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1 White Paper The Internet of Things How the Next Evolution of the Internet Is Changing Everything Author Dave Evans April 2011 Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 04/11 Cisco and/or its affiliates. All rights reserved.

2 White Paper The Internet of Things How the Next Evolution of the Internet Is Changing Everything will change net of Things (IoT), sometimes referred to as the Internet of Objects, The Inter . m like a bold statement, but consider the everything — including ourselves T his may see impact the Internet already has had on education, communication, business, science, gov ernment, and humanity. Clearly, the Internet is one of the most important and powerful creations in all of human history. Now consider that IoT represents the next evolution of the Internet, taking a huge leap in its ability to gather, analyze, and distri bute data that we can turn into information, knowledge, and, ultimately, wisdom. In this context, IoT becomes immensely important. Already, IoT projects are under way that promise to close the gap between poor and rich, most, and help us improve distribution of the world’s resources to those who need them understand our planet so we can be more proactive and less reactive. Even so, several barriers exist that threaten to slow IoT development, including the transition to IPv6, having a o — ven billions dards, and developing energy sources for millions e — common set of stan f minute sensors. However, as businesses, governments, standards bodies, and academia work together to erefore, is to solve these challenges, IoT will continue to progress. The goal of this paper, th educate you in plain and simple terms so you can be well versed in IoT and understand its potential to change everything we know to be true today. IoT Today itute of As with many new concepts, IoT’s roots can be traced back to the Massachusetts Inst - Technology (MIT), from work at the Auto ID Center. Founded in 1999, this group was working (RFID) and emerging sensing in the field of networked radio frequency identification ed four across of seven research universities located technologies. The labs consist continents. These institutions were chosen by the Auto - ID Center to design the architec ture 1 for IoT. Before we talk about the current state of IoT, it is important to agree on a definition. According ) IoT is simply the point in time when , to the Cisco Internet Business Solutions G roup ( IBSG 2 connect were or objects” things more ed to the Internet than people. “ In 2003, there were approximately 6.3 billion people living on the planet and 500 million 3 ng the number of connected devices by the vices connected to the Internet. de By dividi Based world population, we find that there was less than one (0.08) device for every person. didn’t yet exist in 2003 because the number of connected on Cisco IBSG’s definition, IoT n that ubiquitous devices such as smartphones were things was relatively small give just Steve Jobs, Apple’s CEO, didn’t unveil the iPhone until being introduced. For example, 4 uary 9, 2007 at the Macworld conference. Jan Cisco IBSG © 2011 Cisco and/or i ts affiliates. All rights reserved. Page 2 Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

3 White Paper E f devices connected brought the number o of smartphones and tablet PCs xplosive growth the world’s human population increased to 6.8 to the Internet to 12.5 billion in 2010, while billion, making the number of connected devices per person more than 1 (1.84 to be exact) for 5 the first time in history. Methodology 2009, a team of researchers in China studied Internet routing data in six ry In Janua - month intervals , from December 2001 to December 2006. Similar to the properties of Moore’s Law, Using this figure in in size every 5.32 y ears. doubles their findings showed that the Internet combination with the number of devices connected to the Internet in 2003 (500 million as , by determined h), and the world population according to the U.S. Census Forrester Researc 6 ed devices per person . Bureau, Cisco IBSG estimated the number of connect born “ IoT was between Refining these numbers further, Cisco IBSG estimates sometime ” Today, IoT is well under way, as initiatives such as 2008 and 2009 (see Figure 1). Cisco’s 7 smart grid co ntinue to progress . Planetary Skin, , and intelligent vehicles Figure 1. The Internet of Things Was “Born” Between 2008 and 2009 Source: Cisco IBSG, April 2011 Looking to the future, Cisco IBSG predicts there will be 25 billion devices connected to the Internet by 2015 and 50 billion by 2020. It is important to note that these estim ates do not he numbers presented take into account rapid advances in Internet or device technology ; t are based on what is known to be true today. Additionally, the number of connected devices per person may seem low. This is because the much of which is calculation is bas ed on the entire world population, not yet connected to the Internet. By reducing the population sample to people actually connected to the Internet, the t number of connected devices per person rises dramatically. For example, we know tha 3 Cisco IBSG © 2011 Cisco and/or i ts affiliates. All rights reserved. Page Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

4 White Paper 8 Using this figure, the number of 2 billion people use the Internet today. approximately connected devices per person jumps to 6.25 in 2010 , instead of 1.84. Of course , we know nothing remains static, especially when it comes to the Internet. Initiatives , such as Cisco’s Planetary Skin, HP’s central nervous system for the earth and advances (CeNSE), and smart dust , have the potential to add millions — e ven billions — o f sensors to the 9 Internet. As cows, water pipes, people, and even shoes, trees, and an imals become connected to IoT, the world has the potential to become a better place. “With a trillion sensors embedded in the environment — all connected by computing — systems, software, and services it will be possible to hear the heartbeat of the Earth, im pacting human interaction with the globe as profoundly as the Internet has revolutionized communication.” Peter Hartwell Senior Researcher, HP Labs IoT as a Network of Networks built n etworks. Today’s - Currently, IoT is made up of a loose collection of disparate, purpose cars, for example, have multiple networks to control engine function, safety features, communications systems, and so on. Commercial and residential buildings also have various control systems for heating, venting, and air conditioning (HV AC); telephone service; security; and lighting. As IoT evolves, these networks, and many others, will be connected with added security, analytics, and management capabilities (see Figure 2). This will allow IoT to become even more powerful in what it can h elp people achieve. Figure 2. IoT Can Be Viewed as a Network of Networks Source: Cisco IBSG, April 2011 ts affiliates. All rights reserved. Page 4 Cisco IBSG © 2011 Cisco and/or i Cisco Internet Business Solutions Group (IBSG) Cisco and/or its affiliates. All rights reserved. Cisco IBSG © 2011 01/11

5 White Paper Interestingly, this situation mirrors what the technology industry experienced in the early days d itself by of networking. In the late 1980s and early 1990s, Cisco, for example, establishe protocol routing, eventually leading to IP as - bringing disparate networks together with multi the common networking standard. With IoT, history is repeating itself, albeit on a much grander scale. Why Is IoT Important? Before we can begin to s ee the importance of IoT, it is first necessary to understand the differences between the Internet and the World Wide Web (or web) terms that are often — used interchangeably. The Internet is the physical layer or network made up of switches, routers, and ot her equipment. Its primary function is to transport information from one point to another quickly, reliably, and securely. The web, on the other hand, is an application layer that operates on top of the Internet. Its primary role is to provide an interface that makes the information flowing across the Internet usable. Evolution of the Web Versus the Internet The web has gone through several distinct evolutionary stages : First was the research phase, when the web was called the Advanced Research Stage 1. ARPANET). During this time, the web was primarily used by Network ( Projects Agency academia for research purposes. Stage 2. The second phase of the web can be coined “brochureware.” Characterized by the e need for almost every company to share domain name “gold rush,” this stage focused on th information on the Internet so that people could learn about products and services. Stage 3. The third evolution moved the web from static data to transactional information, where products and services could be bou ght and sold, and services could be delivered. During this phase, companies like eBay and Amazon.com exploded on the scene. This phase - com” boom and bust. also will be infamously remembered as the “dot Stage 4. The fourth stage, where we are now, is the “social” or “experience” web, where companies like Facebook, Twitter, and Groupon have become immensely popular and profitable (a notable distinction from the third stage of the web) by allowing people to photos, and video) about themselves with communicate, connect, and share information (text, friends, family, and colleagues. IoT: First Evolution of the Internet By comparison, the Internet has been on a steady path of development and improvement, but same thing that it was designed to do arguably hasn’t changed much. It essentially does the during the ARPANET era. For example, in the early days, there were several communication protocols, including AppleTalk, Token Ring, and IP. Today, the Internet is largely standardized on IP. es immensely important because it is the first real evolution of the In this context, IoT becom a leap that will lead to revolutionary applications that have the potential to — Internet Already, IoT dramatically improve the way people live, learn, work, and entertain themselves. n, light, moisture, stress ade the Internet has m ) sensory (temperature, pressure, vibratio , . allowing us to become more proactive and less reactive Cisco IBSG © 2011 Cisco and/or i ts affiliates. All rights reserved. Page 5 Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

6 White Paper until now have been unreachable. net is expanding into places that the Inter In addition, nternet devices into their own bodies to help doctors diagnose and Patients are ingesting I 10 Extremely s . can be placed on plants, mall sensors determine the causes of certain diseases 11 animals, and geologic features , and connected to the Internet At the other end of the . spectru m, the Internet is going into space through Cisco’s Internet Routing in Space (IRIS) 1 2 program. We Evolve Because We Communicate Humans evolve because they communicate. Once fire was discovered and shared, for day example - example, it didn’t need to be rediscovered, on ly communicated. A more modern y is the discovery of the helix structure of DNA , molecules that carr genetic information from other one generation to . After the article was published in a scientific paper by James an Watson and Fr ancis Crick in April 1953, the disciplines of medicine and genetics were able to 3 1 build on this information to take giant leaps forward. This principle of sharing information and building on discoveries can best be understood by ess data (see Figure 3). From bottom to top, the pyramid layers examining how humans proc . Data is the raw material that is processed include data, information, knowledge, and wisdom ds into information. Individual data by itself is not very useful, but volumes of it can identify tren come together and patterns. This and other sources of information to form knowledge. In the born simplest sense, knowledge is information of which someone is aware. Wisdom is then is timeless, from knowledge plus experience. While knowledge changes over time, wisdom all begins with the acquisition of data. it and Figure 3. Humans Turn Data into Wisdom SG, April 2011 Source: Cisco IB It is also important to note there is a direct correlation between the input (data) and output sdom people can obtain. (wisdom). The more data that is created, the more knowledge and wi IoT dramatically increases the amount of data available for us to process. This, coupled with the Internet’s ability to communicate this data, will enable people to advance even further. 6 Cisco IBSG © 2011 Page affiliates. All rights reserved. ts Cisco and/or i Cisco Internet Business Solutions Group (IBSG) Cisco and/or its affiliates. All rights reserved. Cisco IBSG © 2011 01/11

7 White Paper IoT: Critical for Human Progression As the p lanet’s population continues to increase, it becomes even more important for people to become stewards of the earth and its resources. In addition, people desire to live healthy, hey care about. By fulfilling, and comfortable lives for themselves, their families, and those t combining the ability of the next evolution of the Internet (IoT) to sense, collect, transmit, analyze, and distribute data on a massive scale with the way people process information, humanity will have the knowledge and wisdom it needs not only to survive, but to thrive in the coming months, years, decades, and centuries. IoT Applications: What Cows, Water Pipes, and People Have in Common When we crossed the threshold of connecting more objects than people to the Internet, a of opportunity opened for the creation of applications in the areas of huge window machine communication. In fact, the possibilities are - - automation, sensing, and machine to almost endless. The following examples highlight some of the ways IoT is changing people’s es for the better. liv ! Holy Cow The Economist In the world of IoT, even cows will be connected. A special report in titled . Sparked, a “Augmented B usiness” described how cows will be monitored (see ) Figure 4 up company, implants sensors in the e - Dutch start ars of cattle. This allows farmers to monitor , ensuring a healthier, more plentiful supply of meat cows’ health and track their movements . On average, each cow generates about 200 megabytes of for people to consume 4 1 information a year. Sensors. Figure 4. Even Cows Will Have Source: 2010. The Economist, Cisco and/or i ts affiliates. All rights reserved. Cisco IBSG © 2011 7 Page Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

8 White Paper Mumbai: A Tale of Two Cities ive economic impact, While greater efficiencies and new business models will have a posit the human aspect, in many ways, will provide the most important benefit of IoT. One of the areas where IoT can make a significant difference is in closing the poverty gap. Dr. C.K. mid: Eradicating Poverty Prahalad’s book, The Fortune at the Bottom of the Pyra T hrough provides some mind - boggling statics comparing Dharavi (the poorest neighborhood Profits, in Mumbai) to Warden Road (the better side of the city just blocks away). meter. This r is grade wate - municipal The amount people from Dharavi pay for $1.12 per cubic compares to $0.03 for residents of Warden Road. The injustice is clear : t he poor people of 5 1 times more for water (a basic human necessity). 7 Mumbai pay 3 The main source of the disparity is the higher cost of delivering u tility services to poorer neighborhoods because of infrastructure inefficiencies, problems such as leaks, and theft. According to an article in The Wall Street Journal of “Seven years ago, more than 50 percent , d. wasn't paid for by customers. A key the power distributed by North Delhi Power Lt challenge for power companies is redu cing theft by India's poor . ” Figure 5. Electric Utility Inefficiencies in India. Source: 2009. The Wall Street Journal, IoT, because of its ubiquitous sensors and connected systems, will provide authorities with more information and control in order to identify and fix these problems. This will allow utilities incentive to improve infrastructures in poorer to operate more profitably, giving them extra neighborhoods. More efficiency will also allow for lower prices, which, in turn, will encourage 6 1 those taking services for free to become paying customers. Cisco IBSG © 2011 Cisco and/or i 8 affiliates. All rights reserved. ts Page Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

9 White Paper Better Quality of Life for the Elderly be will people age 65 and older 1 billion population is aging. In fact, approximately The world’s 17 as classified IoT can . ” by the middle of the century working age - non having reached “ significantly improve quality of life for the surging number of elderly people. For example, imagine a small, wearable device that can detect a person’s vital signs and send an alert to a healthcare professional when a certain threshold has been reached, or sense when a person has fallen down and can’t get up. Challenges and Barriers to IoT Several barriers, however, have the potential to slow the development of IoT. The three largest are the deployment of IPv6, power for sensors, and agreement on standards. no real Deployment of IPv6. The world ran out of IPv4 addresses in February 2010. While impact has been seen by the general public, this situation has the potential to slow IoT’s progress since the potentially billions of new sensors will require unique IP addresses. In to configuration addition, IPv6 makes the management of networks easier due to au capabilities and offers improved security features. - sustaining. Sensor energy. For IoT to reach its full potential, sensors will need to be self Imagine changing batteries in billions of devices deployed across the planet and even into ce. Obviously, this isn’t possible. What’s needed is a way for sensors to generate spa 8 1 elements such as vibrations, light, and airflow. al In a significant electricity from environment flexible chip breakthrough, scientists announced a commercially viable nanogenerator — a at the — that uses body movements such as the pinch of a finger to generate electricity 241st 19 . in March 2011 National Meeting & Exposition of the American Chemical Society “This development [the nanogenerator] represents a milestone toward pr oducing portable electronics that can be powered by body movements without the use of batteries or electrical outlets. Our nanogenerators are poised to change lives in the future. Their potential is only limited by one's imagination.” Zhong Lin Wang cientist, Georgia Institute of Technology Lead S While much progress has been made in the area of standards, more is needed , Standards. especially in the areas of security, privacy, architecture, and communications. IEEE is just one izations working to solve these challenges by ensuring that IPv6 packets can be of the organ routed across different network types. It is important to note that while barriers and challenges exist, they are not insurmountable. will get worked out. It is only a matter of time. Given the benefits of IoT, these issues Next Steps As often happens, history is repeating itself. Just as in the early days when Cisco’s tagline was “The Science of Networking Networks,” IoT is at a stage where disparate networks and a e of sensors must come together and interoperate under a common set of standards. multitud Cisco IBSG © 2011 Cisco and/or i ts affiliates. All rights reserved. Page 9 Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

10 White Paper This effort will require businesses, governments, standards organizations, and academia to work together toward a common goal. Next, for IoT to gain acceptance among the gen eral populace, service providers and others must deliver applications that bring tangible value to peoples’ lives. IoT must not represent the advancement of technology for technology’s sake; the industry needs to demonstrate value in human terms. In concl usion, IoT represents the next evolution of the Internet. Given that humans advance and evolve by turning data into information, knowledge, and wisdom, IoT has the potential to for the better. How quickly we get there i s up to us. — change the world as we know it today c echnologist t hief c f hief uturist and For more information, please contact Dave Evans, Cisco ’ s for Cisco IBSG, at [email protected] . made critical contributions to the development he following individuals of this paper : T ● resident, Cisco IBSG Service Provider ractice P ice v Scott Puopolo, p ● anager, Cisco IT Customer Strategy & Success group m s Jawahar Sivasankaran, enior ● istinguished d JP Vasseur, ngineer, Cisco Emerging Technologies e ● Michael Adams, Cisco IBSG mmunications Strategy Practice Co Endnotes 1. Source: Wikipedia, 2011. Source: Cisco IBSG, 2011. 2. Sources: U.S. Census Bureau, 2010; Forrester Research, 2003. 3. Source: Wikipedia, 2010. 4. 5. Sources: Cisco IBSG, 2010; U.S. Census Bureau, 2010. t the exact number of devices connected to the Internet at While no one can predic 6. any given time, the methodology of applying a constant (Internet doubling in size every 5.32 years) to a generally agreed - upon number of connected devices at a rovides an estimate that is appropriate for the point in time (500 million in 2003) p purposes of this paper. Sources: “Internet Growth Follows Moore's Law Too,” Lisa Zyga, PhysOrg.com, January 14, 2009, http://www.physorg.com/news151162 452.html ; George Colony, Forrester Research founder and chief executive officer, March 10, 2003, - 873 ceo - storm - it - http://www.infoworld.com/t/platforms/forrester next - es servic - web - 7. Source: “Planetary Skin: A Global Platform for a New Era of Collaboration,” Juan - Carlos Castilla Rubio and Simon Willis, Cisco IBSG, March 2009, http://www.cisco.com/web/about/ac79/docs/pov/Planetary_Skin_POV_vFINAL_spw _jc_2.pdf Source: World Internet Stats: Usage and Population Statistics, June 30, 2010. 8. 9. Sources: Cisco, 2010; HP, 2010. Cisco and/or i ts affiliates. All rights reserved. Cisco IBSG © 2011 Page 10 Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

11 White Paper Source: “The Networked Pill,” Michael Chorost, 10. IT Technology Review, March 20, M 2008, http://www.technologyreview.com/biomedicine/20434/?a=f t in Your I Millimeter Computer, Want to Stick - 11. Source: “Researchers Debut One Cubic - ristopher Trout, Endadget, February 26, 2011, Eye,” Ch - one - - debut - http://www.engadget.com/2011/02/26/researchers millimeter - cubic - - to - want i/ - k computer stic Cisco’s Internet Routing in Space (IRIS) program uses the Cisco Space Router to 12. extend IP access using satellites. The router eliminates the need to send data to and consuming. Further, - from an extra ground station, which can be expensive and time isco Space Routers extend IP access to areas not covered by traditional ground C networks or 3G networks, delivering consistent and pervasive IP capabilities regardless of geographic location. 13. Source: “The Discovery of the Molecular Structure of DNA,” Nobel Prize.org. The Economist, Source: “Augmented Business,” November 2010. 14. 15. Source: Fortune at the Bottom of the Pyramid: Eradicating Poverty T hrough Profits, Dr. C.K. Prahalad. The Wall Street Journal, Source: “India Has Its Own Kind of Power Struggle,” Jack 16. ie Range, August 7, 2009. Source: United Nations, 2010. 17. Source: “Smart Dust Sensor Network with Piezoelectric Energy Harvesting,” Yee Win 18. Liang - - sg - .org/papers/34 http://www.icita Shwe and Yung C. Liang, ICITA, 2009, 217.pdf 19. Source: “First Practical Nanogenerator Produces Electricity with Pinch of the org.com/news/2011 - - 03 Fingers,” PhysOrg.com, March 29, 2011, http://www.phys - nanogenerator - electricity fingers.html Cisco and/or i ts affiliates. All rights reserved. Cisco IBSG © 2011 Page 11 Cisco Internet Business Solutions Group (IBSG) Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. 01/11

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