Verizon Issues 'State Of The Internet' Address, Takes Aim At IoT

| About: Verizon Communications (VZ)

Summary

Verizon published its view of the Internet of Things.

Verizon's mobile presence gives it insight into what current IoT customers are doing and what's coming in the near future.

Second, Verizon wants to be much more than just a data pipeline.

By Greg Miller

Coming soon to a universe near you: the Internet.

Not your regular, everyday internet, though. A ramped-up, turbo-charged version of the web that will dramatically change our lives.

Don't believe me? It's already happening.

We've previously written on the new "universes" that companies like Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Facebook Inc. (NASDAQ:FB) are creating that will allow devices connected to the Internet of Things (IoT) to communicate with each other and their human or machine controllers.

We've written about moves that IBM Corp. (NYSE:IBM) is making with its Watson super computer in harnessing the power of IoT to improve weather forecasting.

And we've written about the barriers to entry for the IoT as well as challenges to privacy and security.

Another big player just jumped into the fray, too…

Another Tech Gladiator Issues Some Fat Predictions

Yesterday, Verizon Communications (NYSE:VZ) published its view of the Internet of Things.

This is important for two reasons.

First, Verizon is obviously a leader in mobile data. After all, it's Verizon's network, plus its rivals' networks, Wi-Fi and other technologies that form the backbone of the IoT. That gives Verizon insight into what current IoT customers are doing and what's coming in the near future.

Second, Verizon wants to be much more than just a data pipeline. Just as it wants to own content through its purchase of AOL and rumored interest in some of Yahoo's (NASDAQ:YHOO) assets, Verizon wants to own major parts of the Internet of Things, too. Indeed, it's already got "universes" of its own for the utility and transportation industries.

So what does Verizon see?

In short… massive growth, just as we've predicted here.

Verizon estimates that the IoT market will grow to 25.6 billion devices in 2019 and over 30 billion in 2020.

If that sounds large, it's actually on the conservative side of some estimates. Cisco Systems (NASDAQ:CSCO), for example, estimates there will be 500 billion connected IoT devices by 2025.

Either way, it's still enormous growth. So much, in fact, that it's hard to count all the devices. Verizon says there are 10 billion IoT devices in use today, while other estimates say there are only half that many.

But as my colleague Louis Basenese has said, the exact number doesn't matter much.

Bottom line: This is a big market - and it's only going to get much bigger.

One surprising revelation from Verizon, though?

The Ultimate "Forced Adoption"

The company commented on how regulation is driving much of IoT's growth.

Specifically, it pins a lot of the growth of smart meters to the Energy Policy Act of 2007, for example.

And other increasing regulation - from drugs to food to construction equipment - will drive IoT infrastructures to automate sourcing histories, shipping times and more. For instance, if a restaurant has an outbreak of sickness among its customers (Chipotle, anyone?), it can take days or weeks to find the source.

But data collected by the IoT will allow the restaurant to know instantly where every possible source of contamination comes from - it will know if the problem was a farm, a warehouse, the restaurant itself, or even a single truck that wasn't properly cleaned.

And crucially, restaurants will be able to prevent many outbreaks - they'll know if a truck spent too much time in the sun with its cooler off and know not to use the products from that truck.

The government is heavily involved in the IoT - primarily with smart cities.

Smart cities involve much more than tracking streetlights to save energy and illuminate potentially dangerous dark spots.

Cities are employing IoT devices to let landlords compare their buildings to others to see where they can conserve energy... they're building Wi-Fi networks so mobile users don't have to hope that their cellular network doesn't cut out in any given area... they're even finding potholes as they form.

And in the future, motorists will receive a text message telling them where the nearest empty parking space is to their destination.

"Regulation" is often a dirty word... but in this case, it's the ultimate form of "forced adoption."

The most interesting insight from Verizon, however?

Big Opportunity for Big Data

The company notes that at the moment, much of the data being collected by all these devices is actually being wasted.

It estimates that only 8% of businesses are using even 25% of the data they're collecting.

So what's the point, you may ask?

Well, forced adoption doesn't always mean fast adoption.

The IoT is a work in progress - and the trend is pointing higher. For example, half of businesses plan to be using over 25% of that data in two to three years.

This represents a big opportunity for Big Data.

However, only a few companies have the capabilities to process and analyze all of the data that will soon be available to them. Most companies will need help organizing and using the data for their own aims - whether to increase safety, lower costs, or design new products and services that tap into customers' needs.

Today's Menu: Oysters and Wine… With an Assist From the Internet

Verizon uses the examples of an oyster farmer in Massachusetts and a vineyard in Maine.

Neither company has the scale to develop their own IoT analytics. But with help (from Verizon, of course), they can monitor their oysters and grapes in ways they previously couldn't. For example, customizing delivery of water and food.

Once harvested, the companies can track their products all the way to end users - particularly important for oysters, of course, since they go bad so quickly.

But even for the winemaker, knowing where its wine is piling up in a distributor's warehouse and where it's selling well allows the winemaker to focus its sales and marketing efforts and even plan what grape production to increase and which to decrease.

Verizon's point here is one we've made before: The Internet of Things isn't just one giant market... it's tens of thousands of smaller markets.

The service component of these markets represents an even bigger opportunity than the device component. And ultimately, the rewards will go to the companies that can help other firms collect, analyze and use the massive amounts of data to achieve their business objectives.

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