Editor’s note: Business is where technology has impact, and IoT’s impact will keep expanding rapidly in the coming five years. Technology Business Research predicts that IoT revenue will continue to grow well beyond those five years, and of course, IoT innovation will not stop.
HAMPTON, N.H. – Internet of Things (IoT) World, held recently in Santa Clara, Calif., was a beehive of activity. Attendees included many small and local companies seeking sales and alliances, some larger vendor and customer companies looking for products or services to solve problems, and a variety of private equity investors looking for opportunities. The event was a powerful illustration of how IoT depends on supporting ecosystems.
While IoT continues to expand, it is still immature. Growth and further maturation will continue for more than five years. One critical part of the evolution of the IoT industry is increasing differentiation and clarifying classification of the many different types of vendors that play a role in creating and delivering IoT solutions. IoT solutions are more diverse and potentially more complex than purely IT solutions, and a far greater variety of product and services components can contribute to IoT solutions.
The IoT industry
TBR believes IoT is emerging as an industry, overlapping with IT but distinct in its diversity and much larger ecosystem of specialized vendors. Because IoT solutions are more diverse than IT solutions and because they are more closely related to the businesses and business processes they instrument, there will be less consolidation than has been seen in IT. Many small specialized vendors will remain viable, more so than in IT. IoT World represents the early stages of the evolution of this industry.
Most IoT solutions require components from many vendors, brought together to deliver value to the end customer. IoT solutions are more diverse and more specialized to specific businesses and specific business problems than are IT solutions, most of which are adaptations of broad horizontal solutions such as CRM or ERP. For these reasons, IoT draws upon a much broader array of component suppliers than IT. Vendors are dependent upon the availability of components from other vendors to deliver complete solutions. In essence a large part of the sales or business development task facing large and small vendors is forming partnerships, or building relationships that lead to partnerships in future projects.
IoT World brought together customers, vendors and investors to help them find each other. This process is now going on throughout the IoT industry and will continue for several years. It is an expensive and time-consuming process, but it is necessary to reduce both the cost and the time to delivery of IoT solutions.
As IoT matures, the component vendor market will become easier to navigate, with a common nomenclature. Successful vendors will differentiate and more clearly communicate their differentiation. Many smaller vendors will gravitate toward individual large vendors.
The largest change will be increased specialization. Most smaller vendors will concentrate on specific vertical markets, subvertical markets and specific processes within the businesses in those markets. Successful small vendors will leverage their understanding of, and relationship with, the businesses within their specialty. Larger companies use events such as IoT World to present their wares. I attended a Microsoft presentation on new Azure IoT services, announced in April and earlier in May, and met with executives from Here international. Following are observations on these two companies.
Microsoft Azure IoT
Sam George, director of Azure IoT Engineering, presented Microsoft’s new Azure IoT offerings that were announced in April. These include:
• Azure IoT Central, a SaaS offering, presenting a software interface usable by businesspeople to create Azure IoT solutions while allowing developers to continue to customize solutions with the existing Azure IoT Suite
• Azure IoT Edge, bringing Azure analytics and artificial intelligence to edge devices such as gateways
• Azure Time Series Insights, providing Azure with time-series analytics
• Preconfigured solutions, the first of which is Azure IoT Suite Connected Factory
These new services, announced but not yet generally available, are similar to second-generation offerings from other IoT platform vendors. TBR believes these pieces fill in major gaps, such as edge capabilities, or help “democratize” Azure, making it easier for business people to either craft their own solutions or guide developers. “Democratization” of software tools is a strategic goal for all of Microsoft (Nasdaq: MSFT), aimed at helping end users leverage the power of technology directly. This lowers costs and helps create better solutions.
Leon van de Pas, senior vice of president of Internet of Things at Here International, discussed the company’s plan for IoT. Here began as a U.S. map information company and was primarily focused on automobile navigation systems until it was acquired by Nokia to supplement the company’s mobile phone mapping software. In 2015 the company was sold to a consortium of German automobile companies consisting of Volkswagen, BMW and Daimler. Other major investors include NavInfo (a Chinese mapping company), Tencent and Intel
Here provides what it calls the Open Location Platform, an extensible database for all information that can be associated with locations specified with high resolution in all three dimensions as well as time. Customers both contribute and use data, and can set licensing restrictions on the data they contribute. As the database becomes more complete and detailed, the value of each piece of data increases because of the availability of adjacent data.
This high-resolution, detailed, current map of the entire world is of obvious value in automotive applications, especially autonomous operation. While self-driving vehicles acquire their own data about locations in their environment, the ability to embed that data in a much larger and more detailed map makes navigation more effective and lowers the cost of the onboard sensor system. Data from each car is fed back into the Here database, providing a close-to-real-time representation of the driving environment. This makes autonomous driving safer and enables applications such as traffic and parking.
Here is expanding beyond automotive to many other applications that can use location data, including logistics and smart cities. Indoors, location data can be used for industrial and retail applications. Because IoT is rooted in the physical world and everything in the physical world has a location, these data will be integrated into many IoT solutions. TBR believes the Here Open Location Platform is becoming an important contributor to IoT expansion.
IoT World was a microcosm of the exciting and expanding, but still immature and chaotic, IoT industry. One part of the story is the many small vendors making connections and trying to find their niche. At the same time, major vendors like Microsoft are adding important enabling capabilities to their platform, while broadly useful databases like Here are growing. George said, “IoT is not about a technology revolution; it’s a business revolution.”
TBR agrees. Business is where technology has impact, and IoT’s impact will keep expanding rapidly in the coming five years. TBR predicts that IoT revenue will continue to grow well beyond those five years, and of course, IoT innovation will not stop. Now is the time, however, for peak IoT innovation, and that is reflected in the bazaar atmosphere of IoT World.