First there was the Internet. Now there is an Internet of Things.
Increasingly, developers are tapping into what they call the IoT — a network of connected mobile gadgets, sensors and commercial goods. With new hardware and software, for instance, homeowners can unlock doors or turn off lights with their smartphones, and city governments can use sensors in public water pipes to monitor fragile mains.
The much-hyped notion is attracting large and small technology companies. For instance, in November, Intel created a division dedicated to the Internet of Things, and Cisco did the same the month before. Staples recently unveiled hub of sensors to process data from various IoT devices. Start-ups such as Palo Alto-based Nest sell smartphone-controlled thermostats and smoke detectors.
A handful of local businesses are joining the trend — particularly in home automation. Tysons Corner-based Alarm.com has been selling home security monitoring software since 2000. SmartThings, a Georgetown start-up, raised $12.1 million in early-stage investment in November. SimpliciKey, based in Herndon, sells key locks that users can lock or unlock through their smartphones.
Others, such as Hillcrest Labs in Rockville, develop the motion sensors often used in connected devices. (All three are demonstrating products at the Consumer Electronics Show in Las Vegas this week.)
Despite growing activity, IoT is not yet a mature market, experts say — and it's unclear how competition, privacy concerns and data laws will shape it.
Last year, SmartThings raised more than $1 million on the crowdfunding site Kickstarter to produce home automation kits. For a few hundred dollars, customers received various sensors — for motion, moisture and other signals — and a special hub, which relays this information to a user's smartphone.
SmartThings's platform is open, meaning developers can create their own apps or devices to work with its system. So far, about 5,000 developers have done so.
Still, the average consumer hasn't yet heard of SmartThings, chief executive Alex Hawkinson said, and the Internet of Things is "still a widely unpenetrated space — it helps when companies like Comcast, and AT&T and others market their [efforts]."
Security is another major concern, he said. These new gadgets are collecting data, which is not always locked down. "We don't want door locks to [give intruders] awareness of who's home," said Hawkinson, whose company includes staff researching such issues.
Spinning out from Microstrategy in 2000, Alarm.com is one of the region's early connected-home companies. The company raised $136 million in early-stage investment last summer, and sells software allowing users to remotely unlock doors, monitor security videos and track energy consumption.
Over the past few years, Alarm.com has seen a surge of interest in its energy management software, said marketing vice president Jay Kenny, adding that Alarm's client base has increased from tens of thousands to hundreds of thousands of customers a year.
"Now we're seeing the advent of more affordable networking, a lot more truly connected devices and a lot more applications," said McKinsey Global Institute analyst Michael Chui, but he added that companies may soon start collaborating instead of competing. "It will be much easier to manage home automation from a single device, preferably from a single app," Chui said.
Compared with tech hubs such as San Francisco and New York, "the ecosystem [for the Internet of Things] in D.C. is not quite as strong as it is in others," Hawkinson said.
Still, interest in the Internet of Things is growing, software developer Greg Toth said. He has been organizing meet-ups for Internet of Things enthusiasts — about 420 software, hardware and policy professionals meet once every few weeks to discuss the evolving space.
Some of the meet-up members — particularly entrepreneurs — are concerned that stringent laws regulating data transmissions could restrict innovation, Toth said.
It's not surprising to see Internet of Things activity in the Washington area, given the region's history, Toth said — early work to create the Internet occurred here and AOL was founded locally two decades ago. The federal government's supply of developers and data scientists provide a dependable well of technical expertise, he said.
Increased venture capital investments in the Internet of Things could encourage more entrepreneurs to join the trend.
Home automation technology attracted $468 million in early stage investments, distributed over 56 deals, since 2012, according to a report from New York venture capital research firm CB Insights.
Josh Elman, a partner at Greylock Partners, which led the fundraising for SmartThings's recent round, said the convergence of ubiquitous wireless connections, cloud computing and mobile devices make the market ripe for innovation.
Though consumers are still grasping the Internet of Things — and some connected home technology is cost prohibitive for those on a budget — "In 10 years from now, it feels like most people will have homes that are reasonably smart," Elman said. "Some people will start [manually connecting] every device; on the other side, they will have installers and builders making them [at the point of construction]."