There's a huge new market developing in single-chip devices that monitor conditions and report back over wireless networks. I began covering it in 2002 as “the world of Always On,” because such devices would always be active, but it's now generally known as The Internet of Things or the Embedded Devices market.
IBM calls it The Internet of Things, and they're using open source to try and crack it.
The idea is that low-powered network sensors in vehicles, bridges or even household devices would report back on status and stress, alerting their owners to problems before they develop. In your body, such devices could monitor your heart or lung function, alerting doctors to an impending heart attack before you're aware of it.
Microsoft is using the phrase "embedded devices," a business-to-business market that can improve logistics and become a $2 trillion industry by 2015. Its play is to make its software for these systems, called Windows Embedded, part of its Servers and Tools business, then work with Windows Server developers to create applications.
There are both business and consumer applications for this technology. But there are still problems in networking this kind of intermittent data on intermittent networks. The company that can build the largest collection of supporters is going to win the day.
It's going to be a good test of open source vs. proprietary business models. My money's on open source, working from the bottom-up and finding ways to excite hobbyists in consumer markets. Microsoft's is obviously on its business partners solving big problems from the top-down, and applying them to the general market.
Disclosure: I am long IBM.