May 10, 2021

Hyperscalers and IoT Market Prospects

The analyst firm, Transforma Insights (TI), recently published a report comparing the cloud hyperscalers – Google, Microsoft, and Amazon Web Services – and evaluating their readiness for IoT and digital transformation solutions. The report is a timely reminder of the role of IoT in digital transformation. It is also a reflection of latent demand for IoT-enabling services and solutions.

Microsoft is marginally ahead of the pack, scoring just over 50 out of a possible total of 100 points in Transforma Insight’s evaluation framework. Each hyperscaler continues to deploy a range of capabilities and developer tools, which would correspond to a higher score, with the aim of maximizing their share of the market opportunity. However, issues about the role of platforms in on-line advertising and social media markets suggests that complications face the hyperscalers.


Rating the Hyperscaler Service Providers

Transforma Insight’s evaluation framework uses a 100-point scale distributed across several categories [1]. These comprise specialized hardware, general hardware (servers, routers, etc.), software products, integrated solutions, application development, systems integration and project management, specialist services and, field and operational services. Three categories - software products, integrated solutions and systems integration and project management account for about 70% of total potential score.

The hyperscalers’ efforts aim to make it as easy as possible for adopters to deploy IoT solutions and aggregate data in cloud environments. Once there, it is much easier to visualize and analyze using graphical user-interface like data manipulation and programming tools.


The Risk of Creating IoT Islands

Many of these tools will be bundled, as in the case of Microsoft’s Office365. They might also be tied i.e., where the use of one tool relies on a formatting or data-handling convention that effectively ties it to another tool in the supplier’s portfolio. Bundling and tying are ways to achieve competitive advantage.

Viewing the issue through a data lens, as distinct from a connectivity or IoT-hardware perspective, changes the nature of competition. The Copenhagen Business School (CBS) recently hosted an online discussion [2] on such issues which are starting to draw the attention of market-competition regulators in the consumer arena. The CBS session dealt with the issue the data accumulation capabilities of large platforms, how this affects competition and, what it means for innovation.

The discussion reminded me of an illustration in a recent publication on the value of cellular connectivity for the IoT market [3] and, parallels with the US cellular market in the late 1990s. In those days, the technology choices made by different cellular operators prevented their customers from exchanging messages with friends and colleagues who had chosen a different technology. In effect, each mobile network operator functioned as an island of connectivity for messaging services.
After watching message usage and revenue grow elsewhere, North American wireless carriers agreed on the need for an interworking solution [4]. This took the form of the SMPP protocol, originally a proprietary specification, which was turned over as an open standard to the SMS forum.


Rating the Impact of New, Data Capabilities

Once it becomes inexpensive and easy to bring IoT data into cloud platform environments, historical precedent suggests that the focus of value creation will turn to applications of data and cross-party data-sharing. Initially, that means sharing data across operational departments within an organization. With changing attitudes to data, it also means sharing data with supply chain partners and even with rivals, as occurs in on-line marketplaces.

Change will occur once organizations look beyond the value of data in improving operational performance. For example, issues of brand trustworthiness and explainable AI will depend on provenance tracking along data supply chains. This could be solved through systems integration approaches between cloud service providers. An alternative is to promote semantic interoperability to provide a “shared and unambiguous meaning of connected devices and sensors between users and across platforms” [5]. This will rely on common data and information models in combination with tools to enable discovery.

The strategic choices of the hyperscalers and their readiness to collaborate will affect how the IoT market develops. Their choices will also affect the extent to which organizations can make the most of digital transformation opportunities and succeed in capitalizing on the value of the wider pool of IoT data. 



[1] Transforma Insights rates Microsoft the leading hyperscaler in supporting enterprise digital transformation https://transformainsights.com/news/microsoft-leading-hyperscaler-digital-transformation 

[2] Platform envelopment through data – When does it lead to market foreclosure? - https://www.dmcforum.net/platform-envelopment-through-data-when-does-it-lead-to-market-foreclosure/ 

[3] The Value of Cellular Connectivity – From Mobile Devices to the Internet-of-Things (IoT) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3670222 

[4] Cellular Networking Perspectives; David Crowe - https://cnp-wireless.com/ArticleArchive/WirelessTelecom/2002Q3-SMSInterworking.htm 

[5] SmartM2M: Guidelines for using semantic interoperability in the industry - https://www.etsi.org/deliver/etsi_tr/103500_103599/103535/01.01.01_60/tr_103535v010101p.pdf

8 comments:

  1. 13 May 2020 update

    How Google Is Helping Siemens IIoT Ambitions

    https://www.cmswire.com/internet-of-things/how-google-is-helping-siemens-iiot-ambitions/

    ReplyDelete
  2. 14 May 2021 update

    Some context on 'gatekeeper platforms' and competition regulation.

    https://www.twobirds.com/en/news/articles/2020/global/commission-seeks-views-on-gatekeeper-platforms-and-a-new-competition-tool

    ReplyDelete
  3. 18 May 2021 update

    Extract from the European Digital SME Alliance on the EU's Digital Markets Act


    At DIGITAL SME we believe that interoperability requirements could solve some of the issues associated with large platforms and allow new innovative solutions to enter closed-off markets. With interoperability requirements, specific markets, or services where large gatekeeper platforms are dominant can be opened up to allow users to switch to competing services.

    https://www.digitalsme.eu/digital/uploads/Position-paper-on-Digital-Markets-Act-FINAL-DRAFT.pdf

    ReplyDelete
  4. 21 May 2021 update

    Extract from Bank for International Settlements report: BIS Working Papers 941 - The digitalization of money

    The ongoing digital revolution and the rise of large tech firms present the possibility of a radical departure from the traditional model of monetary exchange. The structure and technology underlying digital networks may lead to an unbundling of the separate roles of money, creating fiercer competition among specialized currencies. The association of digital currencies with large platform ecosystems, on the other hand, may lead to a re-bundling of money in which payment services are packaged with an array of data services, encouraging differentiation but discouraging interoperability between platforms. Convertibility among monetary instruments and interoperability between platforms will be crucial in lowering barriers to trade and promoting competition.

    https://www.bis.org/publ/work941.pdf

    ReplyDelete
  5. 24 May 2021 update

    An example of the need for competing providers to collaborate, although it took time to recognize the merits of collaboration.

    Last week Google almost apologetically slipped out the news that it’s merging its wearable device OS with Samsung’s one.

    Wear is the stripped-down version of Android designed for smart watches and that sort of thing. It doesn’t seem to have taken off, presumably in part due to the fact that the biggest Android device maker – Samsung – has its own wearable OS called Tizen. It seems both companies have grown desperate enough to compromise and combine their efforts in this sector.

    https://telecoms.com/509876/google-and-samsung-hope-two-wrongs-make-a-wearable-right/

    ReplyDelete
  6. 28 May 2021 update

    The Misaligned Incentives for Cloud Security, by Bruce Schneier

    Cloud computing is an important source of risk both because it has quickly supplanted traditional IT and because it concentrates ownership of design choices at a very small number of companies. First, cloud is increasingly the default mode of computing for organizations, meaning ever more users and critical data from national intelligence and defense agencies ride on these technologies. Second, cloud computing services, especially those supplied by the world’s four largest providers — Amazon, Microsoft, Alibaba, and Google — concentrate key security and technology design choices inside a small number of organizations. The consequences of bad decisions or poorly made trade-offs can quickly scale to hundreds of millions of users.

    https://www.schneier.com/blog/archives/2021/05/the-misaligned-incentives-for-cloud-security.html

    ReplyDelete
  7. 8 June 2021 update

    5 Things to Know About the IoT Platforms Market

    - The IoT platforms market exceeded forecasts, growing 48% between 2015 and 2020 according to IoT Analytics 2021 market report on IoT Platforms.

    - Many large multinationals have adopted IoT Platforms in recent years.

    - Microsoft and AWS have emerged as frontrunners in the market.

    - IoT platform architectures and business models have undergone large changes.

    For hyperscale vendors, the key questions include: “How supportive will we be of multi-cloud architectures?” and, “How much should we compete with our partners?”

    The key questions for all other players in the ecosystem (e.g., non-hyperscale vendors, end users, service providers) include: “Which hyperscaler(s) should we partner with?” and, “How deeply should we integrate with them (e.g., IaaS or PaaS)?”


    https://iot-analytics.com/5-things-to-know-about-iot-platforms-market/

    ReplyDelete
  8. 11 June 2021 update

    Hyperscale cloud platforms dominate in IoT surge

    “When we launched this sector inquiry, we were concerned that there might be a risk of gatekeepers emerging in this sector,” said Margrethe Vestager, vice-president at the European Commission. “From the first results published today, it appears that many in the sector share our concerns.”

    https://www.telecomtv.com/content/digital-platforms-services/hyperscale-cloud-platforms-dominate-in-iot-surge-41666

    ReplyDelete