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The IoT phenomenon has superseded the traditional market for M2M applications, primarily by embracing a wide variety of Internet- and consumer-connected devices.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.

Smart Home Platform Innovator Strategies

Early in 2012, I completed a study for the GSM Association (GSMA) on the topic of new business models that would be linked to innovative, connected-device applications. This study laid out a sequence of value propositions, as companies seek to move up the value chain. In order to bring these new value propositions to market, new and innovative business models would need to be designed.

In the early days of M2M, the value proposition was all about connectivity. This would make stand-alone devices ‘smart’ and the business challenge was largely about how connectivity could be ‘embedded’ inexpensively. Later on, the market evolved as companies started to care about deployment, reliability and the user-experience issues. This ushered in a new value proposition around managed connectivity and several specialist platform providers have emerged in their own right or as partners to mobile operators.

The final two sources of value that were identified included the delivery of ‘platform innovator’ and ‘stewardship’ services. The connected devices market has been moving in these directions with three companies – Arrayent, Deutsche Telekom’s Qivicon and Zonoff – investing their energies in the platforms arena.