I wrote IoT’s adolescence: five predictions for 2017 to kick off the new year. Your many comments and a rash of news over the last month led me to share this update.
1. IoT 2017: rise of the clever business model
As one reader said: “lots of talk about IoT but most of the technologies are similar to previous waves. I agree. IoT is a mashup of sensors, computational devices, storage and communications – all remixed. For more, see my LinkedIn post, “Is the Internet of Things the Fifth Wave of Computing?”
But, some things are different. Moore’s Law has driven down processing costs, size and power requirements while increasing speeds. Combine that with ubiquitous, always-on communications, and you have a very valuable network effect. These enable new use cases and applications that allow many types of new business models: subscription, recurring revenues, pay per use, price per API call, etc.
Gemalto and Aria have already tapped into this trend to provide capabilities in entitlement, licensing and security to better monetize IoT; their customers will be early to try out new business models.
Another example is ROC-Connect in Smart Homes. It is not just selling IoT devices for the home. Instead, it helps insurance companies gain better insights, engage and add value for their customers while mitigating risk. That can help reduce claims for fires and floods. Boston Consulting Group estimates US insurers could use IoT to reduce claims by 40-60 percent.
In the connected-car space, Zendrive is improving safety by using billions of miles of mobile data and advanced analytics. It helps insurance companies, fleets and connected cars improve driver behavior and fleet safety, reduce costs and has the potential to help bring down the 1.2 million worldwide traffic-related deaths each year.
For more, see my LinkedIn post, “The Connected Cars Meteoric Impact on the Insurance Industry.”
2. IoT security and privacy – still in the malware spotlight
Readers concur and spoke up: security and privacy are critical. Here are a few additional differences in security now vs. previous technology waves:
- Billions and billions: The sheer number of devices means we’ll need new ways to securely provision, update, control and manage them. Lax security like we saw in the video cameras used in the Mirai bot attack on DNS servers can bring on the pain.
- Closer to the “edge” and to us: These devices are no longer just on PCs and phones. They will be on our bodies, in our houses, embedded in our appliances, at work and in our cars as they become part of the Internet of Everything. This means exponentially more devices and potentially unsecure entry points for hackers.
- It’s personal: The richness, detail and importance of data will increase significantly, including health, biometric, credit, location, financial, automotive and video. All this data can let bad guys triangulate on you for malicious attacks.
For example: consider the case where the police in a murder case requested the Amazon Echo recordings in a house. With seven active microphones on an Echo, they wanted to review the sounds and previous Alexa requests to see if it would reveal data about the killer.
3. Artificial Intelligence (AI), virtual assistants and chatbots will be everywhere
This is moving even faster than I expected. At the recent Consumer Electronic Show (CES), Amazon’s Alexa technology was embedded into devices ranging from Samsung refrigerators to Ford cars. It was everywhere. For more information on how Amazon is becoming a juggernaut in multiple areas of IoT see my article, “Amazon’s IoT Strategy: A Force to Be Reckoned With.”
You can also expect to see Google Assistant, Apple Siri, Amazon Alexa, Microsoft Cortana, IBM’s Watson and Samsung’s Viv Labs fight it out as a new platform battle rages for developers and device manufacturers. Natural language and voice interfaces will start to supersede the app-oriented interfaces of today.
Another by-product of this growth in AI: accelerating demand for Graphics Processing Units (GPUs). To power AI, machine learning and computer vision, the industry has rediscovered the efficiency and value of GPUs. Not only has Amazon started offering GPUs as part of its Amazon Web Services Cloud offerings, but NVIDIA, the leading developer of GPUs, gave a keynote at CES touting its strategy in this area. NVIDIA’s stock price has tripled in the last year.
4. In the long term IoT disappears
Today a lot of IoT seems to be all about standalone gadgets and “things.” This was in abundant evidence at the recent CES show where you could see all kinds of new devices. These ranged from 3-D scanners from HP, roaming, security webcam robots like Kuri, the Chrysler autonomous electric Portal minivan, $700 dollar smart lamps and loads of VR and AR devices as catalogued by CNET.
In light of the above, it may be counterintuitive to predict that IoT disappears. But like previous tech waves, you should expect it to be absorbed as part of the computing fabric of our lives. When the incremental cost of smart connected functionality gets built into everything and doesn’t need to be retrofitted, we won’t remember what it was like without it. Almost like asking someone to recall today what it was like to have a car without a radio, a kitchen without a microwave or a computing device without email or messaging.
Now is the time to accelerate your IoT strategy
As we begin 2017, we are already seeing major advances in IoT. IDC updated its forecast that IoT spending in 2016 was $737 billion and will grow about 16 percent annually to $1.3 trillion in 2020. With major industry disruptions in insurance, automotive, healthcare, agriculture and many other sectors, it’s clear the impact in IoT is not just in technology but across all industries. And it’s accelerating.
If you haven’t already launched your IoT initiatives, now is the time. Your competitors are undoubtedly pushing ahead on their efforts to differentiate themselves. More importantly, you have opportunities to leverage IoT devices, AI, SW and other components to create entirely new solutions that will add more value to your customers and deepen engagement with them.
You should seek to innovate, not just on product and technology, but on your business model also. You’ll be able to create new value, new products, new business models and new revenue streams. But to reach your IoT goals and better monetize your offerings, you need to do it now so you won’t get left further behind.
Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 30 years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to advisory roles at startups. Reach him at email@example.com or follow him on LinkedIn.