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The IoT phenomenon has superseded the traditional market for M2M applications, primarily by embracing a wide variety of Internet- and consumer-connected devices.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

Google NEST – a case of déjà vu?

Almost 10 years ago, Amazon formed a team to work on a groundbreaking, highly integrated consumer product. Amazon began with a goal of improving the user experience surrounding physical books. The initiative was led by Gregg Zehr who brought considerable pedigree having previously been the VP of Hardware Engineering at Palm Computing.

The new team was set up outside of Amazon and its strategic objective was complementary to Amazon's mainstream activities. This was the genesis of Amazon’s Lab126, a start-up that focused on product innovation around a new generation of connected devices. Amazon's connected device road map has progressed from the connected eReader to tablets. Most recently, Amazon’s Kindle has been talked about as a point-of-sale device.

If we fast-forward to the present day, it is difficult to escape a sense of déjà vu when looking at Google’s acquisition of NEST. Here we have a separate entity with core competencies in creating highly aesthetic consumer products, led by executives with a strong Apple-design pedigree. And, according to Google’s CEO Larry Page, Google and NEST are “excited to bring great experiences to more homes in more countries”.

However, relative to Amazon's start-up costs ten years ago, it seems that the entry cost for a new category of innovation in the connected devices arena has gone up to the order of a few billions dollars!

So what did Amazon accomplish with Lab126? What might we expect from Google/NEST? And, what does this mean for companies that can’t afford billion dollar initiatives?

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.