The plot thickens when we consider issues of privacy and security the interconnection of billions of devices can potentially create. We’re at a similar inflection point in the IoT today, where consumer adoption is somewhat hampered by the cost and complexity of smart home features compared to their perceived current value. It wasn’t until the price of a phone came down to accessible levels and rates for use became more affordable that wireless phone networks and services began to truly take off. What is the value and what are the corresponding economics? Some of us are old enough to remember the $1,500 cellular bag phone and dollar per minute rates – and those phones didn’t even have cameras, GPS, or touch screens. The challenge of building out the IoT to its potential is twofold. And this goes well beyond consumer applications in the smart home, with equal or greater potential in commercial applications. The truth is that we are only beginning to scratch the surface of the IoT’s potential value, though we are seeing fast-emerging areas of promise. Just as the Internet evolved from point-to-point communications from a single researcher sharing content with a peer via the network, the IoT is still in its infancy.
But what would happen if they could each interconnect, extending the network to new nodes, creating exponential value? The value of smart thermostats, door locks or light bulbs has a certain limited application on its own. Today, we are seeing the same evolution of Metcalfe’s Law playing out in the proliferation of the Internet of Things (IoT). For the lay person, this means the more the network grows, the more we’ll see exponential gains in usefulness for users and in business benefit for those who monetize networks. Later in 2013, he again visited the topic and found that after analyzing Facebook data, the math still held true. Its value increases with the number of fax machines with which it can communicate. His initial research was based on fax machines and that a fax machine that can’t connect with another is basically useless. What should we focus on now to tackle challenges and maximize value?īack in the early 80’s, Robert Metcalfe theorized that the value of a network was proportional to the square of the number of connected users of a system. The value of the network, whether for websites or smart homes, continues to grow yet so do related technical and societal challenges.
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