My shirt’s paying for the hotdog!

The phrase that fell from the lips of Jim Patton, an American TV anchor, seemed harmless. During his broadcast of local news he reported how, days before, a six-year-old girl  had – quite unintentionally – ordered a 160 dollar dollhouse through "Alexa", Amazon's voice-activated digital assistant. Patton joked that the girl had simply said "Alexa, order me a dollhouse". The TV anchor's repetition of the phrase had a colossal impact. Countless Alexas  in the region around San Diego, California spontaneously attempted to order dollhouses.

It was all a lesson – one that shows that while digital networking in daily life is by no means perfect, the Internet of Things (IoT) is making inroads fast – and not only in livingrooms. Everyday devices such as loudspeakers, refrigerators or automobiles are being equipped with sensors which - via WLAN or Bluetooth - enable them to communicate not only with their human owners, but also with each other.

Lightning development

That the term "Internet of Things“ was only coined in 1999 by  Kevin Ashton, a British tech pioneer, underscores the pace of change. The success of smartphones since 2007 and tablets since 2010 has helped the Internet of Things to take off. And further trends have emerged that are closely related to the so-called "everything network". These include the rapid advance of artificial intelligence (AI) and the success of cloud computing, where data is no longer stored and processed on the physical device but on the net.
 
In many instances, linking products and sensors with the cloud is unavoidable given the sheer volume of data constantly being generated. While driving, a connected car produces roughly 25 gigabytes of data every hour.  Bosch, for example, has developed a system where ultrasound sensors scan the side of the road for parking spaces and transmit this information to the cloud^[1].  By 2020, Deutsche Telekom intends to equip roughly 11,000 parking spaces in the German city of Hamburg with sensors so that in the future cars can save drivers from having to search^[2].

 
The car pays for the parking spot

Automobiles could also soon pay for parking. IOTA, a cryptocurrency developed in Berlin with the active involvement of German conglomerates such as VW and Bosch, intends to make this possible. Using this cryptocurrency, smart refrigerators, for example, can already  order milk automatically when it is running low and even pay for it. The automaker, Jaguar, is also thinking along similar lines. In collaboration with Shell, its newest models allow drivers to pay for gas at the pump using an app that downloads to the in-car infotainment touchscreen display. The driver can then use Apple Pay or PayPal to pay for the gas from within the vehicle. The display shows a receipt of the payment and forwards a copy to the driver's email address. 
 
The Internet of Things is, therefore, no longer a vision of the future. It is even present in soccer stadiums. Since the beginning of the soccer season, fans of FC Schalke 04, for example, have been able to pay for their stadium hotdog by simply touching the arm of their fan shirt. This is made possible by a small chip located under the sponsor logo of the online supermarket AllyouneedFresh, in which Deutsche Post holds the majority stake.
 
A further wearable – i.e. networked technology such as smartwatches or data glasses that users carry on them – is the "UV Sense“ from L’Oreal. This small piece of high-tech fits exactly on a finger nail and warns beachgoers when they should re-apply sun cream.
 
Siemens is thinking on an even bigger scale: Its "Industrie 4.0” concept merges the physical world with the virtual world. In the factory of the future, machines and delivery chains will largely organize themselves. Using proprietary software, products can also be developed and tested extensively in the virtual world before a physical example is ever produced. The Munich-based company is also involved in the construction of smart cities around the globe where millions of sensors in homes, street lamps, busses or parking garages are linked with each other to save electricity or optimize traffic.


A connection every 18 seconds

These examples show how quickly the Internet of Things is taking over everyday life – and  the huge potential it offers to companies. According to market researchers at Gartner, roughly 2 trillion dollars were spent in 2017 on products and services connected with the Internet of Things – most of it on consumer electronics.
 
Over 8.4 billion devices linked to the Internet were used worldwide last year.

Gartner projects that by 2020 this number will probably increase to roughly 20.4 billion.^[3].  By 2025, according to the IT consultants at International Data Corporation (IDC), every person on earth will interact with a networked device every 18 seconds^[4].

The IoT trend can benefit not only manufacturers of consumer goods but also manufacturers of machinery, electronics groups, infrastructure providers, providers of financial services, auto parts suppliers, global conglomerates or highly specialized SMEs. It is therefore also an exciting area for investors. But they should keep a very close eye on the automatic ordering feature of Alexa & Co. After all, dollhouses – unlike real houses – are not preferred investments.