Apple Legitimizes The IoT

As with the iPod, it’s not the device. It’s the back-end system that supports it.

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There have been plenty of reviews this week about the new iPhone 6 and the Apple Watch, both of which are either extremely cool or ho-hum, depending upon the disposition of the reviewer. But what’s really significant about all of this has nothing to do with the device. It’s a follow-the-money innovation.

What made the iPod, and singlehandedly resurrected Apple’s reputation, wasn’t the MP3 player. It was iTunes. The back-end music delivery system revolutionized the music industry and made micropayments—not Apple’s idea—a thriving business approach. In fact, the idea was first floated by the World Wide Web Consortium in the 1990s, which ultimately abandoned the idea because its members were talking about payments of less than a penny. Apple’s genius was the 99-cent song, and a system to track it.

The new credit-card payment system that Apple set up with American Express, Visa and MasterCard is a logical extension of that system, and it adds a very important piece to the Internet of Things—the ability to do commerce using smart devices. Just having a centralized control for all devices in your home or your office or your car is interesting. Moreover, it’s likely that the killer consumer application will be having real-time health monitoring on your watch, which presumably will be coming to the Apple Watch and all other smart watches at some point in the future. But what really makes the IoT compelling is the ability to add things without ever using another device.

This is Apple’s real genius, and it’s about to unfold in a very big way. Sony and Microsoft pioneered much of the back end for customers, but Apple turned it into a mass-market opportunity. This is rather ironic, considering Apple lost the PC to Microsoft and its partners because it didn’t unbundle its graphical user interface—the subject of a long, drawn out legal case that ultimately became irrelevant. Google licensed its Android OS with great success, but it has struggled to enable a music- and video-sharing infrastructure that is as universally recognized as Apple’s.

Apple’s foray into the IoT infrastructure is the next logical step, and one that essentially turns on the switch for the IoT business exchange to begin. There will be hiccups, of course. Security will remain a concern, although Apple arguably has done better than anyone else at security because it owns many of the pieces. But the IoT is open to the world, and security will be much tougher to maintain.

Still, this is like the starting gun being fired at the Oklahoma land rush of 1889. Until now, the IoT has proceeded as a mish-mash of ideas. Apple’s entry into the market will legitimize it, setting off massive development—and likely overdevelopment—of all sorts of ideas and devices and business models. And virtually all of it will involve semiconductors with concerns for both power and performance, fast I/O, cloud-based infrastructures and lots and lots of memory. Let the next race begin.

Oklahoma_Land_Rush
Oklahoma Land Rush of 1889. Source: Wikipedia