In future accounts of milestone events in human history, the creation of the smartphone will almost certainly join the advent of the steam engine, and perhaps even the wheel as paramount in impact.
The smartphone opened the existing Internet to possibilities undreamed of. Without a doubt the advent of the Internet itself will make the list as well, but technology experts tell us the original Internet was only the “first wave” of what is to come as it was “fixed”. The smartphone with the addition of mobile access to the Net was the second wave. Now the third wave – the Internet of Things – is here and growing at breathtaking speed.
Already acknowledged as one of the next great Mega-Trend in technology, consumers and companies can expect to see the number of “things” connecting us to the internet and with each other to explode in the very near future. Consider the following graph:
One of the world’s largest Information Technology research and advisory companies, Gartner Inc. (NYSE:IT) estimates 5.5 million additional devices will get connected to the Internet each day throughout 2016.
Investors researching the trend will quickly encounter semantic confusion over the terms “Internet of Things” versus “Internet of Everything.” The argument in favor of using “Everything” may seem to be largely semantic but it does make some sense. A “Thing” is a physical object such as your home’s heating and cooling system. Existing software applications or “apps” allow you to modify system settings remotely. “Everything” enters the picture from the reams of relevant weather data available from multiple sources, all available on the Internet, but not tied to a specific device.
Companies pursuing Internet of Everything solutions develop software that connects the HVAC system with that data, allowing alerts to be sent to the consumer suggesting changing weather conditions that might merit modifying desired temperature.
In reality the distinction is relatively meaningless to investors interested in the potential profitability of the trend. The forecasted dollar amounts spent in the Internet of Things space is staggering. Between 2014 and the end of 2016 spending is expected to increase close to 180% with additional growth of close to 110% by the end of the decade. The following graph comes from US-based international research and consulting firm, Frost and Sullivan.
Note the forecast is not global, but restricted to the Asia Pacific Region with the obvious implications for Australian based companies. As one would expect investors are already making investments in stocks of companies poised to profit from this Mega-Trend and will continue to do so. But there is already something new on the horizon to consider.
Whether one considers it a fourth wave or a logical extension of the Internet of Things, consumers and companies alike are about to see major improvements in the way they connect to the expanding number of devices, smartphone apps and Internet websites. The “Internet of Me” is here.
Internet of Me applications are expected to solve the complexities and confusion inherent in proliferation of devices to which we can connect and which connect to each other. Regardless of the means of connection – desktop, smartphone, or wearable devices – consumers and companies alike face the daunting task of accessing multiple apps to achieve desired ends. In addition to the number of connected devices, there is the maddening problems created by different API’s (Application Program Interface) employed by different device manufacturers. Their strategy is obvious, locking you in to their own proprietary ecosystem.
To illustrate the essence of the Internet of Me, consider the example of connected appliances for cooking and food storage. At the 2015 International Consumer Electronics Show US based manufacturer Whirlpool introduced a prototype of its “kitchen of the future” concept, which could be ready as soon as 2020. The model connects a Whirlpool Stove with a Whirlpool Refrigerator with sensing storage bins. The bins are essentially “smart vessels” that allows the system to recommend cooking recipes based on available foods as well as alerts on foods approaching spoilage status.
Now here’s where the Internet of Me comes into play. The Whirlpool model can tell you what ingredients you need to complete a recommended recipe, but where do you go to find them or get the best price? Grocery Shopping Apps exist but most are independent, as are many other home-related smart devices like security systems and HVAC controls. Add to that independent personal budgeting apps and financial apps for banking and credit card usage. In short, the consumer has no means of central control for their apps. Businesses also have multiple smart device connections lacking a central controlling center.
What’s coming are single application program interfaces not only allowing you to connect directly with multiple devices from one source, but also to “learn” your personal preferences and anticipate future needs. Enter the parameters of an upcoming vacation and the interface can modify everything using interconnected data streams. The kitchen tells you what needs to be eaten or disposed of prior to leaving; security system settings are modified and weather forecasting data adjusts heating and air-conditioning requirements.
There are currently two companies working in the Internet of Me space that should be of interest to ASX investors. One of them, Xped Limited (XPE), went public after a reverse merger, beginning its new life on the ASX as XPE on 5 April of this year.
The second, US Silicon Valley based OpenDNA, closed its IPO offering in early November and is awaiting a listing date with a stock code of DNA.
Xped began in Perth but is now headquartered in Singapore, although research and development operations remain here. The company has developed an Auto Discovery Remote Control (ADRC) technology that enables individual smart devices to be controlled from a central smartphone app once the phone is paired with the device. ADRC provides a solution to the problem consumers face interacting with smart devices with proprietary standards, creating closed ecosystems. What manufacturers of smart devices want is not an Internet of Things, but rather an Internet of (Individual Manufacturer) Things.
XPED’s ADRC solution has been under development for seven years, at a cost of $6 million, right out of the wallets of its founders. Xped likens its technology to a device browser, with the same benefits of web browsers – access to devices or sites regardless of proprietary standards.
The technology, based on Near Field Communication (NFC) is also available for business use, allowing the app to access devices on the premise without internet access. For remote usage, access is available through the Internet.
For Xped to be successful it needs contractual agreements with device manufacturers. Revenues will be generated by licensing fees and service contracts. Obviously this is a high risk investment, as not only does it require commitments from device manufacturers, but also the Internet of Me space is attracting some big name players, including Telstra (TLS) here in Australia. However, according to the company the cost of the initial technology is minimal, similar to adopting Bluetooth or Wi-Fi software or chips. For businesses XPED offers cloud based data analytics of customer behavior.
Xped already has a licensing agreement with Chinese based privately held Telink Semiconductor. Xped is currently in a trading halt, pending the announcement of a private placement with sophisticated investors.
OpenDNA is a digital analytics company that uses its proprietary artificial intelligence and machine learning software to create profiles unique to individual business customers as well as individual consumers. The platform allows software code embedded in websites, smartphone apps, and smart devices to continuously provide user interest data. As individuals access an OpenDNA embedded app, website, or device their actions are fed to the OpenDNA platform which then begins building customised user profiles for client company analysis. The company will generate revenue from business customer licensing fees based on the number of their users and their level of activity. The benefit for individual users, which comes free of charge, is the ability to control their own data. Everyone who uses the Internet or smartphone apps to search for a product gets bombarded with a dizzying assortment of contacts regarding related products, regardless of their true interest. The initial search may have been a casual inquiry or a one-time purchase.
Based on activity, the e platform has the ability to “learn” the user’s genuine interests and provide information truly relevant to the user, based on the users actual interactions with OpenDNA connected websites and applications. The resultant unique User Profile remains the same for all sites and apps. In addition, the platform has a “recommendation engine” that provides information of interest restricted to the activities tracked in the User Profile.
The idea of incorporating artificial intelligence into data analytics for both the consumer and the corporation is intriguing, but as enticing as that may sound; OpenDNA comes with all the risks of a start-up company, and more. First and foremost, the AIS platform software may be proprietary but as of this writing it is still in patent application status, with the company planning to apply for patents in each country where it does business. Perhaps of more significance is the fact the company’s source code could be passed along to unauthorized parties, despite its secrecy policy with both staff and contractors.
The company developed an iOS version of its AIS platform made available on the Apple App Store and received favorable feedback while reaching 23,000 users over seven months. The final iOS version is expected to be ready for release by the end of 2016 with a generic Android version available in 2017.
Funds from the IPO will go primarily for marketing and brand and technology development. Despite the risk, technology experts tell us the sheer mass of data being generated by smart devices necessitate incorporating AI (Artificial Intelligence) into the Internet of Things, making OpenDNA worthy of a place on your watch list.
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