2014 Corporate Initiatives; market rules are changing

Following several years of rapid growth, the 141 corporate initiatives in 2014 almost matched the 147 events that occurred in 2013.

In 2014, companies in the M2M eco-system were less active in several areas. As illustrated below, there were fewer recorded events of companies either: expanding into new market segments; promoting new technology; and, entering into partnering agreements. Product innovation saw a rise in activity as companies launched new products and services. In general, these addressed the needs for specific customer applications.

A stellar approach to IoT

The IoT market can seem overwhelming because of the multitude of use cases and novelty connected devices that capture the news headlines. It’s a bit like looking at the stars on a clear night; each star stands for an individual connected device.

Faced with so much choice, a natural reaction is to look for concentrations of stars or orderly clusters. This is much the same way that ancient astrologers discerned constellations, such as Orion, Hercules and Ursa Major, in the night sky. This is also the way that many companies approach the IoT market, targeting opportunities in the modern day equivalent of ‘clusters’ that characterise our everyday lives. Examples include the connected car, manufacturing supply chains and smart homes. Within any one of these areas, applications typically focus on point-solutions: in-car Internet access; or, vehicle security services; or even remote monitoring for usage based insurance

Is this the best way to assess the underlying IoT opportunity?

Business innovation at IoT speed

Having worked on the topic of M2M value chain structures in 2012, a couple of relevant market developments caught my attention over the past few weeks. These involve: Aeris, an M2M service provider, Cisco, and Deutsche Telekom.

Each of these company initiatives aims to simplify the process of implementing M2M and IoT applications. They provide guidance to (non-technical) companies that are seeking to implement M2M solutions while also providing an organising structure for complex application situations. These examples hold lessons that companies can apply to improve their sales performance in M2M and IoT markets.

Do consumers trust mobile operators, Internet and media companies?

The Royal Statistical Society (RSS) in the UK recently launched its findings from a survey of the UK population. The study examined the attitudes of individuals towards the use of (their) data and the appeal of data sharing. The study is based on a survey carried out by Ipsos MORI for the RSS and covered adults in the ages 16 to 75 age range in Great Britain.

The RSS study found that media, Internet, telecommunications and insurance companies, all come at the bottom of a ‘trust in data’ league table. Is any of this relevant to companies in the M2M and IoT markets?

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?

PTC-ThingWorx dual-aggregation business model

I was recently in discussion with an executive from an M2M service provider who was marveling at the sizable sum - $112m plus a possible earn-out of $18m - for which ThingWorx was acquired by PTC.

By way of context, PTC supplies software and service solutions to discrete manufacturing organizations to help them create and service their products; example products include heavy machinery, medical devices, air-handling and fire-protection systems. While PTC has been in business for over 25 years, ThingWorx was established as recently as 2010. Its aim was to create a platform to speed up the process of developing applications for smart, connected services involving people, systems and devices.

The acquisition should not come as a surprise to readers of this site. The pattern of corporate initiatives in the connected devices market and the rising role of end-user companies were anticipated at the end of 2012.

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.

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.

Trust in Identity

The 2014 CES show is currently generating a lot of consumer technology related press-headlines as different corporations reveal their stakes in seeking to capitalize from the emerging IoT market. IBM/Technicolor got the ball rolling with their IoT/M2M monitoring offering. They were soon followed by Google and AT&T/Ericsson with their connected car ambitions. Intel and Sony also registered on the IoT radar with their messages about miniaturized and wearable connected device offerings.

These companies and the many others that have latched on to the M2M/IoT phenomenon share a vision of a sharp rise in the total population of connected devices.

As this trend develops, users will become ever more dependent on their connected devices. This will give rise to three interesting industry developments each of which represents a potential commercial opportunity.

The IoT Gets Real as Corporates Commit

2013 has witnessed a strong growth in the number of corporate initiatives that make explicit reference to the Internet of Things (IoT) in contrast to terms such as M2M and “embedded solutions”. It seems that large companies are committing to a market where much of the recent activity can be attributed to start-ups and academia.

A few weeks ago in early November, Intel demonstrated its commitment to the IoT market by creating a special division called the IoT Solutions Group, combining its Intelligent Systems Group with its Wind River acquisition. This development seems like the product of a progressive evolution in Intel’s strategy for the ‘connected devices’ market dating back to its mid-2009 acquisition of Wind River for almost US$900m.

It will be interesting to see how well Intel’s internal re-organization efforts now proceed as it develops more of an IoT market presence, especially as one of its main rivals in the mobile computing market, ARM, has also been active with its own IoT plans.

Verticals, Horizontal- and IoT-Platforms

One of the implementation challenges that historically acted to restrain the M2M market is the issue of vertical-specific requirements. Each solution necessitated a new and/or tailored IT development effort; this had an impact on solution development costs and constrained the opportunity to realise meaningful economies of scale.

Over the past few years, the M2M industry has expanded in potential scale and scope. It is now interlinked with high volume, consumer oriented application opportunities and, more recently, with an extremely broad scope of connected devices under the Internet of Things/Internet of Everything/Industrial Internet umbrella. Most recently, this evolution has spawned a number of platform announcements from M2M market research firms and also from businesses, such as Aeris, GE and Wind River, many of which are recasting M2M capabilities in an IoT light. Was any of this predictable?

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.

IoT Business Models

A few weeks ago, I had the pleasure to be a stimulus speaker at a New Digital Economics event in San Francisco. I spoke about IoT Business Models during a full day session - entitled Digital Things – which was devoted to new opportunities from the ‘Internet of Things’.

Digital Things ran in parallel to sessions on Digital Commerce and Digital Entertainment so there was definite competition for conference delegates. As a measure of how seriously Silicon Valley is taking the IoT market, the Digital Things session drew by far the largest audience.

Since the IoT market is still comparatively underdeveloped in commercial terms, my presentation focused on lessons learned from the M2M market. In particular, I highlighted several insights from the business strategies that service suppliers and providers are implementing.