The IoT sector needs to change gears and focus on user problems and multi-level collaboration if it’s going to reach its full potential. Oh, and low-power WANs will be a lossmaker if your business model is based mainly on connectivity revenues.
In a presentation at the TM Forum Live! Asia conference in Singapore, Charles Reed Anderson, head of IoT advisory services at CRA Associates, said that there’s too big a gap between what IoT players are promising and what they’re actually delivering, and that they need to change their approach, starting with a shift in focus from the technology to the customers and the problems they need solved.
“IoT is too important to give up to technologists,” he said. “When you focus on the technology you forget about the human side of this and what solutions are actually needed.”
IoT also needs a more collaborative approach, especially in three areas, starting with inside the company itself.
“IoT is seen as something for the IT department to deal with, but the IT department doesn’t have all the skills required,” he said. “In reality you need other people in the company involved – you need senior management buy-in to drive the decisions, you need operations, strategy, finance, marketing, and even the users themselves because they’re the ones that’ll be impacted. But we’re not really doing that – we’re leaving it to the line-of-business managers and the tech people.”
The second area of collaboration is between vendors.
“Different vendors are working on different aspects of the ecosystem – storage, platforms, apps, integration, support, devices, etc. All of these companies exist, but we don’t have them working together,” Anderson said. “If you go to market with just one of these components, you’re not going to be able to sell it because what customers want is the full package – a best-of-breed solution that will deliver the whole thing. This is the kind of vendor collaboration we need.”
And the third area is data collaboration, he continued. “Everyone’s sitting on lots of data but they don’t do much with it. We need to find ways to monetize it or change the customer experience.”
IoT OTT software and low-power WANs
Looking ahead, Anderson highlighted two key IoT trends to watch in the next 12 months.
The first is “IoT OTT” – i.e. software-based services leveraging existing IoT infrastructure and technologies like data analytics.
“A smart high-rise might have 150,000 sensors in it – they don’t want to buy new sensors, they want to leverage what they have today,” Anderson said. “And there are companies coming out that enable them to stick in a box that can capture the data from all these different platforms, pull it together and create intelligence around it. This is transforming the smart building market, because for very low cost, you can realize significant savings and get a lot more value out of the information.”
Another example is security cameras, which are already so ubiquitous that organizations who install them don’t want to buy new cameras so much as add OTT capabilities like people tracking, for example.
“There are companies doing this. They’re using existing assets and they do it on an opex model because it’s just software – you can buy it, and if it doesn’t work you can cancel it at any time,” Anderson said. “You’ll be seeing more of this software-based IoT OTT model because people don’t have unlimited budgets – they’re looking for ways to drive value with their existing assets, and this is an easy way to do it.”
The other big IoT trend in 2017 will be low-power WANs, which is currently a three-horse race between three technologies: NB-IoT (a 3GPP standard backed by telcos and their suppliers), LoRa (backed by some operators but mainly by software companies, integrators and solutions providers) and Sigfox, which builds its own networks.
Anderson said that overall the low-power WAN model will be successful because they’re dedicated networks that don’t cost much to deploy and deliver cost savings of over 90%. That said, there’s plenty of room for failure for a number of reasons, starting with the fact that it’s being served by a very fragmented vendor market, “which is confusing for customers who just want one network to connect to.”
Also, he added, there are limited technical and operational skillsets for low-power WANs, and also limited use cases. “You need tens of thousands of use cases for this to succeed. How will we create those and whose going to create those?”
The other big problem is that if your low-power WAN business model is based on connectivity revenues, he warned, you’re doomed.
“This is a race to zero – this is the one that no one wants to talk about, especially he operators, or the equipment manufacturers selling into them,” Anderson said. “This stuff is going to be free in two years – you’re not going to have any connectivity revenues. It’s going to zero for low-power WANs, so start planning for it.”