I had a great discussion the other day on the present and future state of the IoT. Much of the discussion focused on monetisation, as it often does these days., says Dr. Scott Nelson of Logic PD. I recounted the most recent WSJ article on the IoT bubble and the author’s less than surprising advice to focus on ‘unit profitability’ and ‘user adoption’.
The article has good comparisons and contrasts to the Dot Com bubble, but basically it comes down to making sure that customers want your offering and that they will pay more for it than it costs to produce. Business 101.
We discussed vertical strategy vs. horizontal and how the successful companies with which we have worked have created the value required for success. While there are going to be horizontal offerings that succeed in IoT, I believe they are going to be few and far between and dominated by companies that already have internet scale.
NOT important to the IoT?
Then I was asked a question that I had not heard or contemplated. “What will NOT be important to the IoT in five years?”
Most technology forecasters take the point of view of the venture capitalists and try to identify the next big thing in an emerging market like the IoT. They are looking for the sexy things with investment potential; things that will disrupt society and its economics. This is the point of view of most technology articles we read today. But if you are already an established and successful enterprise, knowing what is not going to survive can be more important than knowing what to build. Every enterprise has limited resources to apply and invest, except maybe Google and Apple, so knowing where not to invest and what not to protect is as important as knowing the new things.
I answered the question in real time during the discussion, but I was not satisfied with my answer. So I went for a long run and contemplated the future – or the lack of a future.
Zero sum game
Thinking about what will be absent is hard. It’s kind of like looking for something that isn’t there. But I have thought and read quite a bit about what will be the next big thing in IoT. What if I looked at those big things and think about what they will displace – kind of a functional zero sum game.
Here’s what I found. (Note: this was an industrial market discussion so the findings below do not consider consumer IoT applications or digital health.)
| Next Big Thing 5 years out | Fading technology |
|---|---|
| Ubiquitous connectivity | Cellular Connectivity – PAN and LAN standards take hold and connectivity options are plentiful. Cellular is for personal use, not IoT. |
| Secure public cloud computing | Proprietary cloud and database infrastructure – security combined with connectivity make public cloud use safe and operationally invisible. Enterprise server infrastructure, hardware and software, become redundant to too expensive |
| Ubiquitous data visualisation – smart phones, smart watches, tablets, adaptive public screens, etc. | Machine and product GUIs – proprietary and on-machine displays give way to personal displays. |
| Biometric authentication and security key management | Passwords and traditional account management – biometrics and personal authentication make passwords obsolete. Fluid security key management makes transfer from system to system transparent, thereby changing how account management is done for any given service. |
| Multi-band modems with software defined radios – cellular, integrated WiFi, whitespace networks (Weightless, SigFox, etc.), various PAN systems. | Private gateways – Devices can connect to any of a number of public network services without additional or proprietary gateways. |
| Instant on-device capability – activation across all necessary services completed at point of purchase. | Device management and provisioning services, i.e. MVNOs, phone activation, installation services all become unnecessary |
| Billing-on-behalf-of (BoBo) and mobile payment | Accounts Receivable departments – Network operators and mobile device manufacturers (i.e. Apple, Google, Samsung) will fight over master account management for all services that go through the network and phones. Service providers will no longer need account management and specifically Accounts Receivable departments to capture revenue from their services. |
| Direct to user device sales (see instant on above) | Distribution. Manufacturers will sell both devices and services direct to consumers via the internet or network providers. On-site field services will survive but distribution services will be disintermediated. |
Seeing what isn’t there isn’t easy, but I feel better about my answers after doing this ‘inverted’ thought exercise. What do you think? Who is building IoT buggy whips today?
The author of this article is Dr. Scott Nelson, executive vice-president and chief technology officer, Logic PD. Other articles by the same author include: A practical approach to IoT security
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