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Is the 'Internet of Things' the way of the future?

Imagine a world where you can control your coffeemaker from your tablet or turn off toys from your phone. That world is around the corner, according to tech industry CEOs. 

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First, the devices have to be able to connect. That's not a trivial undertaking, especially considering that people don't upgrade washing machines or renovate their homes as often as they change cellphones and PCs. One company at the show, a Los Angeles-based startup named Tethercell, has an ingenious solution for battery-powered devices: a "fake" AA battery that houses a smaller AAA battery in an electronic jacket. It can be placed in a battery compartment with other batteries. Within a distance of 80 feet, some smartphones and tablets can then signal the "battery" to turn the device on or off. For instance, parents whose kids have a lot of noisy toys can turn all of them off with touch of a single button. A fire alarm could send a text-message warning that its battery is running low, rather than blaring an audio signal.

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Unfortunately, a Tethercell from the first production run costs $35. Co-founder Kellan O'Connor believes the price can come down to $10, but that's still a non-trivial cost, and symptomatic of the high price of building out the Internet of Everything. For devices that need to connect at long range over a cellular network, the cost of radio components alone ranges from $10 to $70, according to analyst Dan Shey of ABI Research.

That's not expensive in the context of some big-ticket items, like cars, which have been forerunners when it comes to non-phone wireless connections. General Motors Corp. started equipping cars with OnStar wireless calling and assistance services in the mid-90s. At the show, it announced it is updating the service for faster data connections, enabling services like remote engine diagnostics and upgrades to the control software. AT&T Inc., which has been aggressive about getting into the M2M business, is ousting Verizon Wireless as the network provider for OnStar.

Colao, the CEO of Vodafone, gave an example of another "smart" car application that might seem intrusive to some: the company has been trying out a service in Italy that lets an auto insurance company know how much a car is being used, and charges premiums accordingly. It can also score the driver based on his or her driving style, and give pointers on how to handle the car more safely.

Cellular connections are creeping into smaller, cheaper devices. Ecooltra, which rents out electric scooters by the day in Spain, wants to connect them to the Internet, which would let renters figure out through their phones where there's a scooter for rent and how much of a charge is in its battery. The feature is perfect for quick, impromptu rentals by the hour. Adding "smarts" to the scooters in the shape of a cellular modem would turn the company from a conventional rental service to a "scooter-sharing" business, much like car-sharing services like Zipcar.

Once devices are connected, the next problem is getting them to talk to each other, and making sense of what they're saying. ABI's Shey says this is the real business opportunity in M2M, more valuable than making the modems or providing the wireless connections. He believes that's driving a behind-the-scenes scramble of deal-making at the show, as companies like AT&T seek to bolster their ability to support M2M by acquiring companies that provide a "middle layer" of software between the devices and their owners.

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