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.

2018 in Review: IoT puzzle-pieces falling into place

Compared to previous years, the pace of corporate activity in the IoT arena has settled down. This is to be expected in a maturing market cycle. This impression may be at variance with wider industry sentiment where the use of AI/Blockchain/IoT/Machine Learning labelling continues to sensationalize.

As a sign of IoT market reality, the opening event of 2018 dealt with the commercial reality. It took the form of Telefonica O2 withdrawing from the smart home market through the closure of O2 Smart Home. The year ended with a couple of more promising events for the mobile and IoT industries. I’ll touch on these later.

Most activity was concentrated among three groups: technology vendors; network operators (mobile, low-power and virtual); and, platform providers.

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].

Impressions from IoT Solutions World Congress 2016

While I often attend Mobile World Congress in Barcelona during February, this was my first experience of IoTSW Congress and seeing Barcelona in October. The show is growing impressively, doubling the number of exhibitors and attendees compared to 2015. If this pace holds up, IoTSWC could surpass MWC within three years, such is the growth potential for the IoT industry.

 In addition to three speaking slots – one for the Industrial Internet Consortium, another for Intel’s Corporate Strategy group and a third on main Congress track - I had several discussions with industrial businesses, investors and solution providers about the state of the market.

Here are a few observations that stood out from the event. 

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.

What do we know about IoT developers?

A couple reports published in recent weeks have touched on the topic of the IoT developer community. The first one, from Vision Mobile [1], is entitled IoT Megatrends 2015. Based on research involving over 4,000 IoT developers, Vision Mobile identifies four seismic changes that will shake up the IoT market; one of these changes is that 'everyone can become a developer'.

According to Vision Mobile, this development is quite likely to occur in the consumer portion of the IoT market. This is because IoT platforms, such as Pebble, Razer, Android Wear and Apple WatchKit in the smart-watch segment for example, will evolve in ways that allow developers to orchestrate data streams into valuable scenarios for users. Soon, the ability to manipulate data streams will become so easy that everyone can become a ‘developer’. Or, to use a term that I introduced in an earlier post [2], we should expect a data 'taker' class of user to emerge, paralleling the ‘makers’ of the hardware world.

The second IoT developer survey comes from the Eclipse Foundation [3] and this draws on a small (about a tenth of the Vision Mobile sample) sample of real IoT developers (Eclipse eliminated respondents who did not meet its criteria for IoT developers).

The study author admits to a skewed sample base because of factors such as the channels used to recruit participants. Nevertheless, amongst details about the most popular programming languages, protocols and use of open-source technology there was a surprising revelation about the highly visible industry alliances that are evangelizing interoperability and the IoT market.

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.

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?