The 2018 IoT Health Report: IoT World Gives IoT Its Yearly Check-up

By: James Brehm, Mike Krell, & Carl Ford

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Every spring the IoT industry convenes in Santa Clara for IoT World. As one of the larger (if not the largest) IoT specific show, IoT World is a great opportunity to network with the “movers and shakers” in the IoT space, and it also gives us an opportunity for a checkup…so how is our health?

The answer is we are either still in our infancy or we are a technology trend and not a market.

After careful deliberation, here are 7 key thoughts about where we are after spending 3 full days of meetings and taking in the IoT scene at the show.

1. It’s all about the ecosystem. We’ve been saying this for a long time, and it still holds true. No company can implement an IoT solution in a vacuum—our research at James Brehm & Associates (JBA) bears this out. We see generally about 8 different systems/companies involved in major IoT deployments. Face it, there are just a lot of pieces to the puzzle: sensors, processors, gateways, and servers on the hardware side on top of lightweight OS, edge-based solutions, and cloud on the software side. Given all these pieces, it’s not surprising that for each of these there is a systems integrator or IoT managed service provider ready to assist in assembling the puzzle. Whether we like it or not, this isn’t going to change. What can and should change, however, is the number of potential solutions in each category. This leads us to our next key thought…

2. Cloudy partnerships don’t deliver IoT. We looked around for actual customers and realized there was a problem. Being in Silicon Valley makes for strong attendance. Startups and cloud companies mingle easily and achieve a lot of partnerships on paper. Producing products in partnership, on the other hand, is not being achieved. To elaborate on the problem: in the US there are about 6 million businesses. At the top are 6,000 companies with more that 2,500 employees. These are the companies that can power through using IoT. To IoT World’s credit, they highlighted some of these eenterprises. However, the next two market segments are not necessarily getting offerings that match their needs. For the 1.5 million companies that are between 10 to 2,500 employees (and most of them are closer to 10), integrators with reference designs that deliver 80% of the solution are in high demand. Very few of these offerings are coming out of the CA-based IoT solutions company, myDevices. Sprint’s IoT Factory, on the other hand, is one of the better picks and uses reference designs. The integrator ecosystem has yet to meet the challenge of this segment. The largest market, the small business market of less than 10 employees, is in even worse shape. This is a market that wants to buy IoT off the shelf. They want to buy from Amazon and not Amazon Web Services (AWS).

3. What was missing? Sprint’s IoT Factory & Off the Shelf Solutions. Actually producing finished, IoT products is essential to scaling IoT and broadening the reach of IoT World. By offering off-the-shelf solutions with straightforward, readily understood pricing models and by streamlining processes and cutting down on unnecessary meetings about requirements and costs of customization, Sprint’s IoT Factory (powered by the IoT solutions company, myDevices) is a great example of what the marketplace needs right now. A simple, concise “Here are the solutions, and here is when we can send someone out to install them. Interested?,” carries volumes more punch than hours of will-we-won’t-we conversations. Who does IoT Factory send? This is one of the best aspects of their partnership with myDevices. The installers are small independent integrators identified by myDevices  that have been researched on Yelp. If you know what you’re doing with IoT and have a review on Yelp, then there’s a good chance that you have probably already been contacted by the Factory (or soon will be) and have been invited to train to support the Factory. Kevin Bromber the CEO of myDevices says it well: “As an industry, we’re just scratching the surface of how powerful IoT solutions can be when combined with the massive scale, world-class connectivity and advanced technology…”

4. There are still too many platforms. It’s confusing (and holding back) the industry. We at JBA have a +700-long list of solutions that call themselves “platforms.” A key issue has been (and remains) settling on the definition of a platform. What is a platform? How about device management? Application enablement? When language isn’t standardized, misunderstandings ensue and we end up with a jumble of solutions—many of which claim to fulfill the same role but simply do not provide the same functionality. How’s an organization to pick a solution? There’s everything from majors like Amazon, Microsoft, and SAP to industrial players like PTC and Siemens to smaller players like Clearblade and everything else in between. Do enterprises go with a more generic solution (which requires more programming/setup) or a more industry-specific or focused solution? We’ve got our thoughts on the winners/losers of this battle, but one thing is for sure: with this many players, the field must shake out. And hopefully it’ll happen rapidly to quickly weed out those that don’t have real innovative and scalable technology from those that do.

5. It’s a lot about the edge. One of our constant battles at JBA is trying to define what the edge is, and what the overall IoT industry is. The industry still doesn’t have  comprehensive and standardly accepted definitions of these terms. What we do know is that the IoT edge is getting smarter and that it is having a strong effect on  hardware and software architectures. Driven by video and voice, processor companies like Qualcomm and ARM are focusing on delivering low-cost compute architectures that can provide the ability to process data and provide analytics where the sensors and actuators are located, such as on video cameras on an industrial controller. These applications, driven by increased use of artificial intelligence (AI) and machine learning, are pushing not only hardware architecture, but software architecture, as well. Azure Edge, Clearblade, SAP, and Leonardo Edge are just a few of the IoT platforms that are rapidly trying to deal with this change. The critical elements for long haul success will be how and where enterprises process and then integrate data from IoT applications into their business systems to get the most value out of their data.

6. Use cases, use cases, repeat after me, use cases. We talk a lot about applications, target markets, and verticals when discussing IoT, but in reality, it’s all about use cases. The world of IoT is so diverse that you have to get really specific when talking about what problems you are trying to solve or what markets you are trying to affect. Transportation is not a homogeneous target segment. The needs of an autonomous vehicle are very different needs from those of fleet management or of pallet tracking. Vendors that are focused on just one of these verticals are missing the mark when it comes to positioning their solutions for organizations to actually use them and actually generate revenues. Remember: enterprises are trying to solve real world problems, find new revenue streams, optimize real processes, and meet compliance requirements. Questions like “How can I reduce the number of times my production line goes down?” or “how can I meet the new industry regulations for fleet tracking?” are very specific problems. One of the key trends I see is application enablement platforms producing “80/20” solutions that are 80% complete for specific applications such as asset management or fleet tracking. Huawei and SAP come to mind. With pre-packaged applications mostly done, the only work left is to connect them to the specific systems they need to interact with. This is the right strategy at the right time to jump-start the IoT market.

7. The prospects for IoT monetization are high, and the money continues to flow (for some). There is no doubt that the IoT ecosystem will generate significant revenues over time. IoT Fever may be running high but it will eventually come down from its pitch back to earth. I had a senior executive at a major enterprise player once tell me, “We know the market is huge, so we’ve stopped trying to chase the numbers to justify all out actions.” Microsoft just announced a $5 billion investment in IoT, on top of what they have already spent. There is a huge ecosystem of players being funded by VC’s and private equity firms making continuous moves, and they both are still very active in the space. We all know it’s going to be huge. The problem is this is a long game, and it takes time to move and develop. IoT networks, both cellular such as NB-IoT and LTE-M and Low Power Wide Area Networks (LPWANs) such as LoRa, don’t yet provide ubiquitous coverage. Software and hardware aren’t mature yet. And enterprises are still looking for the ROI. There will continue to be shakeout, and we will need to reduce the number of options for every segment of IoT.

In summary, the promise of IoT has not been reduced, and the industry will continue to grow, but people have to understand that the industry is still nascent. It’s in it’s infancy. We have a long way to go, but that’s not a deterrent. All the pieces in the ecosystem will fall into place to provide the real value of connecting devices and gathering and analyzing data from a seemingly never-ending supply of use cases…