Step One.  The chip is detachable.  It glues on the product as an afterthought.
Step Two.  The chip is a component.  It's built-in.
Step Three. The whole product has been re-designed around the chip.

Here's  how this trend  plays out in, say, the housing market.

Step One.  You buy a home computer.  It comes in the house, it goes out the house, big deal.
Step Two.  You're living inside a wired house.
Step Three.  You build a house because you decide you need to shelter your network.

Here's how some physical devices fit in.

Step One. An antitheft tag.  Inventory tag.  A barcode. Dumb, simple, uses an outside power source and outside computing. You use them to tell where things are, what they are, and how much they cost.  Available now.
Step Two. A GPS navigation unit in the dashboard of your car.  It uses an outside signal to tell you where you are and how to get where you're going.
Step Three.  The tires call you up on the phone and tell you that their tread is wearing low and they ask permission to have themselves replaced.

Running an enterprise:

Step One.  You have a security system to defend your store's perimeter.  The doors and windows scream when broken, and a silent alarm calls the police.
Step Two. You label all the items in your store with location tags.  Nothing can leave the store unless its legally purchased and logged out properly.
Step Three.  Anything you bring into your store is automatically given a name and a network address.  It knows what it is, where it is, who had it last, and what condition it is in.  Because it was all built that way.

   This product in step three is not a twentieth century product.   The twentieth century didn't have this kind of device at all.  It's unheard of. It's crying out for a brand new name.  In fact the whole pervasive computing field is calling out for a new terminology, because none of the terms we have are working properly.  Pervasive computing, ubiquitous computing, things that think, intelligent environment, peripheral interfaces.   These terms just don't get at the core of it.   Consider the functionality of an anti-theft tag: "smart" isn't right, "thinking" isn't right, "intelligent" isn't right.  But it can save your retail business, and if you're a shoplifter it can ruin your life.

     "Smart" is old-fashioned.  I'm convinced that
intelligence is the wrong idea to apply to computation. It's  a bad metaphor to call a machine "smart." It's misleading, confusing, mistaken terminology.  To call machine processing "intelligence" is  just not an accurate description of the phenomenon.  It's like thinking that a jet aircraft is migrating when it flies south.

     This pervasive computing I'm describing is a reactive network of small interacting devices fully integrated into the physical fabric of products. It  keeps track of the status of things.  It has software in it. The chip in its core is programmable, and therefore capable of very protean forms of behavior.   "Pervasive computing" is not the best term for this. "Computing" is no good, because the word "computation"  is about crunching numbers, not about networked reactivity.  We need a  new 21st century word.

      Maybe something completely out of left field, something like the term "polite."   A polite machine. Your elderly frail grandmother asks, can I sit in this chair?  And you answer yes of course, grandma, the chair will adjust to your needs, it's polite. The problem with the term "polite" is that  this pervasive  technology is likely to find some of its best applications in the police and the military.  Since they are objects that are mechanically aware of their status and their surroundings, maybe you could call them "wary."  They have software and hardware inside, they're wary products.

     Why would this imagined technology come into existence? Well, not merely because we can do it.  This is the Iridium fallacy.   It has to offer somebody some tangible benefits.  Let's start by imagining a military app. The military loves stuff that barely works.  They're famous early adopters.

    Imagine we've got two armies, the Balkan ethnic separatist army of hardened guerrilla fighters, and that soft, pampered,  high-tech army from the World Trade Organization's military wing.  The guerrillas don't have much equipment, just the occasional rifle and rocket grenade.  But in the high-tech unit, every military object has a unique ID, a location, a situation report, and a network address.  We know how many  rifles we have, where they are, and how far they are from the fire zone right now. We know where our mortar is and how many rounds it has left.  We know when a soldier is hit because his armor knows it's been affected, and it tells us where he's hit, and the direction the bullet came from.  We have much less of the fog of war than our opponent, because we know ourselves and our own capacities extremely well, and we can learn about him much faster than he can learn about us.  That's a critical military edge.

     To test this thought experiment, imagine that the guerrillas have all this pervasive computing and we don't. All we've got is lots of guns, and nice uniforms and helmets, and some big tanks.  How long do we stay alive in the streets?  Not very long, I'm figuring.

     Now a competitive angle in business.  I'm  assembling products in a factory and shipping them.  All my parts are labelled, so I know all my inventory in real time.  The shipped products talk to me on their way in, through, and out of the plant.  They know whether they are complete and assembled, and what they are missing, and if some particular part has failed.   My competitor has a very neat physical filing and storage system. Crates, pallets, giant storage sheds, tarpaulins.  I've got this giant higgledy piggledy mess. But my disorder is merely actual disorder, it's not virtual disorder.  My virtual order is more effective than his actual order, because it searchable and reactive and wary and polite.  As long as the parts know where they are, why should I care where they are stacked?  It's not like anybody can steal them. They're all automatically theftproof.

     As a professional thief my life is very difficult  == a bicycle might rat me out.  A stolen purse probably has ten or twelve different objects,  all sending email to the owner and the cops.

    It's not that this world has no thieves or evil
people.  Let me be very clear about that. If I'm a bad guy in this world, I probably live in a bad house with a bad network of many bad objects. My welcome mat bites your leg.  My broom gives your broom a virus.  I sell you wary products with chips that lie to you, cheat you, break themselves on purpose, misrepresent themselves, swindle you.   Design doesn't abolish evil intent.  Pervasive computing would be particularly well suited for concentration camps.

     The power to be your best is the power to be your worst. I don't want to be simplistic, but I must be brief. I  find myself  on the side of pervasive computing because I believe that increased awareness is a basic good.  An Information Society cannot properly seek security in keeping bad people ignorant.  The proper cure for bad information is more information, not secrecy or censorship.  Open systems good.  Closed systems bad. Tested algorithms good.  NSA algorithms bad.  If we're gonna trust our lives to this kind of stunt, we've got to get the guts of it fully out in the open. Open source code, good. Trade-secret code, bad.  Level playing field, good. Police state surveillance, bad.   Informed consent, good. Sneaky web cookies, bad.  I could go on, but I want to assure you that I'm not swallowing all this stuff  just because I think it's hip.

     Let's imagine that you've grown up with this
pervasive tracking technology. You trust it, you
understand it, you're at home with it.  If all your
possessions are network peripherals, then you have a possible LINUX model for objects in the real world.   In this world, I don't buy a hammer. What I really want to own is the hammering functionality.  I might as well share the hammer with my neighbor == he can't steal it, and if he breaks it, I'll know immediately. A modern hammer in this world comes built around a chip, with a set of strain gauges that determine if it is worn or broke or abused. Let's network that hammer.  We'll agree that our home-nets will provide us with hammerability, and we'll pool our resources to web-search for  bargain tools.

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