Despite the potential, IoT is still something of a niche endeavour. At Transforma Insights many of us have been watching the IoT space for a decade or so, and things are certainly getting easier for end users, and the technologies are maturing, but there are a couple of aspects that really need to change before the industry can truly scale.
Firstly, some of the vertical integration on the supply side needs to go away. “But the only way to deliver IoT is with vertical solutions”, I hear you say. Well, yes, but the thing is that today too many companies are intent on delivering that vertical stack themselves, and ‘owning the customer’ rather than specialising.
Take for example the industry around website development. This is characterised by a very high number of small, specialist (or even small, generalist) web developers that use industry standard tools. The owners (or curators, in the case of open source) of those tools show little ambition to extend their services to actually design, develop, deploy and maintain websites for end users – they leave that to the wider ecosystem of small scale web developers.
The parallel in IoT would be for platforms providers to make their services available to smaller development houses and systems integrators, under an arrangement similar to Intel’s ‘Intel inside’ strategy. This was Microsoft’s early strategy with Azure, and, to a great extent, it worked. About five years ago I met with a small (5-10 employee) Spanish systems integrator that happened to have a good relationship with their local municipality having undertaken a range of projects to develop various websites and web functionality. The municipality had decided that it wanted to do something in IoT and called in the same small systems integrator, who simply drew on Azure functionality to support the new IoT applications. This is exactly how it should work: democratisation of IoT. I doubt that Microsoft cared that they didn’t own that particular customer relationship, and everything was the better for that.
On the flip side, companies that are vertical domain experts would often be better off leveraging the capabilities of dedicated IoT platform players. Although the widespread development of this kind of dynamic does depend to some extent on increased maturity (and consolidation) in the platforms space, and also the development of generally accepted standards to lessen vendor lock-in effects.
What would result is a much more fluid market where domain experts, or small vendors with strong client relationships, can more easily develop and deploy IoT solutions leveraging enhanced platform and other support capabilities. When this happens, a lot of friction in the marketplace will go away and the smaller end users that are needed for IoT to achieve its full potential will find it much easier to deploy IoT solutions.
Secondly, the market for connectivity is still ‘difficult’, at best, although moving in the right direction. There is still a great degree of fragmentation across technologies and geographies. Part of the solution here might lie in the increased use of cloud-based mobile core solutions to provide multi-country cellular solutions, see here for more discussion on this. Aeris pursues a similar strategy, leveraging a cloud-based platform to support connections on the networks of multiple operators. Nokia’s WING division aims to enable mobile operators to offer much the same kind of globally-integrated and globally-managed cellular connectivity. But mobile operators, of course, generally want to own the customer. Cubic Telecom offers integrated cellular services to larger scale clients (e.g. Audi), 1NCE offers good European and US coverage with their “EUR10 for 10 years” offering, and there are others in the cellular market with similar umbrella-like offerings.
Of course, such connectivity solutions should ideally also include various LPWA and satellite services alongside cellular connectivity, and this is an area that Stream Technologies were focussing on until they were acquired by ARM in 2018.
But we’re not yet at the point where the market is characterised by the existence of significant players that can offer ‘connectivity-as-a-service’, as a platform, and that are happy to white label such services via channels.
When the IoT industry offers true connectivity platforms (that can offer all of the colours, in all of the sizes, everywhere), and software platforms that are broadly standards-based (and that could be either de facto or de jure standards) and which pursue channels-based strategies, then we will have reached maturity and the full potential of IoT can be unlocked. Until that time, adoption of IoT solutions is likely to be held back by some level of ‘friction’.
