Barron's Cover: Is the Internet-of-Things Ready-to-Wear?

A major piece from Tech Trader Daily's Tiernan Ray at Barron's:

The Internet of Things is headed for your wrist: smart watches and fitness bands. Who wins, who loses in wearable technology. 

In a cluttered office in downtown San Francisco, a start-up called Switch Embassy is advancing what's known in technology circles as the Internet of Things. The cramped space overflows with swatches of fabric embroidered with conductive wiring, a veri woven circuit board that can be stitched into shirts, handbags, and gloves, and can transmit signals from a smartphone or even a server across the world. 

Prototypes line the walls: a stylish leather clutch that can light up with a soft pulsing grid of glowing LEDs to let a wearer know she's got a text message; a black cocktail dress that glows green in a periodic rhythm matching the wearer's heart rate detected by sensors inside the dress.

The inventions are a revelation: Someday, technology will be everywhere in our lives, including the clothes on our back. But for now, the Internet of Things, or the "IoT," as the tech world refers to it, is terribly prosaic. It has sprouted legions of supposedly smart watches and fitness bands from the likes of Samsung Electronics, Jawbone, Qualcomm, and Pebble. The results so far, however, have been underwhelming.

The stakes are high, nonetheless. 

 

Apple and Google, smart connected devices will be the next front in the battle of their respective "ecosystems" -- collections of computing devices and software -- for supremacy. 

For established computing-chip vendors Intel and Qualcomm, the IoT offers new realms to conquer, but also challenges the economics that have defined their businesses. 

For other chip vendors, such as sensor makers InvenSense and OmniVision Technologies, the IoT offers a million new uses for the cutting-edge technology they have developed.

For the makers of very simple computer chips, such as Texas Instruments (TXN) and Atmel (ATML), and for one-time mobile champs such as navigation pioneer Garmin (GRMN), the Internet of Things may offer something of a comeback after they lost the battle for smartphones and ts. 

And for a host of others -- smartwatch maker Pebble, fitness-band makers Fitbit and Jawbone -- the IoT could make or break their business models. 

To succeed, all of this connected stuff has to get much, much smarter, and it has to get much cheaper. Right now, wearables just don't have enough functionality to serve many people who have already paid for a smartphone packed with information. 

Richard Doherty, research director with tech-consulting firm the Envisioneering Group, likens the market to the early days of the PC, when no one could confidently predict success or failure. "When we ask consumers about their intent to buy a wearable, to a person they will tell you they're thrilled with the category," says Doherty. "There wasn't even this much support for the iPhone" at its birth. "But when you get into details -- how much it costs, what it actually does -- interest goes down quickly."

In fact, the situation feels like prior waves of euphoria that fizzled. "I can remember when there were watch wars between Texas Instruments, National Semiconductor, and Hewlett-Packard around 1980," says Doherty. "HP's $650 calculator watch only sold a few hundred units. TI and National Semi soon flooded the market with under-$50 models, dissipating the 'cool, new, look at me' factor. Killed the category."

As the table shows, today's wearables, mostly something that attaches to your wrist, are fraught with limitations. Some don't connect to a smartphone consistently. Some let you receive notifications of texts but don't allow you to answer them. 

A whole crop of wearable fitness devices, from Jawbone, Fitbit, Nike (NKE), Adidas (ADS.Germany), and French start-up Withings, which count your steps and in some cases measure your heart rate and sleep pattern, deliver results that may tell you something, but not necessarily enough to be truly meaningful for any health regimen. When Barron's tested Nike's FuelBand SE, for example, we achieved our personal best thanks to a four-hour session playing pool, a workout that included drinking beer and smoking cigarettes -- you know, because you walk around the table a lot. 

The same problem of low intelligence hangs over the connected home and connected cars, places already stuffed with devices that don't talk to one another, as Rochester, N.Y., artist Larry Moss recently learned. Moss outfitted his house with a thermostat from Google's Nest, digital locks from Schlage, and computer-controlled light switches. You can control each of them from your smartphone, he says, but the Nest won't act to adjust the climate in response to the locks being keyed open, for example, nor to lights being turned on.

DEAD ENDS LIKE THAT, or the limitations of wearables, may get better as the software improves. Smartwatches unveiled by Google (GOOGL) in June, from Samsung Electronics (5930.Korea), LG Electronics (66570.Korea), and Motorola, display a more sophisticated ability to relay alerts to the watch from calendar, text, and e-mail applications on your phone....MUCH MORE