Following the Internet of Things can be dizzying. In the first half of the year, the IoT playing field became more competitive and the volume of business partnerships became more extensive. While 2016 could go down as a record year for M&A activity in the sector, concerns about security and execution remain.
1. Potentially Record-Breaking Number of Acquisitions
Approximately 80 IoT acquisition deals went through in 2015the biggest year yet. 2016 will likely have more, as the gaps and market demands become more clearer as adoption increases, says Don DeLoach, President and CEO at Infobright. Moreover, many large firms have been very public about funding acquisition plans around IoT. Most are using in-house teams to both strategically invest and execute acquisitions.
As more and more IoT initiatives become real, pressure mounts for global tech companies to generate new sources of revenue, saysAaron Aubrecht, CMO and SVP of Products at Covisint. As such, they seek to augment their traditional product portfolios to fulfill the required competencies for IoT technologies, such as analytics, security and connectivity platforms.
As IoT keeps evolving, major players will compete for positioning across various vertical market segments. One would expect these players to ramp up M&A activitiy to stay relevantor else miss out on the revolution,explainsAubrechtfromCovisint.
2.IoT Playing Field Grows More Crowded
Just about every type of company seems to have an IoT strategy in 2016. Mattel announced a connected Barbie doll and even a drone. Atari announced that it will make smarthome products. Firefox-maker Mozilla is entering the IoT market, as is Visa. It seems that every week has news of a company either entering the IoT market or expanding their business in the sector. With the rush to bring more IoT-enabled products to market, many are teaming with other companies to quickly bridge gaps to address the perceived opportunity, explains Don DeLoach, President and CEO at Infobright.
3. IoT Is So Complex That Partnerships Are a Must
The Internet of Things is so vast and complex that it often many partners are involved in IoT deployments. Building an IoT product is a massive undertaking, and it makes sense that companies are partnering up because it's difficult for any one company to provide a comprehensive solution, Zach Supalla, CEO of Particle told us earlier after announcing a deal with Twilio.
Already this year, several companies have announced that they are creating or expanding their supplier network, including Dell, IBM, Texas Instruments, Intel, and many others.
4. Established Companies Double Down on IoT to Offset DecliningRevenue
Old-guard tech companies like IBM and Intel are making big investments in the Internet of Things to compensate for declines in more traditional business segments. Intel, which is still the worlds top chip company, announced a reorganization in April with plans to cut 12,000 workers and funneling the savings to its growing Internet of Things and data center businesses. IBM is following a similar path, making cuts in legacy segments while betting that its Watson technology will find growing use in IoT.
5. Security Still a MassiveConcern
There is growing appreciation of the magnitude and breadth of the security threat associated with IoT, says Don DeLoach, President and CEOat Infobright. One of the key thrusts is to increase awareness of threats and provide basic education beginning with very basic best practices associated with security, including authentication and password strategies. It is also important for organizations to understand the use cases and the related security risks, then make IoT investments based on their own tolerance for risk and willingness to spend on security enhancements.
While the scope of the problem is acknowledged by security officials in large companies, the issue is less of a priority at the C level. Its patently obvious the only thing that matters at the C level is money, says Mike Ahmadi, cybersecurity director at Synopsys. IoT companies may start paying more attention to security once IoT hacking incidents begin to cost them financially. Anything that interferes with cash flow is of grave concern.
6. IoT Shines for Industrial Applications amidst Patchy Success in the Smart Home Market
Without a doubt, the Industrial Internet is less sexy than consumer-focused IoT applications. But at least at present, the utility of the latter is substantially greater. Many consumers have lamented about the UIs and the practicality of smart home applications. On the heels of CES, Computer World declared, while discussing smart home, that The 'smart'-everything trend has officially turned stupid. And for all of the smart homes promise to make consumers lives easier, sometimes currenttechnology makes it more difficult. For instance, getting up and physically turning off an old-fashioned light bulb is simpler than navigating through several screens on an app. Still, some companies like Amazon have had success with products like the Echo.
While the IoTs potential to enable services like automatic replenishment and predictive maintenance could ultimately prove popular with consumers, they are already winning over manufacturers. It is more common for companies to view the IoT as a competitive advantage and many companies using IoT technology have become secretive about the technologies and vendors they are using, says Bryan Kester, Head of IoT at Autodesk.
7. Keen Interest in IoT Outside of the United States
While the vast majority of IoT companies are based in the United States, some of the strongest interest in IoT technologyespecially in the smart cities realmis coming from Asia and Europe. Singapore has perhaps the most advanced smart city technology in the world. India is beginning an aggressive, smart cities rollout as well.
It is also interesting to note that Google search volume is higher on a per capita basis in many Asian countries than it is in the United States.
8. Smart Cities and Self-Driving Cars Gain Traction
A growing number of companies are beginning to proclaim that self-driving car technology is only a few years away from prime time. The number of companies now involved in creating self-driving car tech is dizzying, including Google, Microsoft, Uber, Amazon, Mercedes, Bosch, Nissan, Audi, and others. To date, the public seems less enthralled with the technology. In one recent poll, only 15% of peoplewanted a completely self-driving car.
Part of the reason that Uber has been so successful is that it took open capacity, and made it easily accessible, says Tim Evavold, Executive Director Automotive, Covisint. Frankly, its became easy and convenient for both the driver and the rider. The main reason that the public seems less interested with Mobility as a Service is that it is still not convenient and relevant to them. To make it relevant, the capacity needs to be easily accessible to the consumer as well as convenient and affordable. Evavold believes thiswill be achieved when we stop focusing on the end pointsuch as the vehicle or driverandfocus on the intersection of the many-to-many relationships involved in transportation.We believe mobility as a service, fractional ownership models, and crowd based transportation are going to be a near reality. It will come sooner than later if we focus on the relationships between people, cars, and services, rather than just the cars. Utilizing identity relationship frameworks, context centric design principles, and ecosystem interoperability will be keys to success.
Most cities are now working on long-term smart city plans that contemplate autonomous cars. Most automotive companies are also considering these capabilities, along with the growth of ride-sharing companies like Uber and Lyft and the role these key new entrants make to the market overall, says Don DeLoach, President and CEO at Infobright. Cities are also adjusting their infrastructure for more sustainable, productive, and livable environments, including more aggressive contemplation and deployment of IoT-based services.
9. IoT Is Now More about Data Than It Is Things
When British futurist Kevin Ashton coined the term Internet of Things, he was describing a network of connected physical objects. But in 2016, it is apparent that his initial description didnt consider the importance of data or cloud computing. IoT isnt going about the things or connecting billions of objects to the Internet; IoT is really going to be all about the data, says Vijay Raja, Senior Solutions Marketing Manager at Cloudera. And the success of IoT deployments will depend on the ability of organizations to gain insights out of all of this data."
Cloudera sees a growing need for organizations start evolving their data management strategy along with their underlying infrastructure to efficiently store, process, manage, analyze and drive actionable insights from the avalanche of IoT data streams. Even though the data coming in from one sensor has some finite value, the real value in IoT will come from being able to combine and correlate this sensor data with data from other internal and external data sources, Raja says.
"And this is further driving an increased adoption of data management platforms such as Hadoop, which can help organizations not only effectively ingest, store, and manage IoT data, but also combine that data with diverse sources from both within and outside their organizational boundaries, in order to drive compelling business insights, he adds.
Raja says that this functionality is necessary in the smart buidings niche, for instance, in which there is a drive to integrate temperature readings from sensors with information related to building occupancy data, external temperature, humidity, and relevant industry benchmarks. This integrated approach can provide much more compelling insights into the energy usage of a specific building, Raja explains.
10. Beyond the Hype and into Reality
Much of the early press surround the Internet of Things has fixated on predictions the future size of the market. Several years ago, Cisco declared there would be 50 billion connected devices by 2020 while Gartner has pegged the number at 21 billion. Still others have different numbers that typically fall somewhere in between those two estimates.
Predictions of the size of the Internet of Things (IoT) and Machine-to-Machine (M2M) markets have put it at staggering numbers, says Kevin Petschow, Senior Director of Global Public Relations at Aeris. Petschow recounts the following projections that have been made over the years:
- 2010, IBM: A world of 1 trillion connected devices by 2015.
- 2011, Ericssons CEO, Hans Vestberg: 50 billion connected devices by 2020.
- 2013, Cisco: 50 billion things will be connected to the Internet by 2020.
- 2013, ABI Research report: 30 billion by 2020.
- 2013, Morgan Stanley report: 75 billion devices connected to the IoT by 2020.
- 2014, an Intel infographic: 31 billion devices connected to the Internet by 2020.
- 2014, ABI Research updated report: 41 billion active wireless connected devices by 2020.
- 2015, Gartner Research: 4.9 billion connected things in use in 2015 and will reach 20.8 billion by 2020.
Although the specific predictions and the numbers differ, what is remarkable is that the numbers predicted for 2020 have been consistently, extremely large over the years, Petschow says. And in 2016, the ultimate size that the IoT will have in four or five years matter less as the demand for concrete information about how connected technology can be used to solve specific business challenges.
Perhaps the number is not as important as the challenge of connecting devices that have never been online. You pick your data point, once you hit the 30 or 40 billion point, I think it is inconsequential, said Andy Rhodes, executive director of Dell IoT in a recent webcast. It is a going to be huge. But the huge majority of those things is going to be legacy on those production lines, in vehicles, in elevator shafts customers arent going to replace them because they need them to connect to modern systems.