Internet of Things: Who will be the winners?
The Internet of Things (IoT) is of great excitement to many of the world’s largest consumer electronics companies because they seek the “next big thing”, with existing markets in smart phones, tablets and computing saturating. Contenders include wearable technology and IoT. Wearable offers a path to extend the business model – highly desirable functional devices that people are willing to pay a premium for. No surprise then that it is the higher priority for the biggest consumer electronics companies.
A close second is IoT, which promises the highest volumes. However, there are some notable differences – whereas consumers are willing to pay top dollar for highly functional smart phones (and wearables, they hope), to pay extra for IoT capability in less glamorous objects will need to demonstrate clear added value.
The IDTechEx report Internet of Things (IoT): Business Opportunities 2015-2025 addresses this, looking at the opportunities and markets and who is positioned to succeed. IDTechEx has followed IoT and related wireless technologies since 1999 and learning from the lessons from the past we find that the market segments can be categorised as follows: Enterprise, government and consumer.
Enterprise needs a problem to solve
Many in IoT supply are focused on being a horizontal product provider supplying to Enterprises, in applications from energy management to process and manufacturing control. However, IDTechEx research with end-users finds that this is only successful if there is a problem that the technology can solve where the company can get a return on investment (ROI) in a reasonable time frame. Enterprise tends to be slow first movers, preferring others to demonstrate the ROI first. In addition, the huge option of standards and suppliers with little track record is daunting, we are often told. Leadership is often lacking.
Governments often move more quickly
Contrary to the opinion of governments being overly beaurocratic and slow moving, IDTechEx finds much evidence of governments driving wireless sensor and identification markets through the need for improved efficiency, safety, security and prestige. They do not always seek a monetary ROI, but have to invest to grapple with increasing city sizes, terrorism, disease, ageing populations and much more.
Examples include being quick adopters for contactless ticketing for transit systems through to the many smart city initiatives around the world.
Then there is the consumer market – which most IoT players think offers the biggest potential but few could clarify what exactly the volume applications are. That is why we see huge payouts for acquisitions, such as Google’s acquisition of Nest – who was the biggest of a small bunch at the time. Here the value is getting the right application solution, something difficult to achieve by those positioned being horizontal providers.
Even those in software are increasingly horizontally product focused rather than being vertically aligned as they traditionally are. For example, an increasing number of companies are developing or offering software platforms which can integrate different hardware platforms. This will of course be fundamental to IoT but what is surprising is that this is not a single standardized platform but many companies are hoping to build what could become the winning platform. Instead they all compete for a market that doesn’t really exist in any significant shape yet. As the saying goes, in a gold rush sell shovels, but here there seem to be too many shovel makers and not enough people looking for gold.
IDTechEx believe that the near-time winners in IoT will be those that supply complete solutions that are in demand. They may be snapped up quickly as a result.