The recently announced departure of the Nest (Google’s smart thermostat acquisition) CEO and co-founder Tony Fadell won’t be a surprise to many. Andrew Tarantola from Engadget, had earlier commented at CES in January that: “IoT (Internet of Things) remains mired in smart light bulbs, net-connected cameras and wireless speakers”.
Machina Research has as wider prediction that in 2016: “A household name in IoT will file for bankruptcy while at least one will be bought for a price that breezes through the 100x revenue multiple”.
2015 financial results have however also recently shown that the Apple iWatch “flop” (as it had been described by several commentators) generated approximately $6bn of revenue or about $1.5bn more than the combined revenue of Rolex. Gartner predicts that Spending on IoT services will reach $235 billion in 2016, up 22% from 2015.
With these kinds of risks and upsides it’s no wonder the industry blows hot and cold about connected devices of other kinds. Where does all this leave mobile operators who have been notoriously slow-moving relative to OTT (over-the-top) providers like Facebook, Google, Apple and Amazon in the past?
Much of the fuss about IoT has been closely related to the push towards 5G. As it is currently being defined, 5G promises more bandwidth, lower latency and greatly nuanced control capabilities for a wider range of devices. It chimes well with IoT but the 2 a not co-dependent. In fact the success of IoT might well be a factor of how well existing 4G, 3G and even 2G assets are reused for the array of new IoT devices and requirements while 5G is honed for the time-being to cater for the big bandwidth stuff.
In this newly diverse and even fashion-oriented environment with such huge upside, the ability to fail fast or succeed often by compressing launch times to weeks, days or even hours holds a key to risk management. By evolving the network to a flexible, virtualized state that can be “sliced” horizontally with optimal use of shared resources, operators are best positioned to manage a portfolio of bets in the IoT space. This access to risk-hedging holds value. It allows operators to move at a pace that is able to impress end-users demanding the latest trends as well as cater for enterprise-grade efficiency drivers that simply cannot come fast enough. It helps to ensure that operator services are not in silos or over-analysed prior to resource commitment.
Whatever flexibility is added however, a more substantial amount and evolved quality of partnering will also be required. With a “saturated” level of smartphone penetration the next phase of connected devices may not allow for a linear increase in average revenue per device. Therefore scale really matters. The efficiencies that partners can bring within the range of available opportunities further improves the chances of success.
The deluge of expected IoT data doesn’t have to be scary these days either. Instead of crunching the numbers offline, enrichment and correlation can occur in real-time and in fact has a higher value to operators if users (or devices) can be engaged with in context and in real-time. This is not just about advertising revenue. It’s about fuller, relevant engagement with users of all kinds.
So as operators push into this space (and they should) here are some of our key recommendations for success:
- Sector focus may be necessary in due course but partnering still trumps focus and allows for faster time to market and scale.
- A deluge of data will require renewed emphasis on it as a multi-purpose company asset that will drive company value, rather than as a problem that has to be managed.
- Build for flexibility and platform capability now (including partnering capability) that will enable future, if as yet not fully specified, services and devices.
There’s “gold in them hills”. You just have to be ready to try more hills and bring the right equipment.
For further information and Openet White Papers on Smart Cities, Big Data and Virtualization, head to: https://www.openet.com/learning-centre/whitepapers