Editor’s note: Dell enters the IoT sweepstakes with a strong contender, says Technology Business Research Principal Analyst Ezra Gottheil.
HAMPTON, N.H. – Despite the lack of clear Internet of Things (IoT) standards, Dell has formed an IoT division, designed to work closely with customers to create IoT solutions. Dell will work to meet customers’ needs with its ability to integrate endpoint devices, data center technologies, and management, security, and analysis software and services, while providing some of its own, unique Dell-designed IoT building blocks.
The result will be a series of custom IoT engagements with businesses and vendors in targeted verticals, allowing those companies to take advantage of a stack of capabilities based largely on standardized technology and apply them to their business problems. The maneuver positions Dell as an IoT integrator; a company with knowhow in a much-hyped and fast-growing technology segment where customers are looking for vendors with answers to their business needs.
Although the initial wave of IoT solutions and capabilities goes back over a decade, IoT remains largely undefined, with few technology standards to back it. This situation has caused many IT vendors to hesitate to enter the space and prevented others from telling a coherent IoT story. Yet there is great demand for IoT technologies and the capabilities they can provide to businesses that wish to optimize their infrastructure, cut costs, improve decision-making capabilities or get closer to their customers. TBR likens IoT to climate change: It has been happening for a long time, its pace is accelerating and the impact will be enormous. Demand is such that TBR forecasts the IT market for business IoT solutions will grow to $1.7 trillion in 2018.
Dell is approaching IoT from a perspective of enabling customers and partners to initiate solutions, with Dell providing the underlying technology. Although that technology is closely related to Dell’s other offerings, the company’s ability to integrate them has it well-positioned to participate in what is expected to be a vigorous IoT economy.
Dell’s approach differs greatly from that of IBM. IBM’s recent $3 billion investment in IoT positioned the company as an IoT provider while emphasizing the company’s capacity to transform its customers’ business processes, helping them streamline their business, manage their operations in real time and monetize the data IoT devices will generate. This strategy aligns with IBM’s long-term growth strategy, leveraging its business consulting capabilities to drive end-to-end solutions that transform its customers’ businesses.
For Dell, IoT and its new gateways are an extension of Dell’s touted “end-to-end” solutions that provide hardware, software and services from the edge of the network through the data center and into the cloud, with an emphasis on security and management. The gateways provide wireless and wired networking out to the “things” in the IoT solutions, but Dell does not now claim the extension of management and security all the way to the network of sensors. TBR expects this part of the story to fill out going forward; Dell solutions are now built to manage and secure other agentless devices like smartphones and tablets.
TBR believes that, with this announcement and the preparation behind it, Dell has accomplished three things:
- The company has given its existing customers assurance that it is a potential partner in formulating and executing an IoT strategy and the opportunity to engage with Dell in exploring IoT.
- It has informed non-customers that Dell is a mainstream IT vendor prepared to engage with them in exploring IoT.
- It has established a starting point for further development of its IoT strategy and offerings.
Dell introduced the first of an expected line of “gateways,” units that interface between IoT “things” and existing networks. Dell also announced a partnership with ThingWorx, an IoT platform recently acquired by PTC.
Dell at the dawn of an IoT revolution
These are, of course, early days for IoT, and the lack of prototypical solutions and a clear categorization of solutions challenges vendors and customers. Dell points out, and TBR concurs, that what is now called IoT has been going on for many years. Without many solution examples, IoT is in the invention/innovation stage of solutions evolution. As in earlier technology revolutions like PCs, the Internet and mobile devices, what customers and vendors need at this point is close collaboration between business and technology. As much as possible, business leaders need to understand the potential and limitations of the technology, so they can explore the possibilities. At the same time, technology leaders need to understand not only what business needs, but where business wants to go, so they can suggest relevant business solutions.
Unlike vendors like IBM and Accenture, Dell is not, for the most part, seeking to invent IoT solutions for customers or to provide them with transformational services. Dell is providing the technology and technology expertise, and is working with customers and partners to invent solutions that Dell will then help to implement. This makes Dell an attractive partnership candidate for consulting and systems integration partners, which do help customers invent solutions. Another type of partner is the ISV, creating solutions not for individual customers, but for a market. The Dell partnership here is similar to that with consultants and systems integrators, but the market and potential impact on Dell is much larger. Dell provides the information technology and the partner provides the operating technology as well as the route to market. At the analyst event, Dell highlighted its relationship with KCM Controls, which had sought out a vendor to provide a gateway to its HVAC and building automation systems. Dell and KCM cited a potential market of “5 million dumb buildings” in North America as the market here.
IoT — “Where Information Technology meets Operating Technology”
Dell’s initial target markets for its gateway products are building automation and industrial automation. In both cases, customers have two types of technology in place. Information technology is, of course, client and data center devices, networks and applications that are now ubiquitous in business. Operating technology is, for buildings, HVAC, lighting, elevators, alarms, sprinklers and similar features. For industrial companies, operating technology is manufacturing equipment.
Operating technology increasingly incorporates sensors that feed information to front panels and control consoles. IoT leverages these sensors to generate data that can be processed and analyzed to lower costs, improve customer experience, reduce risk or create new revenue streams. Joyce Mullen, GM and VP of OEM Solutions, enumerated these potential benefits of IoT and pointed out that “IoT is where information technology meets operating technology.” There are types of potential IoT solutions that do not work within existing operating technology, but that is where Dell is starting out.
This division between information technology and operating technology fails to support potential synergies, which is the potential that IoT is intended to exploit. There are also experts in each category of operating technology — consultants, integrators and equipment manufacturers — that are the optimal partners for information technology companies like Dell. Not only are these experts knowledgeable about operating technology, but also they tend to have a far deeper understanding of the businesses they serve than do broad-based horizontal information technology vendors like Dell.
“Bringing the compute to the data”
Dell’s gateway is more than a router. In addition to providing connection services between existing networks and IoT networks, it provides computing and storage, allowing preprocessing before data from sensors is sent to the data center or the cloud. Dell claims that one advantage of this architecture is cost reduction from reducing the amount of data to be communicated, stored and processed. TBR agrees with Dell; the amount of data that can be generated by IoT networks is potentially crippling. Another advantage, according to Dell, is reduced latency in reacting to data inputs. TBR believes this will be relevant only in a small number of solutions.
In any case, providing processing near the IoT network is to Dell’s advantage. Dell benefits wherever its platforms are used for processing and storage; data forwarded to data centers or the cloud may end up on Dell systems, or may not. TBR believes the gateways will, in some cases, form the seed around which distribute “near the data” mini data centers may form, and Dell will be the most likely beneficiary of such architectures.
TBR believes that Dell, by relying on its customers and partners to initiate solutions, and by providing technology that is closely related to its other offerings, has positioned itself to participate in an IoT revolution, already in process.