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.

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There is a solution at hand to the mismatch of management costs and revenue expectations for the Internet of Things: distributed, edge-based cloud computing. If the data center is the center of the network, PCs, smartphones and other connected devices are on the edge. Edge-based cloud computing is about more than making individual devices smart and connected. It involves linking together every device at the edge of the network to form an integrated, distributed cloud service. If we can get these smart devices to manage themselves, then network services will be available for as long as the devices are in place and at an extraordinarily low price.

Today, IBM is developing an entirely new architecture that enables a full range of computing capabilities in a distributed model. Unlike past approaches to distributed computing, this one does not depend on knowing or trusting every node in the network — a practical impossibility with billions of devices to be placed in millions of locations.

The core of this new approach is built upon the Block Chain, a model of distributed computing leveraging the architecture of BitCoin (without the financial component). Using the Block Chain we can implement the typical transaction processing work done by centralized data centers without any of the cost associated with those systems by using compute power generated by individual devices that would, in most cases, go to waste.

These distributed, Block Chain-based services will run on new transport protocols as well. One candidate is a newly developed protocol called Telehash that offers peer-to-peer based transport and messaging that is, by default, heavily encrypted. Large file transfers can be run through the very well-established BitTorrent transport tool.

In this vision of the future where the cloud stretches all the way to the edge of the network, devices will have the ability to connect directly with each other, manage themselves and even trade services with each other, offering redundancy and back-up protection without additional cost. Putting these technologies together, we can build a far more efficient, secure, durable and lower cost Internet of Things.

Paul Brody is vice president and global electronics industry leader for IBM Global Business Services

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