Thursday, April 14, 2016

Witnessing the Future of Technology at Mobile World Congress 2016


I have just returned from a very interesting and jammed-packed week at Mobile World Congress 2016 in Barcelona.  For the first time ever, over 100,000 people and 2,200 plus vendors attended this year’s premier technology festival.  Much has changed in the industry over the last year since I reported my observations of MWC 2015.  However, what is most remarkable is how the boundaries of mobility continue to expand and morph – everything now seems to be mobile?  As such, the show offers a fascinating glimpse into the future of technology and the major social and business shifts that we can expect in the next few years. 
The big take-away for me was that the show seems to have returned somewhat to its roots.  While there were still lots of new smartphones, wearables and cars scattered around the show floor, they seemed to be more wallpaper, or in the background.  Much of the buzz and marketing was around new network technologies and the core business of the mobile industry.  The new things were 5G networks, low powered networks, and the new Internet of Things solutions that are going to ride over these new networks. 
The following are my personal observations and extrapolations from the show, based on my conversations with operators, customer meetings, analysts, and colleagues, as well as from simply walking the show floor. 
  1. 5G – The Next New Technology —What is a technology show without a shiny new technology?  Despite the fact that only 20 per cent of global subscribers have adopted the previous new technology (4G), and many mobile users are still back on the second generation (2G) technology, we are now entering the fifth generation of mobile technology – 5G.  The remarkable thing though is that no one really knows what 5G is.  There are no agreed up technical standards or industry agreements on the definition of 5G.  And, the best estimates are that we really won’t see 5G becoming a reality until sometime in the middle of the next decade.  However, every major vendor is now “5G ready” and promoting their 5G solutions, and plastering the fact all over their exhibit booths.  Numerous announcements were made on new 5G partnerships and tests.  Verizon is looking to deploy in 2017 and the Japanese, Koreans and Russians have all promised to have 5G networks running in time for the various global sporting events that they are hosting. 
  2. From High Power to Low Power Networks – At the other extreme from the futuristic, high-powered 5G networks are LPWA networks – Low Power Wide Area networks.  These networks cover wide areas (up to 30 km and more per base station), require very low power (the batteries of attached devices can last for years), and transmit very low amounts of data at slow speeds.  Many see these networks as an essential platform to realize the Internet of Things revolution.  Everything from water meters to parking meters and agriculture sensors could be hooked up to these networks and essentially forgotten for years.  Sigfox and LoRa are the current leading contenders for these networks, but the GSMA and others are frantically working to release a LTE-based version.  Providers, such as Orange, Proximus and KPN are currently deploying LPWA networks and many others are trying to figure out their strategy.
  3. IoT – The Year’s Hottest Three Letter Acronym — These 3 letters – standing for the “Internet of Things” – were everywhere.  They were on the signs of practically every booth and on the tip of everyone’s tongue.  No doubt, the ability to connect sensors, devices and “things” to the Internet is the next wave of mobile growth and presents tremendous opportunities for technology vendors to sell new products and services.  A number of key partnerships were announced and some very interesting and compelling industrial IoT case studies were promoted.  The mobile operators shouted out their relevance in IoT by displaying their platforms, capabilities and lighthouse customer engagements.
  4. The Next Not So New Devices – In the shows of past, some of the biggest highlights were the highly publicized announcements of the next sleek and sexy smartphone.  While all of the manufacturers proudly displayed their range of devices, there didn’t seem to be any buzz about the “next big thing”.  Samsung announced it’s new Galaxy S7, but you had to look hard to understand how it really differed from their S6, which they announced with a big splash last year.  Similarly, wearables were on display, but not front and center like they were in 2015.  Phenomenal progress has been made in the smartphone and device space over the years, but I think that we have currently reached an innovation plateau.  In fact, I think that there might actually have been fewer, and a narrower range, of devices than in the previous year.   
  5. Virtual Reality Becomes Virtually Real — Not only did Samsung demonstrate its cool new virtual reality devices at the show, but they had a temporary building in the center of Barcelona, Plaza de Catalyuna, welcoming long queues of the general public to sample these new worlds.  HTC also demonstrated its VR devices, signaling the start of the virtual reality wars.  Several exhibitors were also using virtual reality devices to enhance the impact of their messaging.  Interestingly, while VR is a hot area, the consensus of a dinner of industry experts that I attended was that VR will be like 3D TV – a niche experience a select customer segment.  However, we all expect VR to have a big impact in re-shaping many businesses – far beyond the gaming world.
  6. Virtualization Reality — Virtualization and the cloud have finally hit the core mobile network elements.  Not only will this make it less expensive for operators to build networks, but it will provide them with much greater flexibility and responsiveness and allow the network to extend well beyond the boundaries of the traditional mobile network.   SDN (Software Defined Networks) are also critical to the new network architectures.  Network virtualization is finally hitting the mainstream.    Mobile operators, such as Telefonica, China Mobile, AT&T and NTT DoCoMo, announced fully operational NFV (Network Functions Virtualization) deployments.  And many others announced their plans for getting there.
  7. Mobile Monetization – An Industry on the Edge — At one time, service providers were the kings of the show.  They are now just one of the participants in the massive and rapidly changing mobile industry.  The decline in voice traffic, loss of messaging and competition to their data business from over the top providers and alternative access networks such as Wi-Fi, means that they desperately need to find new ways to make money.  Most of the world’s major mobile operators now have their own large and prominently placed booths on the show floor.   They are proudly displaying the latest business solutions, cloud services, gaming, IoT and other innovative mobile offerings that they have to sell.  They are hoping that these new revenue-generating opportunities will move them beyond merely connectivity providers and deliver the next wave of monetization opportunities.
  8. The Battle for the Great Indoors — Changes in devices, applications and social behavior are re-defining mobility from an on-the-go activity to a more nomadic activity, which takes place largely indoors.  Traditional macro networks have a tough time penetrating buildings and reaching indoors.  Hence operators are struggling to provide 5 bar coverage in homes, offices and public spaces.  Traditional mobile technology vendors are now showcasing their small cell, Wi-Fi and DAS solutions as the answer to this challenge of lighting up the indoors.  At one time, these solutions were relegated to the back corner, but they are increasingly becoming center stage as a solution to this new and growing problem.  Not to mention, they offer an attractive new revenue opportunity for traditional macro network vendors.
  9. The Mobile Ad Battles – A big bomb was dropped during that show was the announcement that the mobile operator Three was working with the Israeli start-up, Shine, to block mobile ads from being displayed to their subscribers.  Unlike ad blockers installed on smartphones, this blocking would be done in the core of the operators’ networks.  Mobile operators estimate that up to one-third of the traffic on their networks is generated from mobile advertising.  In addition to reducing the demand on their networks, operators argue that blocking this unwanted traffic is providing a valuable service to their customers who end up paying for these invasive ads from their data plans.  The counter argument of the advertising industry is that ads pay for the Internet and the services that users enjoy.  The majority of the operators who I spoke with suggested that There Mobile was not unique and that they expected many other operators to follow suit, banning mobile ads on their networks.  Let the mobile ad wars begin.
  10. Mobile Payments – Maybe Next Year? — The last point that I always seem to make on these reviews of MWC is on mobile payments.  At last year’s show I was hopeful that with the launch of Apple Pay and Samsung Pay that 2015 might finally be the year of the long awaited mobile payments.  Alas, that does not seem to be the case.  According to one analyst, only 6% of eligible Apple users actually use Apple Pay.  And, the number is even lower for Samsung and Google Pay.   This despair in the adoption of mobile payments was evident on the show floor.  Besides, a few small vendors scattered at the edges of the more distant halls, Master Card and Visa were they only exhibitors that I saw actively promoting mobile payments.  Well, there is always next year…

Small Data is the Core of the Internet of Things


The wireless world is all about speed and quantity.  The evolution of wireless networks is the history of trying to transmit ever greater quantities of data at faster speeds.  It was once viewed as revolutionary that suitcase-size “mobile” phones could make poor quality voice calls without wires.  Now, with the latest 4G cellular networks we can access the Internet, communicate with the world and watch the latest videos over our latest, svelte smartphones.  And, the new 5G networks on the horizon promise speeds measured in multiple gigabits per second, latency in the single digit milliseconds and the capacity to handle 1,000 times more consumption that current network technologies.  Industry pundits predict that 5G promises to bring the Internet of Things world alive, enabling new IoT opportunities like robotics and autonomous vehicles.

This exciting new future for mobile networks may be great for data hungry smartphone users and “sexy” new IoT applications, but the majority of IoT applications is pretty pedestrian, or as some might say, old school.  From a network connectivity perspective, this huge body of sensors transmits very little data, at slow rates.  Moisture sensors buried in farmers’ fields indicate when they need to be irrigated, trash bins communicate whether they need to be emptied, or embedded parking sensors indicate when a parking spot is available.  And, most of these sensors don’t have ready access to power, so they need to have very low power consumption to ensure that their batteries last for years.  Do you really want to be ripping up agricultural fields or water distribution networks every couple of months to replace batteries?  While the high-speed world of futuristic IoT applications sounds exciting, it is really this mass of connected, “small data”, sensors that is truly going to deliver on the social and economic promise of the IoT revolution.

The problem is how to effectively connect this “small data” IoT world.  Cellular networks have been fantastic for creating our wireless world but they are not very well adapted for much of the IoT world.  These networks and devices consume a fair bit of power, they are costly to build and operate, they have a fair bit of unnecessary technology overhead, and their coverage is typically confined to areas populated by people, not necessarily sensors.  The race is now on to deliver alternative, better suited networks to the rapidly growing “small data” IoT connected world.

There are currently three network technologies vying to connect the small data world.  All of these networks cover wide areas (up to 30 km and more per base station), require very low power (the batteries of attached devices can last for years), and transmit very low amounts of data (10 to 100 bytes) at slow speeds (60 bs to a couple of 100 kpbs).  SigFox is a French company that uses proprietary technology to build and operate its own networks, selling access to IoT users.  SigFox currently claims the world’s largest IoT network, covering much of Europe, Australia and ambitious plans to blanket the United States.  LoRa is an alliance of manufacturers, vendors and operators who collaborate to create an open, global standard and certification process.  Operators, enterprises and others can use their certified equipment to build and operate their own LoRa network.  Lastly, the GSMA, the association that represents the world’s cellular operators and vendors, has been frantically working with the global standards body to create, the yet to be released, Narrow-Band IoT (NB-IoT) which will be compatible with current cellular standards and deployments. 

The world’s mobile operators are in a precarious position, they know that wireless connectivity is essential to the IoT revolution, but they recognize that their bread-and-butter cellular networks will only take them so far.  They also need to be able to connect the small data IoT world.  Despite unclear business cases, operators around the world are launching these alternative IoT networks using one of the three network technologies.  While it is not yet obvious how they will make money, besides the very low access fees, they recognize that there is a “land grab” happening that will define who will connect the small data IoT world.

It is not certain which technologies or which providers will win in the race to connect the small data world.  But, it is certain that the small data world is the backbone of the IoT revolution and without effectively connecting this world, the revolution will never be realized.

Thursday, January 7, 2016

Who Can Help Businesses to Realize the Promise of the IoT Revolution?


We are embarking on a new technological journey that will fundamentally change forever the economy, society and the way that we live.  The Internet of Things (IoT) is a world where up to 50 billion things (or devices) will be connected to the Internet by 2020; or, the equivalent of 6 devices for every person on the planet.

The clear winners in this revolution will be those companies that, not only embrace the Internet of Things, but use it to transform their businesses.  Those winning companies will be the ones that integrate IoT into their operations, products and customer interactions to create new business models and sources of value.  In fact, McKinsey estimates that there could be as much as $11 trillion per year by 2025 in new economic value created by adopting IoT.

Businesses are beginning to completely re-design their processes, operations and business models to benefit from this new era.  We are already starting to see the emergence of smart cities, connected utilities, connected railways, connected factories, connected cars, and even connected mines, to name but a few.  All industries are looking to IoT as a breakthrough technology to help them optimize their business, enter new markets and enhance their relationship with their customers.  This is why industry analysts, like IDC, estimate that businesses will spend up to $20 trillion over the next four years to realize the promise of the Internet of Things. 

The dawn of the IoT revolution may have begun but it will still be some time before its transformational powers will be fully felt.  There are a number of technical, business, regulatory and perception obstacles that must first be overcome.  We are still very much in the early days of the IoT revolution with many companies knowing that they need to do something but not sure, what or how.  A study by Harvard Business Review and Verizon found that less than ten percent of enterprises had deployed IoT initiatives.  And, of that small minority only 56 percent of those had an IoT strategy.  What does that say for the 90 percent of companies who have yet to implement IoT initiatives? 

Recent Cisco research of enterprise IT and business decision makers revealed that their top 3 challenges with implementing IoT initiatives in their businesses were: 1) security of business data; 2) standardization of IoT infrastructure and compatibility with business systems; and, 3) cost of implementation.  The IoT supplier market is currently very fragmented with a multitude of big and small companies providing single pieces of the IoT implementation – devices, application, point solutions, different platforms, etc.  Hence, it is currently challenged to meet these demanding customer needs. 

We believe that Service Providers are well positioned to unlock the true value of IoT for business and public sector customers.  Our recent white paper, “How Service Providers Can Help Businesses to Realize the Promise of the IoT Revolution,” describes how SPs are well suited to deliver on these customer needs and the strategic and operational decisions that they need to make to build a viable IoT business.  In particular, we address a number of key questions that service providers need to answer to build and run a successful IoT business: 

  • What are the key challenges that businesses have with IoT and how are SPs best positioned to help them?
  • How can SPs add further value to their connectivity offerings?
  • What are the best opportunities more value and move up the IoT delivery stack from connectivity? 
  • What are the potential economics and business models of these new solutions and services and how can SPs best extract value?

Thursday, December 17, 2015

2015 – A Tipping Point for the Internet of Things


2015 will be remembered as the year of the Internet of things.  The tipping point when IoT went from the back rooms of the technology world to become mainstream.  
 

The consultancy McKinsey estimates that the Internet of Things - a world where up to 50 billion things (or devices) will be connected to the Internet – could create up to $11 trillion per year of new economic value to business and society.  The term Internet of Things traces its origins to 1999, but it is only over the last year or so that the realization of its transformational potential has reached the business community and the general population.  The number of research reports, conferences and media articles devoted to the topic has exploded.  With the media making the connection between the smart home and the connected automobile IOT has begun to become part of the popular parlance.  In fact, a Google search for Internet of Things reveals 725 billion results.

Google Trends also reveals that 2014 and 2015 were pivotal years in the dawn of the IoT revolution, as evidenced by the explosion in the number of IOT related searches.  Over the past two years there have been big announcements from all of the major car manufacturers of their connected car initiatives, lots of M&A activity in the technology industry as they race to supply the revolution, and major global alliances of telecom providers being formed, to provide the underlying connectivity and infrastructure.  But, most of all, we are actually starting to see some of the promised transformational benefits of the Internet of Things becoming a reality.

Companies like GE have connected sensors to their jet engines to provide near real-time monitoring of the health of their engines, reducing airline spending by 10-40%.  In shifting from rules-based maintenance to more predictive driven intervention, GE has fundamentally shifted its business from one of selling jet engines to airlines to providing a comprehensive, engine-as-a-service offering.  Using GPS and vehicle monitoring sensors many utility companies are now able to more accurately monitor the performance of installation and repair personnel.  General Motors uses sensors to monitor humidity to optimize painting; if the conditions are unfavorable, the work is routed to another part of the factory, thereby reducing repainting and maximizing plant uptime. 

The oil and gas industry is probably one of the most advanced users of IoT technology with new production platforms containing more than 30,000 sensors, connected through a sophisticated central control and data management systems.  IoT is also creeping into our everyday lives, with home security, thermostats and monitoring connected to data analytics and all controlled through our smart phones.  With an estimated 130 million consumers worldwide using fitness trackers today, the reality of more efficient, and personal effective health care is starting to become a reality.

It is not just businesses that are reaping the benefits of the IoT revolution.  Cities around the globe are beginning to build out new digital services such as smart lighting, traffic, waste management and data analytics to reduce costs, tap new sources of revenue, create new innovation business districts and improve the overall quality of urban life. Real-time bus information is now available in New York City, Chicago, Singapore, and many other cities, significantly improving, not only the wait times for riders, but the operations of the transit authority.  Similarly, by using real-time data to adjust the timing of traffic lights to improve traffic flow Abu Dhabi has been able to speed traffic flow in the city by up to 25 percent.

Telecom companies have realized that the IoT revolution holds for them the promise of new found revenues in connecting the projected 50 billion things.  The number of cellular machine-to-machine connections grew 28 percent in 2014 and is estimated to reach to 1 billion connections annually by 2020.  AT&T reported that it has more than 22 million IoT devices connected to its network.  Recognizing the huge opportunity afforded by the IoT revolution, the large French telecom operator Orange recently announced that €600 million ($670 million) of its revenues will come from the Internet of Things related businesses by 2018.  Leading technology companies like Cisco, IBM and Ericsson have all realized the opportunities of the next technology revolution by creating IoT business units, new product lines and extensive marketing campaigns.  Industry analysts, consultants and other technology services companies have similarly organized to benefit from the Internet of Things.

The dawn of the IoT revolution may have begun but it will still be some time before its transformational powers will be fully felt.  There are a number of technical, business, regulatory and perception obstacles that must first be overcome.  We are still very much in the early days of the IoE revolution with many companies knowing that they need to do something but not sure, what or how. 

Recent Cisco research of enterprise IT and business decision makers revealed that their top 3 challenges with implementing IoT initiatives in their businesses were: 1) security of business data; 2) standardization of IoT infrastructure and compatibility with business systems; and, 3) cost of implementation.  The critical issues of security and data privacy are critical elements that are being addresses, but we still have a long way to go to allay these justified fears around IoT implementations.  Equally, there are organizations and committees that are working hard on establishing IoT standards to ensure compatibility between all of the different IoT components. 

The current IoT technology and solutions environment is very much a Tower of Babel when it comes to interoperability and compatibility.  Government regulation will no doubt play an important part in shaping security and privacy, driving standards and forming the legal framework for such leading-edge innovations as self-driving cars and autonomous machinery.  The IoT supplier market is currently very fragmented with a multitude of big and small companies providing single pieces of the IoT implementation – devices, application, point solutions, different platforms, etc. 

Now that the Internet of Things has gone mainstream these challenges will be resolved and IoT will become a fact of life for businesses and society alike.  In fact, one day IoT will cease to exist.  In the future, it will be hard to imagine that all things weren’t connected and that the extraordinary benefits of IoT hadn’t always been with us.

I welcome the Internet of Things to 2016 and beyond.  I can’t wait to see how this new technology revolution continues to transform our lives.

Tuesday, October 6, 2015

The Internet of Things Revolution Has Only Just Begun


We are in the early days of another transformative technology revolution.  The consultancy McKinsey estimates that the Internet of Things - a world where up to 50 billion things (or devices) will be connected to the Internet – could create up to $11 trillion per year of new economic value to business and society.  The term Internet of Things traces its origins to 1999, but it is only over the last year or so that the realization of its transformational potential has reached the business community and the general population.  The number of research reports, conferences and media articles devoted to the topic has exploded.  With the media making the connection between the smart home and the connected automobile IOT has begun to become part of the popular parlance.  In fact, a Google search for Internet of Things reveals 725 billion results.

Google Trends also reveals that 2014 and 2015 were pivotal years in the dawn of the IoT revolution, as evidenced by the explosion in the number of IOT related seraches.  Over the past two years there have been big announcements from all of the major car manufacturers of their connected car initiatives, lots of M&A activity in the technology industry as they race to supply the revolution, and major global alliances of telecom providers being formed, to provide the underlying connectivity and infrastructure.  But, most of all, we are actually starting to see some of the promised transformational benefits of the Internet of Things becoming a reality.

Companies like GE have connected sensors to their jet engines to provide near real-time monitoring of the health of their engines, reducing airline spending by 10-40%.  In shifting from rules-based maintenance to more predictive driven intervention, GE has fundamentally shifted its business from one of selling jet engines to airlines to providing a comprehensive, engine-as-a-service offering.  Using GPS and vehicle monitoring sensors many utility companies are now able to more accurately monitor the performance of installation and repair personnel.  General Motors uses sensors to monitor humidity to optimize painting; if the conditions are unfavorable, the work is routed to another part of the factory, thereby reducing repainting and maximizing plant uptime.  The oil and gas industry is probably one of the most advanced users of IoT technology with new production platforms containing more than 30,000 sensors, connected through a sophisticated central control and data management systems.  IoT is also creeping into our everyday lives, with home security, thermostats and monitoring connected to data analytics and all controlled through our smart phones.  With an estimated 130 million consumers worldwide using fitness trackers today, the reality of more efficient, and personal effective health care is starting to become a reality. 

It is not just businesses that are reaping the benefits of the IoT revolution.  Cities around the globe are beginning to build out new digital services such as smart lighting, traffic, waste management and data analytics to reduce costs, tap new sources of revenue, create new innovation business districts and improve the overall quality of urban life. Real-time bus information is now available in New York City, Chicago, Singapore, and many other cities, significantly improving, not only the wait times for riders, but the operations of the transit authority.  Similarly, by using real-time data to adjust the timing of traffic lights to improve traffic flow Abu Dhabi has been able to speed traffic flow in the city by up to 25 percent.

Telecom companies have realized that the IoT revolution holds for them the promise of new found revenues in connecting the projected 50 billion things.  The number of cellular machine-to-machine connections grew 28 percent in 2014 and is estimated to reach to 1 billion connections annually by 2020.  AT&T reported that it has more than 22 million IoT devices connected to its network.  Recognizing the huge opportunity afforded by the IoT revolution, the large French telecom operator Orange recently announced that €600 million ($670 million) of its revenues will come from the Internet of Things related businesses by 2018.  Leading technology companies like Cisco, IBM and Ericsson have all realized the opportunities of the next technology revolution by creating IoT business units, new product lines and extensive marketing campaigns.  Industry analysts, consultants and other technology services companies have similarly organized to benefit from the Internet of Things.

The dawn of the IoT revolution may have begun but it will still be some time before its transformational powers will be fully felt.  There are a number of technical, business, regulatory and perception obstacles that must first be overcome.  We are still very much in the early days of the IoE revolution with many companies knowing that they need to do something but not sure, what or how.  A study by Harvard Business Review and Verizon found that less than ten percent of enterprises had deployed IoT initiatives.  And, of that small minority only 56 percent of those had an IoT strategy.  What does that say for the 90 percent of companies who have yet to implement IoT initiatives? 

Recent Cisco research of enterprise IT and business decision makers revealed that their top 3 challenges with implementing IoT initiatives in their businesses were: 1) security of business data; 2) standardization of IoT infrastructure and compatibility with business systems; and, 3) cost of implementation.  The critical issues of security and data privacy are critical elements that are being addresses, but we still have a long way to go to allay these justified fears around IoT implementations.  Equally, there are organizations and committees that are working hard on establishing IoT standards to ensure compatibility between all of the different IoT components.  However, the current IoT technology and solutions environment is very much a Tower of Babel when it comes to interoperability and compatibility.  Government regulation will no doubt play an important part in shaping security and privacy, driving standards and forming the legal framework for such leading-edge innovations as self-driving cars and autonomous machinery.

The IoT supplier market is currently very fragmented with a multitude of big and small companies providing single pieces of the IoT implementation – devices, application, point solutions, different platforms, etc.  The same Cisco end user research found that customers are not only looking to suppliers to provide them with end-to-end solutions but are looking for a broader array of services to help them successfully navigate this new technology revolution.  Specifically, the top things that businesses are looking for from an IoT provider include: 1) full solutions; 2) services (strategic planning, install, design, technical support); 3) solutions that leverage existing infrastructure; and, 4) the ability to scale with organization’s needs.  It could be some time before a number of key IoT suppliers emerge from the current fragmented market to successfully address all of the businesses needs and help them to fully realize the promised benefits of the IoT revolution.

What does the future have in store for IoT and how will this revolution unfold?  The following are my ten predictions of what we have to look forward to: 

  1. The platform is the key to success – The “things” will get increasingly cheaper, applications will multiply and connectivity will cost pennies.  The real value will be created in the horizontal platform that ties it all together – the new OS.  This platform will be composed of 3 different layers: management, infrastructure, and data analytics and insights.
  2. The industry will look completely different than it does today – Like in the early days of the Internet, IoT is a greenfield market.  New players, with new business models, approaches, and solutions can appear out of nowhere and overtake incumbents.   
  3. Business is the key market - While there is lots of talk about wearables and connected homes, the real value and immediate market for IoT is with businesses and enterprises.  The adoption of IoT will be much more like the traditional IT diffusion model (businesses to consumers) than the Consumer-led adoption of social media and personal mobility. 
  4. It will be about much more than the “things” – The currency of IoT will be “data”.  But, this new currency only has value if the masses of data can be translated into insights and information which can be converted into concrete actions that will transform businesses, change people’s lives and effect social change.
  5. The “Connected Car” will be all about the car – There is currently a lot of hype about turning your car into a mobile entertainment center – music, video, social media and all of the apps that we currently enjoy on our smartphones.  However, the real value and transformation is in connecting the car operations (e.g., service updates, advanced notifications of failures) and drastically improving safety (e.g., inter-car communications, semi-autonomous driving).  These services will most likely be paid for by the manufacturer or through new, alternative business models, rather than directly by the driver.  
  6. IoT will force business transformation – Businesses which connected to the Internet saw the real value when they re-designed their businesses models and processes for a connected world, and found new online products and services to offer.  Some companies immediately embraced the Dot-Com world, many had false starts and many others took a long time to jump on, or the revolution passed them by completely.  The same will be true of IoT.  Businesses need to develop strategies and plans for how they can leverage IoT to transform all aspects of their businesses and capture the real value of this revolutionary technology.  
  7. Trading mobile dollars for IoT pennies – Mobile operators are salivating at the new revenues to be earned from connecting all of these things to the Internet.  However, it is not that straight forward.  While some of the traffic will flow over mobile networks, the majority of the connections will be made over wireline or unlicensed wireless networks, and much of it will be very low bandwidth traffic. Mobile operators will need to do more than just sell mobile connectivity to inanimate objects to reap the full rewards of IoT. 
  8. There will be a battle for IoT application mindshare – With billions of devices projected to be spewing out petabytes of data, application developers will have a field day launching thousands, or even millions, of new and cool apps.  But, like the smartphone world, all of these apps will be fighting for mindshare and only a few will rise to the top to be valued by businesses and consumers. 
  9. All cities will be smart – With more than one-half of the world’s population living cities innovative new IoT solutions, such as smart parking, connected waste, and traffic management, hold great promise for combatting the major challenges of rapid urbanization.  We are unlikely to see many Jetson-like smart cities of the future appearing overnight.  However, like in the past with the adoption of revolutionary technologies such as sewers, electricity, traffic lights, and the Internet, mayors will slowly implement IoT solutions to save money, shape the future and make their cities better places to live.  
  10. IoT will cease to exist – Terms like “eCommerce”, “the Net” and “WWW” are all quaint reminders of how the Internet has ceased to be an exciting and mysterious new thing, and, like electricity, is now just part of our daily lives.  The Internet of Things will go the same way.  One day soon, it will be hard to imagine that all things weren’t connected and that the extraordinary benefits of IoT hadn’t always been with us.

Tuesday, August 11, 2015

Who Will Be the Winners in the IoT Revolution?


Every new technology revolution creates new technology company powerhouses and relegates others to the ashes of history.  The PC revolution gave us the likes of Microsoft and Intel, the Internet revolution created companies like Cisco, Google, and Amazon, and lately the mobile revolution has created market giants like Apple, Samsung and Facebook.  

We are in the early days of another transformative technology revolution – The Internet of Things.  Connected everything to everything in a smart, data-rich world will fundamentally transform businesses, generate enormous economic wealth and create immeasurable social value.  There is immense opportunity for suppliers to help businesses to achieve these tantalizing new benefits.  But, who will be the winning suppliers in the IoT revolution?   

Despite the Internet (connectivity) and Things (devices) being the key terms in the title of the next technology revolution, this is not where the money will be made.  It is estimated that there could be up to 50 billion connected devices in the next five years.  But, these will be largely low cost, low power devices with long replacement cycles.  We have all seen what happens in the device and hardware business – a steep declining price curve.  For example, the cost of semiconductors on a per-transistor has plummeted 50 percent in the last 3 years.  Effectively, lots of volume but a low margin business. 

Service providers are salivating at the thought of connecting the estimated 50 billion inanimate objects to the Internet.  However, the vast majority of these devices will require very low bandwidth as opposed to the demands of chatty and data hungry mobile users.  Equally, most of these connections will be over unlicensed networks, like Wi-Fi, rather the lucrative cellular networks.  Chasing value from connectivity effectively becomes a game of “trading mobile dollars for IoT pennies.” 

While there might not be huge value from chasing catchy IoT term itself, there are good opportunities to generate good money from supplying the IoT revolution.  Success will result in the creation of the next tech giants of this new era.  There are three key areas for value creation: 
  1. Platform.  Successful IoT implementations require a comprehensive business and technical architecture – the IoT Platform – to provide the building blocks of the underlying infrastructure.  This platform is comprised of 3 broad areas: 1) Technical – cloud storage and compute, security, etc.; 2) Data Management – capture, management, analytics, etc.; and 3) Management – policy, device, API and application framework. These platforms are horizontal plays that can be leveraged across multiple industry verticals, allowing suppliers to reap the benefits of economies of scope and scale.
  2. Solutions.  Implementing effective IoT systems is complicated and often requires considerable customization.  Providers who can provide end-to-end solutions (hardware, software, data insights, implementation and services) will be clear winners.  Successful solutions will have an industry vertical wrapper to make them relevant to the customer’s particular needs.  These solution providers will create new business models to deliver “IoT as-a-service” and outcomes-based financial models.  For example, IoT-enabled machinery as a service, or payments based on energy savings will be new models that will reduce the risk to businesses and ensure successful IoT implementations.  Providers who can successfully deliver solutions, vertical expertise and new business models will create deep and enduring relationships with their customers.
  3. Business Integration.  IoT is only as good as its successful implementation and adoption by the business.  As we saw in the Internet revolution, there is a big need for outside providers to help companies to make this transition and to realize the promised benefits of the new technology.  Key business integration needs include: 1) Business Consulting –identifying opportunities, creating the business case, re-engineering the business and change management; 2) Systems Integration – integrating IoT systems with existing systems, data and processes; 3) Management – program management, ongoing operations and outsourcing of key operation
Helping to deliver the IoT revolution presents huge opportunities for business and technology suppliers.  The winners will be those companies that bring distinctive technologies, innovation, new business models and deep industry knowledge to the three key areas of IoT value creation.

Friday, May 29, 2015

Is Big Data the Eyeballs of the Dot-Com Era?


Remember the halcyon days of the Dot-Com era?  A frothy stock market, venture capital money flowing like water and famous sock puppets characterized the exuberance of the day.  One company (Boo.com) spent $188 million in just six months to create an online fashion store.  And 16 start-ups spent over $2 million each for a 30 second advertising slot during Superbowl XXXIV to crow of their existence.  But, all of the money didn’t matter – the mantra was all about capturing “eyeballs.”

The business theory of the day was that if you could get people to your website (the eyeballs) then somehow the money would come gushing in.  You were a heretic if you questioned how that would happen.  Eyeballs were a very monetizable item, so the more of them the better.  Of course, we know what happened.  The Dot-Com era came to a crashing end when the market finally realized that these companies really needed to have a viable business model, rather than waiting for the eyeball prophecy to be fulfilled.

I can’t help wondering if the exuberance, and some might say blind faith, in big Data is similar to some of the fallacies of the Dot-Com era?  Much of the Big Data mantra is all about creating and collecting as much data as possible because it has to be valuable.  The more of it you have, the more value you can create. 

Don’t get me wrong.  There is huge business and social value to be derived from Big Data.  There are numerous examples in medicine, education, business and government where data analytics has added huge value to the services and customer experience.  There countless opportunities to use data analytics to drive ever new sources of value.  The thing that I am challenging is the belief that by collecting huge amounts of data that it can be directly monetized – or turned into money.

Mobile users, public Wi-Fi, smart city deployments and user-centric applications are generating huge amounts of data.  Typically, huge streams of personal data like location, preferences, application usage, and device type are being generated by these uses.  The operators of these services believe that they are now sitting on a goldmine.  Their dream is to turn this valuable personal data into mounds of cash by selling it to advertisers and others who want to better reach and target end users.  There seems to be great excitement and expectations about how much this data is worth.  Many business cases now seem to use data monetization as a kind of “Factor X” to justify otherwise questionable business cases.

Like the eyeballs of the Dot-Com era, data monetization is all about advertising.  Advertising is a well-known business with well-established governing business principles.  At its simplest, advertising is a function of the ability to target a customer times the number of advertising impressions, or potential customers, that you can reach.  For example, a golf club manufacturer is willing to pay more to advertise to an avid golf player than the general public.  This is why big data is so valuable.  Personal information like location, device and app usage can be used to provide a much better target customer than general mass advertising.

We looked at the potential value of this data in considerable detail for a prospective large smart city deployment.  We discovered that we could definitely make money by selling the data generated on our smart city network, but it wasn’t that different than traditional advertising models.  Our proposed digital signage solutions generated roughly the same revenue as traditional billboards on the sides of bus shelters.  Similarly, pushing ads to mobile user devices generated marginally more advertising revenue than handing out flyers to pedestrians.  In total, we calculated that we could generate roughly $1.5 million in new annual advertising revenues.  To put this in perspective, that is just 5 percent of the total revenues that could be generated from delivering the total smart city solution.  The data can definitely be monetization, but it is unlikely to generate the mounds of cash that is eagerly expected from many operators.

As with Dot-Com eyeballs, once the hype and the na├»ve assumptions are wiped away, there is no real magic to big data monetization.  While there is money to be made from data monetization, it is highly unlikely to be a major revenue generator.  And, by no means should the promise of monetizing data be used to prop up weak smart city and Internet of Things business cases. 

Big Data has been described as the “New Oil.”  That may be a very attractive and compelling metaphor in a world where a barrel of oil sells for $100 or more.  But, remember oil can equally drop to $40 to $50 a barrel as we are currently witnessing.