There is now little doubt that we are about to see an exponential growth in connected devices. This will lead to what is referred to as the Networked Society or the Internet of Things. Ericsson predicts that there will be up to 50 Billion connected devices by 2020. What is more difficult to predict is who will shape this industry as the value chain is fairly complex and the eco-system is fragmented.
Operators are today providing connectivity services and want to move up the value chain, either by providing service enablement functionality or industry targeted business solutions. Consulting companies on the other hand might try to keep it a complex system integration business, while specialized service providers focus on providing value in specific verticals.
I believe now is the right time to disrupt this M2M/IoT industry.
Take an OTT approach and put all your efforts on innovation and value creation. Why? Because the cost of developing, integrating and deploying new solutions goes down close to zero. Entry barriers for new companies are vanishing really quickly. Here are four trends that support this thought.
1 – Super Affordable Sensors, Device Gateways and Controllers
Today almost anybody can start prototyping to create connected devices at low cost. Arduino, for instance, is an open-source electronic prototyping platform allowing to create interactive electronic objects. With arduino you can create and control simple objects, sensors, all of this for a handful of dollars. For less than a hundred dollars you can even connect to the internet over a mobile network.
Similarly, for more complex control, it can be enhanced with cheap processing power, the Rasberry Pi is a 25 USD, credit-card sized computer that plugs into any HDMI TV and USB keyboard/mouse. It includes an ARM chip that is powerful enough to run Linux and a full Java Virtual Machine. The possibilities are endless.
Standardization is also moving to make things easier. ZigBee protcol and Zigbee alliance is an example of such a simplification initiative. ZigBee is an open global wireless standard to address the needs of low-cost, low-power wireless M2M networks. ZigBee applications include wireless light switches, electrical meters with in-home-displays, traffic management systems, and other consumer and industrial equipment that requires short-range wireless transfer of data at relatively low rates.
Technology is also evolving and supporting move innovations. Bluetooth Low Energy (BLE) appears to have solved some of the energy consumption problems of sensors since these sensors can last 1-3 years with the same battery. iBeacon, a technology derivative of BLE, is now also getting widely adopted. Some companies like Estimote, WiMoto or Blesh have quickly understood the potential and are provide sensors and toolkits that allow you to collect more data and create value.
There is a big shift in the industry that is happening as we speak and you only have check the number of Crowfunded projects to see how big this trend is becoming. Now is the time for the emerging maker generation.
2 – Opensource M2M Plaforms / Cloud Platforms
Appearance of opensource M2M platforms like DeviceHive provide now also the communication layer needed to control multiple devices and sensors that can be used to develop home automation solutions, energy management solutions and much more. These M2M platforms provide also the basic functionality to provision, manage and control multiple devices that are part of an M2M enterprise solution. The platforms also support simple API’s based on HTML to address a large developer community.
Deploying an opensource M2M platform on a public cloud provides a very attractive go-to-market approach for anybody that wants to become an M2M specialized service provider. Not much is required to get started.
With the cost drastically decreased, more innovation will come from the end-users within each vertical. I could easily imagine larger communities like cities develop their own M2M solutions and manage it in order to optimize urban development and public spending. Why not?
3 – Application Design through Mashup and Integrated Communication
With the development provided by HTML5 we can now also embed real time communication capabilities in web pages. This allows for rapid UI design, clever mash-up and a complete new type of interactivity. WebRTC is part of these new communication capabilities that can easily be embedded in Web Pages. Whether it is voice, video, messaging or document exchange it can now all very easily be provided from a web page.
I have now doubt that these technologies could easily be used to develop home automation or energy management solutions that can be controlled from a tablet or mobile device from anywhere in the world.
4 – Low risk and quick market feedback through crowd-funding
I believe the Internet of things provides huge opportunities for innovation, substantial growth opportunities and an entry barrier which is fairly small. Beside the availability of open source technology to reduce production cost, operational costs can be reduced thanks to cloud. And why not use social media to build-up your M2M tiger team and for the funding try to expose your project to crowfunding platforms like Kickstarter.
In Kickstarter project creators get funded by the community. They set a funding goal and deadline. If people like a project, they can pledge money to make it happen. Funding on Kickstarter is all-or-nothing — projects must reach their funding goals to receive any money. Kickstarter is very effective in creating momentum and rallying people around an idea. Backers are supporting projects to help them come to life, not to profit financially. Instead, project creators offer rewards to thank backers for their support. Kickstarter takes a marginal 5% fee to the funds collected.
What industries to target?
I believe that with the current technology development, fragmentation of current M2M value chains the opportunity is there for anybody to take a strong position with niche industry solutions. The entry barriers are pretty low.
For the consumer market, applications like home automation and energy management are probably good places to start, but I think there might be huge possibilities as well in sectors like e-health and quantified self.
Enterprise segment might be difficult to enter for startups, since it is ofte about optimizing current business processes and using M2M to reduce costs. From telemetry, to POS, Securtiy or Vending machines the industry specific requirements will usually make it more or less easy to enter that particular market.
When it comes to industries to target there are plenty and the shipment of connected devices per segment is going to surpass 100 Million per year in a couple of years only, according to an ABI research report, so plenty of choice.
A call to innovate and disrupt the M2M/IoT space
I believe now is the right time to disrupt this M2M/IoT industry: Affordable devices and sensors, reduced costs through cloud and opensource, Application design requiring less coding and finally crowdfunding allowing you to quickly validate and fund your ideas. All the conditions are right, now is the time to Make it happen.