Free, low-speed IoT data

Earlier this week, Amazon opened its Sidewalk long-range, low-bandwidth network to developers with an offer of free, low-speed data. On the surface, this sounds like a great inducement for developers and IoT innovators. 

The publicity alone might evangelize the market in the manner that multi-vendor support for the Connectivity Standards Alliance’s Matter protocol is stimulating the smart home market. 

Before committing to AWS’ IoT bandwagon, however, adopters should weigh their position on three questions. 

What does “free” mean? 

The concept of a “free lunch” dates back to the 1870s. It describes a situation where establishments provide a meal at no cost, usually as a sales enticement to attract customers and increase revenues from other businesses. Businesses and consumers are familiar with the concept of “free” services today as anybody using email, social media and “freemium” will testify. 

The challenge for users of these services is to understand the terms of the trade. Specifically, what benefits are users foregoing in exchange for the free offering? While these might seem intangible, they might contain pointers that help an organization to innovate and develop a sustainable business case.

What is my IoT roadmap and planning horizon? 

As I wrote, in 2016, on the topic of another free offering, many communications services evolve in a pattern. It begins with basic messages and leads to users wanting more data, more frequent communications, and conversational interactions. Applying this progression helps with market segmentation and business model innovation. Organizations planning to take advantage of Sidewalk’s free offer should reflect on whether their use cases are relatively static. If they are likely to evolve, their cost model needs to account for data usage charges and possibly a change-out of technology. This is one planning horizon consideration. 

Another is the prospect that AWS might discontinue its free offer or withdraw from the market. Large organizations are not immune from the kind of withdrawal that affected another “Sidewalk” initiative. It is a concern that overshadows the IoT market after several high-profile market withdrawals over the past year. 

These matters might be less critical if solutions are not mission critical or have a relatively short operational life, based on deployment scenarios and customer needs.

What does my customer want?

There is a class of customer that is actively interested in experimentation and innovation. New concepts help them explore business strategies and plan for the future. That is one reason why free trials are so valued. 

However, many customers understand that when they are using a free service, they are taking on some level of risk. The service might be offered on a best-efforts basis or for a limited time period, for example. 

While working on IoT market project many years ago, I discussed the concept of a photocopier leasing service targeting small businesses. The “free” option was to connect photocopiers via enterprise Wi Fi networks and free ride on the user’s broadband connection. Nevertheless, the service provider explained that the business justified using a relatively costly cellular module (module prices have fallen considerably since then) and paying for cellular connectivity. The alternative of having to dispatch technicians to customer sites and tweaking deployments for each customer’s network security policies was far more costly. Overall, the cellular approach yielded a superior customer experience.

Amazon’s Next Billion

In the context of the multi-billion IoT market, Amazon might well unearth an opportunity of about a billion connected devices in the US market. Whether it is wise to entrust environmental sensors, leak detectors or smart locks, as referenced in Amazon's announcement, to a free, low-rate data offering is a decision that solution providers and customer will have to judge for themselves. Asking the right questions will help.

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