The Internet of Things will cost companies more than they think or are ready for

Though the Internet of Things era has only just started, it may already be broken.

Like generals fighting the last war instead of the next one, many companies working to build the Internet of Things seem to be stuck in the smartphone and tablet era, embracing approaches that will soon be obsolete, if they aren’t already.

Today, smartphones are powerful hubs surrounded by less intelligent objects. Each device is managed and operated from a few centralized data centers. This is not yet a major issue as devices currently last only a year or two before being decommissioned. The cost of managing data centers is limited in duration and underwritten by a constant flood of replacement devices with short lives.

Not so in the Internet of Things era: an LED lightbulb has an expected life of 20+ years; aircraft are expected to remain in service for decades; the average car on the road in the US is now more than a decade old. Applying a centralized cloud-based business model to these devices will mean decades of expense without decades of associated revenue. At IBM we already see clients that are struggling with device-related services that have failed to meet revenue targets, but cannot be switched off for fear of angering an installed base.