It was a perfect evening for barbeque. We had a few friends over for dinner, and I had bought really nice rib-eye steaks for the occasion. I heated the grill to 400F and slapped on the steaks. Five minutes later, I opened the grill to flip the steaks and…NO GAS! ARGH! I was so upset with myself. With tail tucked, I excused myself to buy gas, but on the way, a thought occurred to me, “Why didn’t the gas cylinder tell me that it needed a refill?” Where is the Internet of Things when you really need it?

I am sure some entrepreneur is already working on this idea. This is not a futuristic dream. Soon my gas distributor will know when my cylinder is about to run out, and he will replace it with a new one without me lifting a finger. Needs like this, from everyday conveniences to saving patients’ lives via remote sensors, are fueling a new era of Internet innovations—The Internet of Things. This era will be the next phase of computing advances where smart sensors will bring artificial things to life and have them communicate with each other.

The first phase of the Internet, Web 1.0, was the Internet of information, which democratized information and gave birth to eCommerce. The second phase of the Internet, Web 2.0, was the Internet of People, which gave rise to Social and Mobile computing. The third phase of the Internet, Web 3.0, is the Internet of Things (IoT), where living and non-living things will communicate with each other to form a web of artificial intelligence.

Some analysts predict that the Internet of Things industry will top $11 trillion by 2020. The race to lead and cash in on this mega-opportunity is heating up fast. Web 1.0 drove the sale of computers to about 300 million computers a year. Web 2.0 drove the sale of smartphones to a whopping 1 billion a year. But wait! Web 3.0 is expected to push the sale of connected devices to 75 billion smart devices a year.

The Internet of Things is not entirely new, however. After all, we have had satellites, weather stations, airplanes, GPS instruments, traffic monitoring systems, and all sorts of machines communicating with each other for decades. But these were mostly closed network systems, while the modern IoT uses the public Internet for communication and can work anywhere there’s an Internet connection. What pushed the Internet of Things into high gear is the perfect storm of three distinct forces coming together:

1. Proliferation of smartphones
2. Advances in micro-sensors
3. Rise of analytics

Today, a smartphone carries as much computing power as NASA packed into the rocket for the Mission to the Moon in 1969. For empowered consumers, smartphones have become their personal information hub, entertainment center, personal assistant, and very own command center for controlling things around them. Smartphones have many built-in sensors, but they can also communicate with sensors nearby. Sensors are becoming smaller, smarter, and cheaper every day. Data from these sensors goes into the smartphone’s localized analysis, and it can also go to a central hub for deeper and aggregate analytics. Given the interest and pace of progress in these three domains, we will soon have sensors embedded all around us, on us, and also, inside us.

Web 1.0 gave birth to the information giant Google. Web 2.0 re-birthed Apple as the most valued in the word. Now Web 3.0 will breed to a new wave of innovators. But the opportunity is not limited to a few. $11 trillion is a very big number. There is plenty to go around. Market opportunity is huge, and so are the challenges.

Security, privacy, and interoperability are the three biggest challenges facing the IoT industry. But every challenge is an opportunity in disguise. Perhaps these challenges will boost the security industry and create new forms of alliances, new kinds of regulations, new watchdog groups, and perhaps new jobs and industries that we cannot even comprehend today.

IoT is big. Bigger than anything we have seen in computing history. I am very excited and looking forward to the innovations it is going to bring to the market. Above all, I am hopeful that IoT will save me from embarrassment at my next BBQ get-together.