Mar 3, 2014

Commercializing the Internet of Things

This article was commissioned by Telit Communications PLC and appeared in telit2market magazine, February 2014

The IoT phenomenon has superseded the traditional market for M2M applications, primarily by embracing a wide variety of Internet- and consumer-connected devices. This is what accounts for long-range market forecasts of billions of connected devices.

Early experiences with IoT applications have focused on novelty – such as connected household appliances – rather than long-term commercial prospects. Many of these implementations simply involve the application of silo-like, M2M concepts to new types of devices and sensors. For companies that aim to develop an IoT strategy, however, failure to distinguish between M2M and IoT is a risk to long-term business strategy.

By convention, an M2M service is based on one or more related devices – such as fleet vehicles, point-of-sale terminals and container level-sensors – operating within a narrow industry vertical. This ‘vertical’ emphasis has tended to restrain the M2M market’s rate of growth. This is because each vertical application necessitated a new and/or tailored IT development effort, which had an adverse impact on solution deployment costs.

The reality of IoT applications is that they will enable a much more inter-linked use of data from connected devices and sensors. An example scenario is the array of devices in a transport hub, such as an airport or train station. A given location houses multiple M2M applications such as digital display advertising, point of sale terminals, security cameras etc. This territory is ripe for IoT applications that leverage data across verticals. For example, retail outlets in an airport concourse could link their operations to digital advertising panels to launch promotional offers. If security cameras are added to the mix then it becomes possible to monitor for a build-up of queues in one location and then to prompt travelers to use other, less crowded, food outlets.

Practically speaking, such an outcome is possible if all connected devices in a particular location use a common data transmission network or platform. Alternatively, devices could run on different connectivity platforms but employ standards for data exchange across information silos through techniques such as APIs and standardized data models.

Without this kind of cross-silo vision, companies that re-badge M2M applications as IoT ones are likely to waste at least one product development cycle by not focusing on the longer term potential of their devices. This is akin to Google providing a search engine and failing to analyze search queries to deliver targeted advertising.

Connectivity can improve most devices but the effort to create a first-generation, connected device is not to be underestimated. Nevertheless, this should not stop companies from thinking beyond connectivity in planning their IoT strategies. They need to envision second- and third generation offerings involving a higher degree of cross application interaction. This has profound implications for the IoT platform capabilities to manage these applications and also their business models.

This point is illustrated in the context of a set of in-home services under a typical M2M scenario and also for a more integrated IoT scenario.

Each of the initial set of services – home automation, smart metering and assisted living – is designed on a standalone basis. And, each service would have its own value chain comprising: module and device-technologies; network connectivity; service enablement; application-delivery; and, user-interface elements. The ability to combine data across service silos could lead to higher quality services (through improved information integrity) as well as new service opportunities (e.g. home security, wellness monitoring). One way to achieve this is by linking the individual vertical value chains horizontally. An alternative approach would be to intervene over the top of individual services.

Several companies are already targeting the business opportunity for these types of application.

  • The shared or horizontal platform strategy allows several connected device providers to manage their devices remotely and also to deliver connected services to end-users. A shared platform should appeal to small and medium sized companies that cannot justify investing in their own platform capabilities. AT&T (Digital Life), Deutsche Telekom (Qivicon) as well as niche platform providers such as Arrayent and Zonoff in the USA are already experimenting in this arena.

  • The OTT strategy relies on information being available to end users, via the Internet, from connected devices and sensors. This can be conceptualized as a database for machine and sensor data (e.g. environmental sensors in public spaces), which can be accessed by applications. This is not a far-fetched idea as more and more devices are equipped for Internet connectivity. Some of the early developments in this arena come from companies such as IFTTT and Xively.

Decisions about inter-operability will have a major bearing on the success of these two approaches. Put differently, there has to be a way to share data across application silos and devices from different suppliers.

Many IoT enthusiasts would argue for an open platform into which any manner of device can connect while also having its data available to any and all applications. In practice, a structured approach to inter-operability will be more beneficial in the short term. This is because cross-device interactions will benefit from some degree of orchestration regarding permissible device and application-level behaviors. In particular, connected device providers will seek guidance on how to design for IoT services. Applications developers will want service quality assurances about the devices they are relying on to deliver end-user services.

The IoT market has massive promise in terms of economic impact. IoT companies need to look beyond connectivity and consider how they position themselves with partners and also in the overall value chain. They also need to conceptualize their next-generation products to capitalize on new business models based on the cooperative use of data from a variety of connected devices.

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