Getting Past the Internet of Things

on December 18, 2014

It’s not a single opportunity for anyone and not even a cohesive thing to anyone but those that operate at the level of devices or networks – Intel, Qualcomm, Cisco, the carriers. It’s really many discrete opportunities, none of which will be thought of as the “internet of things” by consumers. They’ll have specific names and serve specific purposes and many of the opportunities will be captured by companies that don’t exist yet.

The Consumer Electronics Show is coming up in just a few weeks, kicking off the new year with a gadget fest in Las Vegas. This year, one of the big themes will be what’s commonly called the Internet of Things, something some companies have been hammering away at for several years. The problem with this concept is it really isn’t one thing – it’s a fragmented, complex space that only really comes together at the chipset or network layer. If it’s really to take off, the companies looking to sell this technology need to start talking about discrete solutions that meet specific needs rather than acting as if it’s some sort of cohesive whole.

The temptation to create a single category

It’s clear why certain companies have attempted to create the Internet of Things as a category. For chipmakers, it represents the next wave of devices which will need their chips embedded. For telecoms operators, it represents the next set of things that will require connectivity. For network equipment manufacturers, it represents the set of services that will drive future growth in network capacity requirements. But it’s only really at these foundational layers the Internet of Things appears to come together in this way. In reality, the Internet of Things is made up of several sub-categories.

Breaking down the Internet of Things

The diagram below is a very simplified attempt to break down some of the sub-categories involved in the IoT. This is by no means either an exhaustive list of the key opportunities nor an all-encompassing one. But even this simple diagram illustrates there are at least three different basic business models at play here and the reality is even more complex:

Screenshot 2014-12-17 17.51.55

Digging into the diagram, you’ll see there are three layers at the bottom where these things do come together in some way – chipsets and components, network infrastructure and network services. The Internet of Things requires putting connectivity into a whole range of hitherto unconnected objects and that means installing modems and connecting them to networks of various kinds. But things rapidly get more complex from there. There are at least three different business models for the Internet of Things:

  • B2B – some IoT solutions will be sold by various providers to business customers for use within the enterprise. These opportunities include services to track various objects and activities, whether that’s fleets of vehicles, pallets of goods, medical carts within hospitals, or smart vending machines.
  • B2C – another major opportunity is made up of services sold directly to consumers and they will include home automation services, fitness tracking devices, remote monitoring of the home for security or other purposes, smart sprinkler systems and so on.
  • B2B2C – last but not least, there’s a whole series of products and services that will be sold into the enterprise for deployment in consumers’ homes and vehicles, whether that’s connected e-readers such as Kindle tablets which come with 3G or 4G connectivity built in, smart electricity meters managed and installed by the utility company on behalf of the consumer, health monitoring provided and paid for by hospitals or medical insurers, or telematics and over-the-air update technology for connected cars.

Each of the specific opportunities under these three broad categories has its own characteristics, too. In some cases, the objects being newly connected will remain essentially “dumb” objects, with no intelligence, just connectivity. But in other cases, these objects will become not just connected but smart, too, with miniature computers, not just modems inside, transforming their utility and ability to communicate with both other machines and humans.

My point in all this is the Internet of Things can’t be sold as a concept to either consumers or businesses, and those pushing the IoT concept need to stop using that term and instead start talking to the various groups involved in terms of specific needs met by specific solutions, the ways in which these solutions can transform activities, businesses and people’s lives, and so on. Until they do this, the danger is they’re selling a vision that makes sense to none but themselves and that will never catch on with either consumers or businesses. It’s as if cellular service had been sold simply as connectivity, without any reference to the utility of that connectivity. Just as cellular connectivity only came alive when sold in the form of the ability to make calls from anywhere, the Internet of Things will only come alive as a concept when we stop talking about the IoT and start talking about how it has the potential to change human lives. I hope that, as CES approaches, the companies planning to tell an IoT story focus on these things and not just on the misleadingly over-simplified messages we’ve heard so far.