Can market-based mechanisms encourage user innovation in the IOT?

How can we create or encourage innovation mechanisms for the Internet of Things similar to the market-based mechanisms employed in the mobile space? 

This is a question I have been pondering in recent weeks. The iPhone and the iPhone App Store have unleashed a wave of innovation in the mobile space comparable to the breakthrough of the Web in late 1990s. Not only has the iPhone given consumers seamless access to a vast number of mobile phone applications, it has also enabled individuals with a minimum of programming skills to reach a mass audience for their applications. As a result, the iPhone (and increasingly other mobile platforms such as Android, …)  has created a long-tail of mobile applications, that has brought about applications for social activism, citizen science, and citizen journalism, areas that tended to be underserved before the iPhone made is possible for small groups to reach large mobile audiences.

Are app stores a model for encouraging innovation in the Internet of Things? Perhaps, but the Internet of Things space is much more complicated than the mobile space. Unlike the iPhone ecosystem, the Internet of Things cannot be confined to a single device platform and a unified distribution channel. The IoT ecosystem will necessarily consist of a heterogeneous collection of hardware, software and data components. This greatly complicates user innovation as it introduces dependencies and compatibility issues, which make it harder to develop, share and reuse artifacts. I am currently writing a paper on this topic for the Internet of Things 2010 conference in Tokyo. So far, however, my ideas of how to tackle this issue are pretty vague.