Gil Press, a contributor to Forbes magazine, last month published a useful and long list of predictions about the Internet of Things (“IoT”) drawing from several sources.
I have little faith in long term predictions in IT sectors. As discussed below, statements 1, 2, 3 and 4 stood out for me in the Gil Press article in Forbes. They are about 2015 and 2016. His sources are analysts at Forrester, Machina Research, World Economic Forum, Gartner, and IDC.
Investment in #IoT
1. Spending on IoT services will reach US$235 billion in 2016 according to Gartner, up 22% from 2015.
2. Enterprise #IoT spending will be larger than consumer spending in the near-term.
[COMMENT: As noted in statement 1, Gartner estimates that in 2016 almost a quarter of a trillion (in US dollars) of corporate investment is chasing the IoT.
Explaining the functions of IoT platforms, Jim Tully, a lead IoT researcher for Gartner states in this podcast: “The IoT platform is such a critical and central part of the overall solution. IoT platforms provide functions to monitor, control and manage the IoT end points (known as things) and their software. They aggregate and analyse the IoT end point data for the purpose of a desirable business outcome of some kind, such as maybe providing predictive maintenance functions on some kind of asset. The platform also provides the bridge between those end points and the enterprise applications, the databases and the other back-end system compoents. And IoT platforms accomplish that through a set of tools and facilities for device management (for what might be thought of as IoT-focused middleware, often provided as a service) and some combination of security, APIs, application development, business rules, analytics, visualisation tools – it’s a whole mixed bag of tools.”
Taking an IoT position is this Microsoft website. There’s also the Miscrosoft vision, as written by Telsyte in Sydney, titled Cut through how the Internet of Things is sharpening Australia’s competitive edge (a mid-2015, 16 page PDF).
The Venture Scanner graphic below segments IoT investments by category using publicly available IoT company data.]
Asia/Pacific ventures in #IoT
3. 40% of the worldwide total IoT spending in 2015 came from Asia/Pacific.
[COMMENT: This partly reflects original equipment manufacturing in China about which you can read this 16 page report from mid-2015 titled “How China is scaling the internet of things” (PDF download).]
Business models in IoT – what will make money?
4. We will start to feel the first heartbeat of the new #IoT economy and the shift from selling products to providing service as at least one Fortune 500 company will fundamentally change how it values, underwrites or trades assets based on the data generated by IoT.
- Social media + data-directed advertising is and has been big since at least 2006. Will it remain so for IoT ventures? The future often arrives with surprises. Breakthrough business iniatives are often accompanied by business model innovation not anticipated by technology inventors or pioneers. Other potential revenue streams include fees for service, hardware sales and API subscriptions. For each, clever business design and contracts are dancing partners.
- Data involves many pesky legal considerations. Fields of intellectual property apply, particularly copyright and confidential information or trade secrets law. Joining them is information law, into which falls national security, spam, privacy and data protection law. With IoT sensors there’s no privacy “I agree” or “opt in” buttons to click. The U.S. legal position is discussed over 71 pages in a January 2015 report from the Federal Trade Commission titled “Internet of Things, Privacy and Security in a Connected World“.]
Enhancing old technology with new
In 2001 economist Michael Porter published “Strategy and the Interent” in the Harvard Business Review. He wrote that the internet is not disruptive to most existing industries and established companies. Jaws dropped.
In 2014 my jaw jaw shut on reading Porter’s co-authored detailed analyis on the IoT in the Harvard Business Review titled How Smart, Connected Products Are Transforming Competition. The image for this post is taken from that Harvard article. We can see in it how IoT is enhancing the 12,000 year old technology industry of farming.
Porter wrote: “Now, in the third wave, IT is becoming an integral part of the product itself. Embedded sensors, processors, software, and connectivity in products (in effect, computers are being put inside products), coupled with a product cloud in which product data is stored and analyzed and some applications are run, are driving dramatic improvements in product functionality and performance.”
In 2016 there’s almost a quarter of a trillion US dollars of corporate investment expecting smart, connected things will create enhanced product and service offerings.