2023 in Review: Connectivity Dominates but IoT-system Gaps Remain

Two investment themes bookended 2023. In January, the European Union backed a $100m venture capital fund, managed by Momenta Partners. In December, Softbank announced its EUR473m ($514m) investment for a 51% stake in Cubic Telecom. This development more than drew the eye as
exemplified by the analyst commentary around the high (16x) revenue to implied enterprise value multiple. 

In between, the level of corporate activity in the IoT sector continued at roughly the same pace in prior years, albeit down on the years of heightened activity going back five or so years ago. There were several developments among the vendor and network operator communities, but less so among the IoT platform providers. Governments became more active with an emphasis on security and protections for the consumer sector. 

Against the backdrop of 5G developments and 6G pathfinding, IoT is becoming a part of the fabric of enterprise operations and national infrastructure. Established players continue to emphasize connectivity, a relatively small portion of IoT value chains, while enterprises focus on quick-to-market solutions enabled by cloud providers and systems integrators. Both approaches risk leaving ‘system of systems’ issues for later consideration. 

2020 in Review: Corporates Adapt Their IoT Business Models

This review of 2020 corporate initiatives in the IoT market builds on a history of tracking strategic industry developments for over a decade. Two sets of corporate events that bookended the start and end of 2020 provide instructive examples of the roadmap and dead ends that characterize today’s IoT market. In the intervening months, organizations in different parts of the industry ecosystem bolstered their IoT strategies. Some developed complementary capabilities through M&A while others addressed go-to-market issues through business reorganization and product-innovation initiatives. For many organizations, however, there remain challenges in balancing short term imperatives with strategic positioning goals. There is a degree of comfort in embracing the familiar. The risk is that this leads to an under-investment in properly integrating new business approaches and complementary technologies.

Where the IoT Market is Heading

I delivered a presentation some weeks back at an online conference for the managed-services industry. My talk was about the implications of IoT for digital transformation [1]. To prepare for the presentation, I began by looking back over the past decade of market developments, joining a sequence of past and present developments to see into the future of IoT. This exercise provided useful insights into the evolving pattern of customer needs, consequences for where the market is heading and, implications for strategy and business innovation.

A change in perspective reveals new IoT strategies

My last post examined the direction that several MNOs are taking with their IoT strategies [1]. Applying these trends at an industry level, I questioned whether MNOs are approaching the commercial opportunity with a broad enough strategic perspective. Think about it from the perspective that traditional mobile connections will supposedly account for roughly 10% of all IoT connections. That proportion should rise now that low power cellular technologies (NB-IoT family) are firmly on the deployment roadmap. Since this raises the credibility of a vibrant supplier eco-system, more adopters should gravitate to mobile connectivity to take advantage of more compelling economies of scale.

Nevertheless, it’s clear that mobile connectivity will coexist as one of several IoT access technologies. However, unless MNOs find ways to stake an economic role in activities higher up the value chain they will lose out on promising commercial prospects. They will also find themselves dis-intermediated from end customers and their needs. How might this play out?

2017 in Review: Making the IoT work

Looking back over notable, M2M/IoT corporate initiatives in 2017, mobile network operators (MNOs) and technology vendors were the two most active groups in the industry eco-system.

The main feature amongst MNOs was market expansion into new geographies. Sometimes, this happened individually; more often, it took the form of partnering with other network operators. This is a classic growth model for the mobile operator community.

In the technology vendor community, leading initiatives took the form of: acquisitions/investments; partnering (with MNOs, platform providers and system integrators); and, product innovation.

In comparative terms, activity among platform organizations was subdued. And, end-users barely featured among 2017 initiatives. It is likely that these last two data points mask a higher level of internal activity targeting operational scaling and in-house developments as firms solidify their foundations in the IoT market. As an example, Altair, a provider of engineering software to enterprise customers, acquired the Carriots IoT platform. This initiative illustrates the trend to internalize IoT capabilities and has parallels with the earlier acquisition of ThingWorx by PTC [1].

2016 in Review: Shift in Industry Dynamics as the IoT Enters the Mainstream

According to my records, the strength of IoT corporate initiatives witnessed over previous years weakened in 2016, somewhat in contrast to the much greater visibility of the IoT at industry events and in the marketing literature.

While the number of merger, acquisition and investment (MA&I) fell compared to 2015, as a proportion of all corporate events it increased over the prior years.

About 70% of these relate to acquisitions; the remainder correspond to fundraising or investment activities.

Now that the IoT market has become a mainstream idea across the wider economy, the MA&I dynamic reveals a stronger tendency for companies to accelerate their IoT strategies by acquiring capabilities from third parties.

Reality bites for low-power wide-area IoT

A few weeks ago, I commented on a LightReading article [1] on the topic of IoT prospects for wireless operators. I received positive feedback and a few questions about my observations on the revenue drivers that will shape operator strategies over the long run. In essence, I pointed out that wireless operators can grow in three directions and that their individual strategies will be a hybrid of the alternatives.

Readers can digest the full logic of a presentation that oneM2M Partnership Project invited to deliver at a workshop hosted by ETSI [2] in December 2015. In summary, I outlined how operators can grow along three dimensions.

Vendor strategies aim to drive IoT uptake

Over the past few months, several vendors have made high profile announcements about their IoT intentions. This post takes a closer look at their activities, what we can infer about their IoT strategies and likelihood of success.

IoT Roaming

The mobile industry and users of its services are very familiar with the concept of roaming. Roaming allows users to access mobile services outside their home-operator’s footprint. Most users are familiar with roaming in the context of foreign travel. Roaming also occurs when users cannot access their service provider network at home and need to ‘roam’ onto other, local service-provider networks.

M2M service providers and IoT technology developers are now beginning to think about new service scenarios where ‘foreign’ devices enter a local operating environment; I have been using the term ‘IoT roaming’ to describe this situation. There are several reasons why IoT roaming is important, and different compared to traditional ‘roaming’. This is because IoT applications need the ability to recognize and inter-operate with roaming devices. There are knock-on implications for service provider business models and the platform capabilities needed to support IoT applications.

IoT Product Development - Planning Strategically

The IoT (Internet of Things) has been hugely popularized by companies, such as ARM, Bosch, Cisco, GE and Intel. Their marketing campaigns speak of new and massive business opportunities along with their respective IoT market offers. So what do users of such offers need to know in order to manage their IoT product development plans strategically?

Review of M2M Corporate Events in 2013

2013 as a whole was another year of strong corporate activity in the M2M market. A total of 147 events easily surpassed the 115 events that were recorded in 2012. These events include: announcement of an industry changing technology breakthrough; market entry/expansion initiatives; strategic partnering; investment-related acquisitions or divestitures; distribution agreements along the value chain; product innovation and outsourcing of key service delivery capabilities.

While 2013 saw many more companies taking to the press wires to publicize their sales wins, these are not recorded here as corporate initiatives. If anything, sales wins are the consequence of one or more corporate strategy commitments made in prior years.

An important development that occurred over the course of 2013 was a shift in sentiment to promote IoT in preference to M2M. This began with a raft of announcements at the Consumer Electronics Show (CES) in January 2013. Momentum continued to build around the IoT theme due to significant publicity drives and business commitments by large organizations such as ARM, Bosch, Cisco, GE and Intel.

Two Aspects to Business Model Innovation

New business models and business model innovation have become very topical in the M2M industry over the past year. Now, companies are talking less about eye-catching use-cases and more about the business of commercializing the most promising ones. The IoT market, currently preoccupied with cool and quirky devices, has yet to make this transition.

For any company in the M2M market, there are two aspects to business model innovation. The first deals with business-unit organization at a corporate level. The second applies to any special approach that is needed to capitalize on a specific market opportunity.