MIT-invented IOT Seen as Moneymaker for Taiwan and China

Even in this age of lightning speed Internet communication and technologies, the concept of IOT (Internet of Things), attributed to the 1999-founded Auto-ID Center of the Massachusetts Institute of Technology (MIT), is reportedly just catching on with firms in Taiwan and China. IOT, arguably the Net-era sibling of the original universal bar code that is still ubiquitous and tracks goods in quantifiable terms, is manifested as a self-configuring wireless network of sensors whose purpose is to interconnect RFID-tagged routine things via the Internet.

Companies in Taiwan and China eager to tap business opportunities of Internet of Things will form an alliance in late June to develop industry standards for their operations in Greater China.

The alliance will consist of telecoms from China such as China Mobile, China Unicom and China Telecom, as well as those from Taiwan as Chunghwa Telecom, Far EasTone Telecom and Taiwan Mobile. Such move reflects the telecoms' optimism about the potential of IOT, touted as the next major moneymaker in telecommunications valued at US$1 trillion worldwide by 2020, as well as seen by leading economies as a pivotal industry to drive growth and offset economic downturns.

President Barrack Obama of the U.S. reportedly equates IOT with green energy in degree of importance, believing these two key sectors can generate short and long term benefits.

Futuristic Inventory Management

As with the UPC or barcode, industry executives say that if daily objects like canned goods, books, shoes or auto parts are integrated with micro-identifications that are linked via the Internet, depleting stock or product waste will be minimized as suppliers can track effectively and instantly inventory levels, whether in Mumbai or the Mojave Desert. Industry watchers say that IOT can theoretically encode 50 to 100 trillion objects and track their movements via the Net.

The IOT concept was reportedly invented to save energy and improve efficiency of daily goods management, making such idea attractive to economies pursing both goals. Some extol IOT as the third wave of the global information-technology industry after the PC and Internet in light of the huge potential in goods management, backed by the formidable combination of the Internet, radio frequency identification (RFID), infrared sensor, global positioning system, and laser scanner.

China Mobile president J.Z. Wang summarizes IOT as "extensive sensing, reliable transmission, and intelligent treatment." Market analysts at the Topology Research Institute, a Taiwan-based market consultant, cites a real-world product incorporating extensive sensing: the world's first IOT-enabled fridge that was recently introduced by the Haier Group, China's No.1 household appliance maker. Linked via the Net to the supermarket, the fridge has a display panel that tells the user freshness of foods in the supermarket as well as characteristics, origins of food stored in the freezer.

Upbeat Outlook

Despite its budding stage in China, revenue from the IOT sector as from infrared sensors and RFID manufacturing is expected to top US$14.7 billion by the end of this year and US$36.7 billion by 2015.

During a tour in August 2009 of the Wuxi Internet of Things Research Institute, Chinese premier J.B. Wen proposed to set up the "Experience China" center to enable the world to experience everything in China through IOT applications. Now upgraded to a national organization, the center in Wuxi, Jiangsu Province is China's first IOT city.

Also China has invited Taiwan's IOT developers to visit the officially-invested IOT facilities in Wuxi, with the invitees including Chunghwa Telecom, D-Link, Industrial Technology Research Institute (ITRI), GemTek, First International Telecom, Tatung, and Alpha Networks.

Wen's IOT vision and instructions have spawned a slew of developments: Since early this year, China has accelerated interconnecting telecom networks, telecasting and broadcasting networks and the Internet, offering subscribers on a single platform wide ranging services including voice, data and telecasting and broadcasting, with the triple-play network considered the foundation of China's IOT future.

Vice Chairman of Chinese National Development and Reform Commission (NDRC) X.Q. Zhang says that the commission will aggressively promote six measures to develop IOT and other emerging industries in China, including interconnecting the three networks, inspiring investments in IOT projects, and creating demand for IOT applications.

IOT Fever

Apparently China is serious about building the IOT sector in the nation. Chengdu, capital city of the southwestern province of Sichuan, announced in May a municipal IOT project with estimated revenue of US$4.4 billion; Guangzhou, the capital city of the southernmost province of Guangdong, announced plans to generate IOT revenue of US$14.7 billion in five years; Shannxi Province has launched an IOT alliance; Jiangxu Province has started a plan to build an IOT industry valued at US$58.8 billion; and Beijing announced the establishment of a national committee to set IOT standards.

China, the United States, Germany, and South Korea have also called for global partnership to set standards for the nascent IOT industry to prepare for potentially massive growth.

In light of China's vast domestic market and its aggressive attempt to play a major role to form international IOT standards, Taiwan's IOT developers are reportedly eager to work with their Chinese counterparts on mutual standards.

Y.J. Lee, a senior market researcher at Topology, advises Taiwan's IOT developers to watch closely China's standardization of its RFID and electronic-labels, as well as try to work with China's agency on IOT protocols based on its homegrown TD-SCDMA 3G technology and take part in China's IOT infrastructural projects. Lee also believes that entering China's market and working with its standard-setters will help Taiwan's IOT developers penetrate other emerging IOT markets, as well as become a dominant global player.

Lee notes that Taiwan's IOT developers lag their Chinese counterparts as China Mobile, China Unicom, Invengo Information Technology and Tongfang in terms of network and service technologies, as China offers opportunities for field testing of integrated systems. In contrast, Taiwan is ahead of China in integrated-circuit design, components and equipment manufacturing, making the two sides more friend than foe.

Taiwan Makers Contracted

As such, the Newland Group in China, recognized as the No.1 IOT equipment supplier in Greater China, recently announced it would contract Hon Hai Precision Industry Co., Ltd., United Microelectronics Corp. (UMC), Largan Precision Co., Ltd. and Faraday Technology Corp. as suppliers.

Newland is one of the three Chinese manufacturers contracted by China Telecom, China's No.1 telecom carrier, to supply IOT equipment.

Newland Group president J. Wang said she had approached chairman Terry Guo of the Hon Hai Group and Honorary Vice Chairman John Hsuan of UMC over IOT cooperation, adding that the IOT industry in China and Taiwan are complementary, with Taiwan being good at RFID, high-end chips, barcode testing and consumer-premise equipment, while China's edge lies in matrix code and sensor transmission.

The chairman also said that Newland will work with Taiwan's equipment suppliers not only to tap the China market but also international markets. Newland has set up a subsidiary in Taiwan. Insiders say that the subsidiary plans to acquire an IOT company in Taiwan for over US$31 million and may ask local manufacturers to buy its stocks for capital increment. Newland will also invest US$10 million in Accuevally Inc., a Taiwanese cloud-computing startup co-founded by graduates from Taiwan's National Tsing Hua University, Chiao Tung University and National University of Science and Technology for wide-ranging applications of cloud services to IOT network.

Regarding Taiwan's lack of field testing of integrated systems, Topology's Lee suggests Taiwan's IOT developers focus on applications for urban life, transportation, residence, finance, retail, energy, production, and agriculture.

Wireless Sensor Network

Y.S. Hsieh, another Topology analyst, suggests Taiwan's equipment supplier emphasize wireless sensor network, with service providers to use the network to develop IOT applications like intelligent data transmission system, homecare for seniors, as well as home and community security. She notes that although manufacturing of WSN equipment as chips, modules and end equipment is mature in Taiwan, very few developers are capable of integrating such equipment and no open interoperability platforms have been set up on the island. These deficiencies hamstring development of Taiwan's IOT industry, she stresses.

China's significance in global RFID manufacturing, including manufacturing of tag, reader, and infrastructure equipment, also strengthens its IOT development, according to watchers in Taiwan. China's RFID strength is driven by robust demand, which totaled around US$1.4 billion in 2008, with the global market valued at US$5.2 billion, up from 2007's US$4.9 billion.

Some analysts disagree with the optimistic view that China's IOT supply chain will likely produce revenue totaling 100 billion yuan throughout this year, and believe, instead, that China's IOT market will be less florid in the near term due to various problems. Some market experts think IOT services will only be ubiquitous in a decade, while service providers boasting IOT capability need to first equip themselves extensively with 3G networks to prepare for the arrival of the IOT era.