Following Real Money On The IoT

We probably need to change the wording, but the next killer apps for the Internet of Things likely will be ones that save lives.

A common approach by vendors looking to capitalize on the IoT is simply to mash together different vertical segments and technologies that never went together in the past. A crowd-based real-time GPS/traffic system like Waze would never have existed a decade ago (it was created by Israel-based LinQmap in 2008 and sold to Google last June for $1.1 billion). There are plenty of other examples like Waze.

But the real money will come from mashing up markets that affect human health, not just measuring fitness steps or heart beats per minute. This will involve highly sensitive, real-time monitoring of an aging population across many parts of the globe.

A report from the United Nations says that in 1950, 8% of the world’s population was older than 60. In 2013, that number increased to 12%, and it is projected to increase to 21% in 2050.

That only tells part of the story, though. The report notes that the percentage of the population in less-developed regions has increased rapidly since the 1960s, with about two-thirds of those over 60 now living in developing nations. That means solutions have to be effective, inexpensive, low power and easy to use—basically everything that has defined the semiconductor industry for the past 50 years.

What makes this story so compelling for technology—and for business, which is the other key ingredient—is that many of the new opportunities in this area are not regulated by the government. A pulse monitor strapped to the wrist is considered exercise equipment. Add in sensors that can pick up minute changes in heartbeats and chemicals in the skin and it’s still not going to require approval from the FDA or EU health agencies, meaning the time to market and the development costs are significantly lower than typical medical equipment, while the payback could be orders of magnitude larger.

One of the reasons that biotech investments have been so limited, despite their almost astounding potential, is that it takes years to clear government hurdles. The promise of life-saving drugs or equipment isn’t enough. It has to be proven, which requires years of testing and clinical trials—all told, as much as a decade—and in the end the patent might not be awarded at all, or it might go to a competitor. None of that exists in the health monitoring business, which combines personal electronics with medical monitoring.

This opportunity hasn’t been lost on venture capitalists, or executives at semiconductor companies, makers of EDA tools or giant OEMs. They’re all racing to come up with ways to tap a field which, for lack of a better term, amounts to persistent and continuous health monitoring. As Mentor Graphics Serge Leef points out, an EKG at a doctor’s office is just a snapshot in time. You can learn a lot more about a person’s health with continuous monitoring, providing you develop the algorithms to sift through all that data. You can even identify when the aberrations occur, what you’ve eaten or done at that time, and use it to prevent health issues in the future.

This is interesting stuff, and if it’s unobtrusive—such as collecting data with a wrist watch—it will be a big market by itself. But as Sonics’ Drew Wingard notes, what will push it way over the top is that insurance companies already recognize it’s far cheaper to prevent an illness than to treat it. By offering discounts to subscribers to use these devices—even subsidizing their cost—the entire health care system can slash expenses and reduce medical treatment.

Which brings up another interesting facet of the IoT: It doesn’t just mash technologies together. It also mashes markets together in ways that couldn’t have been predicted a decade ago. The next big things are not just going to be things. They are going to be things across vertical markets and geographical boundaries, and medical will be one of the very, very big ones that will gain an early foothold and defy the rules that typically apply to medical electronics about time to market, what is the appropriate amount for investments, and time to profit.

None of this comes without problems, of course. There are still issues to resolve with regard to security, bandwidth, power and personal rights. But where there is ample money and opportunity, there will be a big incentive to keep the financial pipeline open by solving any issues that might arise very quickly.