The iPhone revolutionized mobile in 2007. What's going on in IoT?

In the telco world, the owner of the network from the device to the backbone was king. The network operators controlled the transport, and traditionally decided which devices were permitted as end point devices. But starting with the introduction of the iPhone in 2007, the value has migrated to the end user devices and the applications. At the time of writing in early 2016, Apple, Google and Facebook are three of the top five companies by market capitalization.

When will 2007 be repeated for the Internet of Things?

It is worthwhile recalling the elements of a generic network infrastructure and the developments in the telco space

• Sensor packed end point devices.
  In the telco industry these are mobile phones and DSL/cable modems. Mobile phones in particular have developed into platforms with an ever growing number of applications leveraging the many sensors in the phone. The mobile phone manufacturers have consolidated.
• Wireless or wired data transport from from the end point device to an aggregation point.
  In wireless, WiFi for short distances, and cellular networks for longer ranges. Wireless carriers have spent billions on licensing spectrum from national regulators. Cable companies have cleaned up their coaxial cable infrastructure to transport increased bandwidth. Fixed line phone companies have even put fiber in place of the twisted wire copper pairs.
  
• Concentrators to aggregate data from the devices.
  Cell sites, DSLAMs, or CMTSs are all owned by the telco providers.
  
• Backhaul networks to transport signals from the concentrators to the backbone.
  Initially these were owned by incumbent carriers, but starting in the late 1990 massive amounts of fiber were deployed to create multiple backbone networks.
  
• Platforms to manage the network and distribute applications.
  In the mobile space, the phone has emerged to be that platform and bifurcated into one high end closed system (iOS) and one open device ecosystem (Android).
  
• Application services running on top of the network. Google, Facebook. Enough said.

The winners in IoT will invent new uses cases and creatively deploy devices. In the consumer space, the ‘Things’ can be the human body, the home, the car, or anything else owned by a person. Wearables and home automation are off to an early start, and cars are not far behind.

In the enterprise space, the owner of the ‘Thing’ location will pick those devices and applications associated with the most promising use case. Beacons may be an early use case for retail, and there is a wide range of industrial use cases emerging.

As these deployments and applications scale and reach critical mass, platforms emerge. Nest’s platform program is a case in point for the home, and others are likely to follow.

For many IoT applications, wireless and wired networks are already in place. The evolution of the IoT landscape can leapfrog the network deployment phase and its captive devices and fast forward to the IoT equivalent of 2007.

It's The IoT Device, Stupid!

The Internet of Things (IoT) is a catchall headline for a seemingly unlimited number of use cases and applications. While human interaction with mobile devices has quickly become ubiquitous, the Internet of Things requires interaction with sensor devices.

No device access, no IoT.

Image via Time.com

Participants in the IoT value chain who are downstream from these sensor providers - systems integrators, telcos, network providers, software companies - need to understand the respective device landscape to be able to capture significant value. To raise the stakes even more, device management requires provisioning, securing, managing, and updating these systems, and hence exclusive access to these devices will likely be the norm, similar to mobile phones. In the consumer IoT space, Nest and Fitbit are just a few examples of such vertically integrated ‘walled garden’ systems.

18 billion IoT devices were deployed by the end of 2015.
Significant capital expenditures have already been made, and can be leveraged to defer, reduce and even eliminate initial device expenditures. Yet, budding downstream players need to answer a number of questions to assess the feasibility and viability of their IoT business case:

• How many devices have already been deployed? • Who owns these devices? • How can the devices be accessed? • Is the device access exclusive? • Are edge clients and gateways required to transport the data? • Who will pay for the cost of the HW deployment?  • Who owns the data? • Who can grant permission to access the data?

Another 32 billion IoT devices will be deployed between 2015 and 2020.
Complex IoT devices are getting cheaper quickly. Low-cost single purpose sensors are already available and can be used as a beachhead to achieve lock in. If the IoT devices are not in place today, additional issues need to be addressed::

• Who will bear the cost of deploying the devices? • Who will own the devices? • What is the economic incentive to deploy them? • Whose permission is required to deploy the devices? • Who are the visionary users and customers ? • How quickly can the devices be deployed? • How many will be installed and active in three years from now?

Locking up access to the end device is required and necessary, but is not sufficient to win. As Ben Evans from Andreessen Horowitz has said: ‘Anything that can be measured or connected or controlled, will be’. The race is on.