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Dell and Intel’s Internet of things effort will connect the hard stuff

October 22, 2015, 8:00 PM UTC

Dell is one of many technology companies banking on the Internet of things as a generator of zettabytes of data that will help it sell more stuff—in Dell’s case, servers and storage hardware for corporate data centers. Like many of its largest peers (Intel, GE), Dell sees projections around the Internet of things—50 billion connected devices by 2020, or the potential for trillions of dollars in economic value—and wants a piece of the pie.

On Wednesday at Dell World, the company’s annual customer conference, CEO Michael Dell paid lip service to the opportunity without articulating a clear strategy. Dell will sell hardware tailored to the Internet of things, its chief executive said. Beyond that, who knows.

So Dell during the conference introduced a gateway made in partnership with Intel (INTC) that is, in essence, a computer designed to sit in a factory or field, collect sensor data, and analyze it to send what it deems relevant to the cloud. The idea is to reduce the total information transmitted to the cloud to conserve time and bandwidth. It’s also a bolt-on accessory, so to speak, that can translate data from sensors that use older, non-Internet compliant protocols for today’s digital world. The gateway accommodates the alphabet soup of data created by sensors—once unified, it’s a language that the entirety of the Internet of things can work with.

Cisco (CSCO), IBM, (IBM), and Oracle (ORCL) each make hardware offering similar functionality. The devices also serve as a form of lock-in for these companies—a way to ensure that they can squeeze just a little bit more margin out of their traditional hardware businesses before the world transitions to open standards that allow customers to swap hardware more freely.

Rose Schooler, vice president and general manager of Intel’s Internet of things effort, pointed out in a presentation at Dell World that most of the opportunity is in so-called brownfield deployments, where companies are trying to add analysis and connectivity to older sensors. “We can’t start with greenfield because it will take too long,” she said. “It’s hard, and the all-ethernet IP world would be easier, but today that’s the smaller opportunity. We’re only in mile two of the marathon, but it’s important for us to go out there and connect some of this stuff and get some wins.”

To accomplish that, technology companies look to collaborations where they bring the gateways, and consultants help connect the old-line manufacturing gear to the box (and then to the Internet). And then the industry-specific partners come in. For Dell and Intel, for example, KMC Controls assists in building management applications, where reductions in emissions reductions and waste in corporate offices are targeted by analyzing gateway data for opportunities to adjust the air conditioning or lighting.

Figuring out such correlations in the data often requires industry expertise. That’s why we are increasingly seeing, from Dell to SAP, industry partner programs that actually mean something beyond a series of logos on a slide. Such partnerships can make or break a technology company’s relationship with a customer—it’s really the industry experts that are creating the algorithms that will generate the savings or reduce waste.

This is one reason why General Electric (GE) has such an enormous advantage in what it calls the “Industrial Internet.” Much of the company’s data comes from its own manufacturing efforts or devices in the field, so the software it builds for customers isn’t based on a third-party’s experience but its own.

Dell is thinking a lot about how the proliferation of computers in this Internet of things future will impact the environment, said the company’s chief research officer Jay Menon. It’s also thinking about how to move code between gateways and the cloud.

Dell has about 160 IoT customers today. Looking ahead to larger deployments, a utility might one day ask Dell to manage upwards of nine million smart meters, Menon said. Such scale will pose new problems. “These gateways are like mini-servers, so I am thinking about the energy efficiency of gateways,” he said. “They could dominate what we have in servers. Nine million smart meters is the power equivalent of 90,000 servers.”

There are other challenges. Dell plans to actively sell gateways for five years and support them through software updates for five years beyond that. In that span, owners may want to adjust how much analytics or code runs on the gateway versus in the cloud, or even anticipate a new generation of sensors to accommodate.

How can Dell cope? Its researchers are looking at the blockchain, the transactional technology that underlies digital currencies like Bitcoin. Menon said Dell was experimenting with the Etherium blockchain, which uses a different type of math than the blockchain underpinning Bitcoin. It’s in good company: IBM and Samsung have a pilot project called Adept that is using blockchain technology to move data among the various nodes in the Internet of things. Meanwhile a company called Filament is using Bitcoin’s blockchain technology to build out a real-world network of connected sensors.

After two days of presentations and conversations at Dell World, the prevailing sentiment was simple: Talking about and recognizing the benefits of the Internet of things is easy, but doing the difficult work to interconnect fields, factories, buildings, or even bars is far more challenging. Manage to pull it all together and there may be real savings to be had, if not new opportunities for business. That work is just beginning.

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