on 2013 as a year in technology, some saying nothing happened and others countering with a long list of milestones (Farhad Manjoo in the WSJ) for example.  From my perspective (as a semiconductor guy far from the social media bubble) I think there were 3 major developments we need to review which point us to what may happen in 2014 in IoT and the broader semiconductor market. 

First I was amazed by the stock price of Micron which rocketed 228% in 2013 (this is not a typo).  When was the last time those of us in Semi’s saw anything like this for a company of Micron’s size? (Feel free to comment).  There are lots of reasons for Micron’s performance in 2013 but the biggest was the shift to flash memory not just in mobile but the cloud and I think this is going to accelerate in 2014.  The memory market is notoriously volatile and many canny investors will be shorting Micron in 2014 but given the huge demand for memory (see below) I think Micron (and most memory vendors) will have another big year.  I base this on charts like the one below from IDC & Intel that now seems to appear in every semiconductor road map presentation and it’s all about getting to 200 billion devices connected to the Internet; yes the real IoT.    

The problem with exponential growth though is that the numbers become mind boggling when you start to do even rudimentary analysis.  Many of these IoT devices (think jet engines) throw off data at such a rate that the storage needs of the IoT cloud will also need to grow exponentially.  

Some of this storage will be flash (good news for Micron) but flash isn’t keeping up with capacity demands the way a good old hard drive can, so vendors like Seagate and Western Digital still think they are going to sell millions of high terabyte drives in the next five years.  All of those terabyte drives are going to have to store 6,000 exabytes of data in 2020 (according to WD) and that’s going to drive huge sales of storage and cloud related semiconductors (maybe Avago’s purchase of LSI Logic was perfectly timed?)
This does point to a much needed inflection point in memory technology and a huge investment opportunity for the company that cracks the storage problem.  As an aside the other giant nut to be cracked is battery storage capacity which yet again would be another huge inflection point in world history if someone can produce a battery for electric cars with 300 mile range at reasonable weight.  Isn’t it interesting that the worlds greatest technology and environmental challenges actually come down to the storage of electrons!

My second 2013 to 2014 extrapolation point is whats happening in crowd funding,  I wrote about this back in June of 2012 in my EETimes blog when I ordered a Pebble watch but since then there have been some very significant products (many IoT by the way)  and companies emerging from crowd funding roots.  Rich Quinell of did a nice synopsis of the top 12 companies by funding and I think several of these could become major players in a few years (Canary, Smart Things and Scanadu for example).  You can buy Pebble watches now at Best Buy so I think they have crossed the chasm already.  Crowdfunding is one of those Internet innovations that few people could have predicted just a couple of years ago but it has huge implications for the way products are brought to market and it removes venture capital from the equation and tests the viability of a product in real time which is the ultimate market test. 

My third prediction of IoT developments and opportunities in 2014 is about security and I’ve been writing about the huge issue of data security and ownership from my very first blog (including my 7 fundamentals of IoT).  In December 2013 the latest large data breach hit Target Stores who lost 40 million credit and debit card records to hackers and if you do more research you’ll find those card numbers are on the black market already.  Back in my tech media days we wrote about systems security all the time but it never gets the attention it deserves until something catastrophic happens and I think this will be true in IoT as well.  In the IoT market there probably won’t be a lot of credit card or financial data flowing through passive data collection devices but my fear is that data could still be highly valuable, even personal (health records for example) so its going to be an issue of how secure it is. 

As always in large complex systems there is always the inevitability of unintended consequences and my current worry is who actually owns the data?  Data mining could become so valuable in terms of business and financial decision making that whoever owns the data owns the profits.  How we find a way to freely share data in an open source way that benefits the greater good is going to be hotly debated  and maybe 2014 will be the year we do something about it.
So there are my 3 big predictions for 2014:

  1. Data volume will start to grow exponentially therefore creating opportunities for many semiconductor and cloud companies (who will be up 200% in 2014?). 
  2. Crowd funding will continue to evolve and be a major factor in the development of the IoT, one of these companies will be big in 2014. 
  3. Last but not least the security wars are just breaking out and they need to be solved or the IoT revolution may be stalled (watch for the first IoT security breach).
Please comment below and get in touch if you are coming to Silicon Valley in 2014.