Within a few years, billions of Internet-enabled microprocessors will provide digital intelligence and connectivity for almost every commercial and industrial product and appliance, extending the Internet into most aspects of our lives – this is the concept of the pervasive Internet.

There were approximately 7 billion microprocessors sold in 2001, and only 120 million of them (about 2%) were intended for PCs. It is estimated that in five years, the number of processors in the average home could grow from 40 to 280 and the number of embedded chips used to support increasingly intelligent devices could grow to over 9 billion.

Soon everything will be Internet-connected

Today's fragmented market environment generates a great gap between product manufacturers and their customers. Most companies try to control their brand, their customers, their products, their information — the things that drive growth and value. Wouldn't it be better if they could speak directly with the customer, or better – directly to their product? Technologies exist right now that can do that – and help product companies regain control of their business.

The next era of connectivity – device connectivity – will allow product suppliers to provide increased benefits for their end customers, hence providing increased competitive value. Device networking allows product and service companies to communicate with their products, without the interruption that might be imposed on an end consumer. This allows both the supplier and the customer to benefit significantly.

Imagine any product you know being Internet-enabled – an automobile, a house, a washing machine, an office thermostat – these all have the potential to be networked. Skeptics think that this kind of "gadgetry" has few practical applications for the user of the product (do I really need to talk to my washing-machine?) But, it's not the consumers that initially have the most to gain from device networking — it's the businesses that support them.

Manufacturers will use their connected products to develop customer service relationships that ultimately recreate the nature of revenue growth and customer management in an information economy. Product companies will use device-networking technology to reduce, or even eliminate (for their customers) the hassles of product ownership. This allows the manufacturer to reduce costs, achieve revenue growth, and pursue new opportunity areas. Device networking is not only possible, but also essential.

What happens when product information is networked?

In the current paradigm, the value of a product typically related to the product itself. In consumer markets customers purchase a device with the best value for their needs – quality, reliability, function, style, warranty, service. Product transactions generate minimal information for the manufacturer – usually nothing more than date and location of purchase – and no actionable information at all. As soon as the product leaves the store, the manufacturer has lost touch with it altogether, unless the customer voluntarily elects to register the product for warranty purposes.

A networked product continues to generate informational value over its lifespan. The manufacturer can now know where the device is located, when it was installed, critical specifications, diagnostics, availability of spares, replacement alternatives, repair instructions, and so on. This information can then be used throughout an organization for sales and marketing efforts, product development, and customer service.

Industrial automation – many links in a chain of alliances

In industrial automation markets, the value of products relate to the functions they serve when connected as parts of total systems producing whatever the end-user wants – tennis-balls or toasters, soap or semiconductors, jelly beans or jet-engines. The objective is improved productivity. When the product functionality is less than that of the overall system – accuracy, reliability, maintainability  – there is a problem. When a product's features exceed system requirements it may be needlessly expensive; and when service life exceeds that of the system, it becomes surplus inventory. I have seen hundreds of perfectly good instruments sitting on a shelf after a system has been taken out of service; they usually get dumped as junk, or disposed off as surplus. The challenge is – how to fit the product to the need?

In the B2B world, transactions between companies involve chains of alliances that extend far beyond the simple customer/seller transaction. An industrial end-user may buy a SCADA system from a systems integrator. To build the system the SI buys PLCs from the manufacturers or their Distributors, generic software from other suppliers, and other standard hardware from a variety of sources. The SI then utilizes knowledge and experience to "integrate" all the pieces to meet the specific needs of the end-user. In addition, the SI is usually responsible for startup and service during the useful life of the equipment.

The complex supply chains in the industrial business world require constant interaction regarding total systems operation, expensive site visits for maintenance, and complicated upgrades that can cause system downtime. Industrial automation products and systems have a huge impact on the efficiency, or even survival, of businesses. The ability to monitor remotely and diagnose problems, upgrade programs and equipment, and generally maximize systems uptime saves companies millions of dollars.

Horizontal vs. vertical applications

When products become networked and accessible by remote users, supporting applications are necessary for maximum product utility. "Horizontal" applications are fairly generalized and include features and functions that can be applied to a variety of products and systems across different markets. Horizontal applications tend to become cumulative; a company working with an application meant for the automotive test market might recognize that their technology also applies to power and transportation.

Features of horizontal application may be the same for many markets – it is the specific application that makes the technology "vertical". For example, a company specializing in a horizontal application like remote monitoring may sell their product to a power company that wants to watch over their systems. The monitoring of those systems is now a vertical application for power.

Since most companies are only just beginning to understand the impact of the Pervasive Internet, most horizontal applications are still in the process of finding their vertical applications. As horizontal applications develop and become more financially and technologically viable, more and more market-specific vertical applications will emerge.

Common horizontal features and functions (with vertical extensions) include:

·         Status information: Reporting product operation, performance and usage.

·         Diagnostics: Remote monitoring, troubleshooting, repair and maintenance of networked devices.

·         Upgradability: Improving the performance or features of products or services.

·         Profiling: Tracking variations in performance, usage, and territorial requirements – used to create a customized or predictive response for specific end-users.

·         Replacement, replenishment & new business opportunities: Monitoring consumption and buying patterns, to initiate transactions when levels of a consumable are low, or orders for new requirements.

·         Location mapping & logistics: Tracking and optimization of product service & support.

These applications have value whether they are deployed individually or collectively in any market. In many cases, they will need to be integrated into existing enterprise systems, at a cost that will reduce as the value of the connections increase through providing the information flow. This quickly develops maximum potential for existing systems.

The Pervasive Internet is here

The convergence of smart devices with the Internet is creating a profound shift in the development of the digital revolution - creating a global "digital nervous system."  The exponential growth of device networking technology is changing the landscape very quickly. Products and companies that fail to exploit this next wave of the digital revolution will simply obsolete themselves.

Harbor Research – The Pervasive Internet Report:

http://www.harborresearch.com/pir_demo/frameset.php

Jim Pinto is an industry analyst and commentator, writer, technology entrepreneur, investor and futurist.

You can email him at: jim@jimpinto.com. Or look at his poems, prognostications and predictions on his website: www.JimPinto.com