Hype or not? Both!

October 16, 2014

Gartner_Hype_Cycle.svgIoT is hotter than ever! Gartner just placed IoT at Peak of Inflated Expectations in their Hype Curve and forecast 5-10 years until the Plateau of Productivity. But our baby is growing much faster than anything else we have seen before and I stick to my previous view that our baby will be grown up, but still young, 2016 after only three years as teenager. Good enough technology and infrastructure are in place since a couple of years and when organizations started to go from Powerpoint and thinking to trials and pilots we reached the teens. Four things have been missing to leave the teens behind: solid participation from the IT players, a hot M&A market, active and seriously engaged enterprises and efficient easy-to-use prototyping tools for users of IoT. All these things are starting to happen now which is one of the reasons why I dare to challenge Gartner on their projection. But there is another aspect of IoT which is underestimated: how the value is created.

In most cases we build something and when it’s done we start harvest. And if customers like what we built it takes off. It might take a couple of years at least  to plan, develop and start produce, then we start market and after another year or so it might take off. That explains Gartner’s 5-10 years to Plateau of Productivity, if one ever gets there. But IoT applications deliver value when the information created is distributed to an IT system, shows up in an app, makes an alarm go off somewhere or change a road sign. Initially all IoT applications had to be created end to end – from sensor to terminal – which made them expensive to make and maintain. But now we can leverage existing networks, platforms, tools, terminals and applications making it much cheaper and quicker. So far we have seen this primarily in the consumer market where a connected sensor providing data to an app has been good enough. In enterprises data management and delivery is more complicated and changes in processes and business models takes time, but they are getting there. When they do, the operational value (cheaper, faster, etc) will be obvious and the strategic value (brand, innovation, employer attractiveness, etc) will be visible in the horizon. One only has to look at what GE is doing with Industrial Internet to understand that the impact will be massive.

Everyone promoting the story about billions of connected devices delivering data to impressive Big Data systems creating trillions of $ benefits clearly put IoT at the peak of inflated expectations. But all hard-working organizations and entrepreneurs working on industry or company specific IoT applications, well-integrated and cleverly implemented, are changing the world very fast. These efforts will start pay off soon putting competitors who haven’t started yet in a very difficult situation similar to when the frequent flyer program happened or Richard Fosbury jumped 2.24 at the Olympic Games in Maxico City 1968  using a “redicolous” new technique.

The only major difference between when we connected people and businesses to the Internet and when we connect things is that ignorance will not be an acceptable excuse this time. Beyond some clever start-ups the winners will be organizations who best understand when and how to improve their business using IoT solutions.


Axeda acquisition makes PTC an IOE power house

July 26, 2014
axedaThe creation of the Internet of Everything has been going on for a while now. It is easy to find estimates of the number of connected devices some years from now and how much the market will be worth but still hard to find the evidences that it actually happens and in which pace. A year ago I declared that we entered the teenage phase meaning that early moving customer started to go from power point and  plans to pilot trials and roll-out. I still believe we are in the teenage phase but another important indicator – mergers and acquisitions – is starting to show that we are coming closer to the real take off. Because of this I will try to track relevant M&A deals in my blog onwards.
Intel recently acquired Basis Science with their advanced health tracker, Google has spent about $5B acquiring Waze, Nest and Dropcam but PTC’s recent acquisition of Axeda for $170 million in cash following their $112 million Thingworx acquisition in December are even more interesting to me. PTC provides systems and solutions to a long list of very large companies globally and they obviously believe being a leader in IoT system and service enablement is key. I believe the Internet of Everything will be grown-up in less than two years from now and insist that the key difference from when people and companies were connected to the Internet is that ignorance will not be an acceptable excuse this time.

What is Google up to?

June 24, 2014

dropcamMergers and acquisitions indicate rapidly growing markets ahead. Google made a 3.2B$ acquisition of Nest in January. Now they just followed on with an acquisition of the Wi-Fi surveillance camera maker Dropcam for 555M$. Thermostats, smoke alarms and cameras – what is Googles plan? I think it is the homes and maybe offices they are after. There are many thermostats, smoke alarms and smart cameras available but Nest and Dropcam definitely comes with a cool design which should at least bring home healthier margins. People love nice products! Google has always been interested in Wi-Fi and it’s not a wild bet that there will be Wi-Fi in homes and offices. But this can’t be enough, they must be going after a service model with recurring revenues and collecting data from these devices to store, manage, analyze and sell. I have always claimed that “data is the gold of M2M” and I am confident that Google shares that view.

Provided I’m right, I still questions that idea. Even if Google spend another couple of B$ to buy companies with cool things (Sonos could be a good target) they will never get market share over maybe 5-10% and scattered around. I understand that they could sell the information back to the users of these devices but that seems to be a difficult path to get the money back. And if they try to sell the data elsewhere I would believe the owners of the devices and policymakers would have a view on that. But Google knows all that. The recurring revenues are obviously attractive but it feels questionable to pay this much to get there.

On top of all I believe their will have to be at least three separate wireless networks in homes: an unmanaged Wi-Fi with good performance but only best effort services, a really secure fully managed network for security related applications like door locks, surveillance and medical monitoring, and maybe even a third managed low bandwidth network for connecting things like fridges, coffee machines, etc. And even worse, we will see a mix of WAN and LAN technologies being used as well. I simply don’t see how one can deliver sensible services like surveillance or smoke detection over an unmanaged best effort Wi-Fi network. Successful companies with such services like Verisure today typically manage their own network.

So I am probably wrong. Goggle sees something I don’t. And they also understand the down-side of connected hardware since Nest just had to recall 440.000 smoke alarms due to a potential risk that they didn’t alarm immediately. But I am happy for their acquisitions since it stimulates entrepreneurs, customers and other companies who consider playing a sincere role in building the Internet of Everything.


Time for IT players to step forward

April 30, 2014

layout-databaseIn April last year I wrote that the M2M industry was leaving the connectivity focused baby phase and entered its teens. This was great news and happened much faster than when we connected people and businesses to the Internet. In essence this meant that all players who wanted to be part of building the Internet of Everything, not only the connectivity guys, started to gather around the table. Looking at when Internet of people and businesses was developed made it obvious that no one could make it alone and partnerships became the name of the game. That’s pretty much where we are today and these efforts are very promising. 

A major change has to take place before the industry leaves its teens and the building of Internet of Everything gains solid momentum – the IT companies have to take the lead. Up until now connectivity players have been enabling and driving but since “data is the gold of M2M” it has to be the IT players who take over before we really can get going. The value of any M2M application is realized when the information collected or created shows up in a decision-making system or a system managing processes of any kind. This is why application developers, system integrators, app developers, architects, UX designers, CIO:s, business analysts and others are key to bring on board. And this is why leading IT companies will have to join the party before take off.

I have been waiting for the first ones to walk the talk and I’m delighted to share with you that it’s happening here and now! Cisco has rapidly been ramping up their efforts in the Internet of Everything space with research, reports, speeches, acquisitions, idea challenges, etc. And last week they joined our Swedish M2M Service Enabler (SMSE) alliance as the first sponsor from the IT industry. This was very well received by our 26 members of the alliance and media. I expect collaboration and results quite rapidly and I am convinced we will have the leading IT players in Sweden, vendors and consultants, in our alliance before summer. My aim is to make Internet of Everything for Real 2014 in Stockholm June 18 the first event where leading connectivity and IT players will discuss how to create and promote the Internet of Everything together with the entrepreneurs and customers.

Yet another evidence of the importance of IT in building the Internet of Everything was an interview with Klas Bendrik, Group CIO at Volvo Cars, in CIO Sweden today (in Swedish). Mr Bendrik says that everything change when both customers and products are connected – how they develop, design, sell and service cars. It influences the entire life cycle of the car and redefines the entire foundation for their company. “I and our IT function get involved in all business development when IT becomes part of the core processes in the car life cycle”. Voila! Data is the gold of M2M. The only difference from when Internet of people and businesses was built is that ignorance will not be an acceptable excuse this time. Decision makers need to look into what the Internet of Everything will mean to their business and industry now.


Plumbing or solutions?

March 6, 2014

PipesDevice connectivity platforms for mobile operators have been discussed for years. There have been two primary platforms on the market – Ericsson and Jasper – with Ericsson more focused on the ability for the operator to manage M2M business efficiently and Jasper having been more focused on adding solution partners to their platform thus to their mobile operator customers. Up until now most mobile operators have had one of these platforms and in many cases an in-house alternative somewhere. But at MWC Telenor Connexion announced that they add Jasper to their Ericsson platform (once acquired from Connexion). According to Per Simonsson, CEO at Telenor Connexion: “Deploying services from the two leading platform providers ensures greater flexibility and enables us to collaborate with new partners and operators in global deployments“. I believe Telenor Connexion has a clever long-term strategy to become technology agnostic when it comes to platforms and bearer technologies in order to get a strong position for global business and to become flexible in supporting customer’s changing needs over time.

This announcement caused some stress here and there since some operators used the situation of being the only Jasper customer in a market as a differentiator. This is of course not a sustainable way to create a position in a market and it was only a matter of time until the opportunity would have been gone anyway.

I have always argued that mobile operators should refrain from a GSM-only approach in M2M and that they should be aware that Jasper’s business model is quite comparable with an MVNO from the operator’s point of view: The operator get some additional traffic but might loose the relationships with partners and customers and once and for all become a pure connectivity provider. Nothing necessarily wrong with that but most mobile operators active in M2M state that they don’t want to become just a connectivity provider. Yesterday I read that Jasper is launching the world’s first commercial end-to-end Global SIM product based on Giesecke & Devrient (G&D) technology. It’s is aimed at the IoT market and will allow enterprises to remotely manage embedded SIMs over the air (OTA).

The ability to change operator over-the-air is a necessity in M2M and I saw a GSMA demo at MWC 2012 demonstrating this. Mobile operators who don’t have the ability to go down the verticals and applications in M2M thus “outsource” partnership and business development, might be stuck with plumbing when the OTA provisioning is in place. I see only two main roads ahead for operators (including the M2M MVNOs): invest and get engaged in applications, solutions and verticals or provide the connectivity. And anyone getting involved in applications and solution, service enablers or operators, need to use a connectivity agnostic approach like Telenor Connexion.


Partnership is on everyone’s lips

February 28, 2014

bildYet another humongous Mobile World Congress is over. Almost 90.000 people from around the globe have spent a couple of days together in Barcelona with decent weather, amazingly good organization and an interesting mix of cava, business cards, pickpockets, technology and rock’n roll. This year was very much about improvement and evolution and little news and revolution. That is both serious and good but unfortunately less exciting and makes a show like this a little sleepy. Beyond a couple of quite expected things like Mozilla’s 25$ smart phone and that Nokia goes Android you mainly heard words like security, virtualization, big data, robustness and improved BSS/OSS at the show. From a helicopter perspective I believe it is a slow process of marrying IT and Telecommunications that we are looking at.

And then, of course, M2M and Internet of Things. It’s on everybody’s lips now, and it’s mainly questions. Ranging from companies considering to enter the market and wonder where to start to people already there trying to figure out where to go next. And my previous conclusion that we have left the connectivity phase behind and focus on the data and use of it was more clear than ever. I heard reference to the 50B devices three times during the entire event to be compared with hundreds of times a year ago.

I was there with a common stand in the Swedish Pavilion with nine of the 21 members of the Swedish M2M Service Enablers alliance: Kombridge, Springworks, Maingate, Possio, WSI, Fym, Evothings, Info24 and WBIRD. And I was amazed to see the interest in talking to experienced specialized m2m service enabler companies with solid solutions in use by real customers. From across the world we had operators, potential customers, vendors, analysts, regulators, consultants, investors and governments visiting us. We counted collectively to over 300 meetings with reasonable business potential after day three of the event. We also got the opportunity to explain to our Swedish Minister of ICT and Energy, Anna-Karin Hatt, that we are working hard together in SMSE to make Sweden the obvious country to go to for leading edge skills and knowledge in M2M aka Internet of Things. 

So what’s the state of the nation? Most players have understood that data is the gold of M2M, that the value of M2M is realized when the information is properly distributed to decision-making systems, business process applications, etc. and that a proper M2M solution consist of three different components: connected devices and sensors, collection and blending of data most often in the cloud and distribution of the information to apps, ERP systems, etc. The challenge is that each of these three components is a competitive industry by itself and each M2M solution must include all three to deliver the value. This is obviously not possible to solve without well working partnerships. The transition from quite ok complete generic proprietary M2M solutions to excellent M2M solutions for an industry or more often a specific organization is similar to what the IT industry went though over some 20 years starting from IBM providing everything from Nobel prize research and silicon to post service and financing. Our transition will be brutally fast and enable the fully international and layered Internet of Things industry needed for the real take-off. Companies perceived as providers of generic products or services with no edge will fade away in this process and simply just not be seen. This is why operators and vendors talk partnership now. It is needed but very difficult. To set up a well designed and attractive partner program is not rocket science but a lot of work. But making people work well together goes far beyond that. It is little about technology and a lot about trust, way of working, culture, business models and not the least “similar children play best” as we say in Sweden. And entrepreneurs are stressed people who have little to no patience with things that don’t contribute to their business. Partnerships are also initiated by government bodies and research organizations and a new LinkedIn group on IoT or M2M is established at least weekly.

It will be really interesting to follow how this will develop. In my mind this is mostly a commercial issue why any working partnership will have to be driven by people closest to the customers, who understand the context of the data and application the customers are looking for. Progress and success will only come when people start doing thing also in this field. Nobody, not even McKinzey or Accenture, designed the value chains, the standards or the API:s when we connected people and organizations to the Internet. It was created by people trying things and finding ways that customers liked. This is how the Internet of Things will be established as well. And this is the thinking behind our Swedish M2M Service Enablers Alliance. Avanti!


M2M – a glocal business!

June 29, 2013

Parking in NiceWhat more does it take to make M2M aka Internet of Things – everything or some things – happen big way? Let’s revisit the key components again. Data is the gold of M2M and the winners will be those who best utilize the data captured. Integration of data in existing business systems and processes is key to maximizing the value. Distribution of information through relevant channels and to terminals of users choice, using open api’s and gorgeous human-machine interaction is required for the applications to be used. Generic Device Control platforms on top of service providers networks together with Specialist Service Enablers are required to make it affordable to develop and maintain applications for clients of all types. The winners in Service Enablement will be the ones who understand the data they are dealing with and due to the huge amounts of industries and functions to be served Service Enablement will be a very fragmented part of our industry.

I see most of this happening now and our industry is definitely developing fast. We are in the teenage stage already with clients moving from thinking and talking to doing. From Powerpoint to pilots. There is absolutely no better way to understand what happens if one connects things than actually connecting some things to play around with. And there is no better way to go for that than to contact a Specialist Service Enabler who has most things ready. Connecting things and collecting the data in the cloud was good enough 1-2 years ago when technology was the key challenge. But today the challenges are mainly business centric why understanding the context of the data is key to succeed. This is why Specialist Service Enablers is the right choice when it is time for a pilot or proof of concept project.

But there is one major thing missing: Internet is global, ICT is a global business and Internet of Things will have to be global as well to prosper. Vendors and operators are working quite hard to make this happen which is great but it will take long time and they can’t make it themselves. Most organizations in the world are small to medium-sized and the software they use are mostly local or localized. Law, policies, culture, language, taxonomy, habits, taxation, religion, alphabet and friendship are examples of things that make people use local software. And it will continue to be like this for many many years. Since the data captured in M2M solutions should end up in business applications, maybe blended with data from public or commercial sources, we need what I call a glocal value chain. The global component is needed to drive economies of scale and enable international business etc. The local part is there to cope with the local requirements, to ensure proper integration in business systems and to engage integrators, consultants and developers locally bringing their clients with them.

Glocal value chains are always difficult to make work. But in our case, whatever we call our industry, I find it quite straight forward. The global part consists of operators (like Telenor Connexion) and their alliances (like GMA), Telecommunication vendors (like Ericsson and Telit) and international ICT vendors (like Cisco, SAP and Oracle who all have started to move now). Ever since Ericsson’s 50 Billion Devices statement this inside-out effort has been coming along quite well. The local part, i.e. developers, integrators, resellers and consultants, has in most parts not got going yet and therefore the small to medium businesses in general are in waiting mode or not even aware. Specialist Service Enablers constitute the missing link. Due to missing operator device connectivity services they have had to learn to deal with the connectivity layer directly. And the services they provide to customers in the industry they target is to a large degree useful across boarders. To me it’s clear: operator networks with device connectivity services together with Specialist Service Enablers interfacing to local developers and integrators is the way forward. The challenges are primarily commercial and practical, not technical. I am working with members of Swedish M2M Service Enablers in several projects along those lines and it looks very promising.


Enable M2M trials by proper training

April 8, 2013

STF-200x962013 is the year when M2M aka Internet of Things entered the productivity phase which I have been writing about before. Focus moves from the actual connection to what value comes out. The value we look at in this phase is typically operational thus quantifiable and ROI-calculation friendly. In the next phase, probably as little as 1-2 years away, we will start harvest also the strategic value and that is when industries and society will change drastically.

Already a couple of month into “the year of M2M productivity” I can share a great Swedish example: STF Ingenjörsutbildning is a postgraduate education institute targeting engineers and technicians. They run some 2000 training activities per annum with 15000 attendees, mainly in Sweden but also abroad. STF just announced a one day training on “M2M – from products to services” aiming at providing practical guidance to the attendees. Where to start? Who to turn to? Legal implications? Purchasing considerations? Pitfalls? Hopefully the attendees will have information and confidence enough to start their first in-house project when they come home.

I have been quite involved in this training and believe this is a very important step forward for the industry. We simply need to make people understand the value of M2M for them and give them knowledge enough to start playing around with ideas, prototypes and trials. It is simply not possible to figure out before hand what will happen and which new opportunities we will have when we connect our products. This to me is a great way to drive technology driven innovation.


M2M in its teens – the industry is shifting gear

April 5, 2013
The M2M industry is rapidly leaving the first connectivity focused baby phase – thank god! – and enters the productivity phase. This is where we look at operational issues, capabilities and value. Vendors and operators are preparing themselves to be able to serve the market better and more efficiently. And new partnerships, alliances, initiatives and M&A activities pop up on a daily basis. This is all very good and makes life easier for developers, integrators and customers. But it is more about preparing for the business to take off than making it taking off. It mainly improves the capabilities to deliver in an efficient way.

Today’s initiatives are signs of a developing industry. Building blocks are put together into candidate platforms and architectures. As always most of them will fail over time but still it is an important part of growing up. Let’s look at a couple of recent M2M “teenager activities”:

  • Telefónica and Telit cooperate in M2M Air, providing managed M2M services globally
  • Etisalat group just joined KPN, NTT DOCOMO, Rogers Communications, SingTel, Telefonica, Telstra and VimpelCom in the M2M Multi-Operator Alliance
  • Ericsson and SAP announced a partnership at MWC and talk about the M2M Eco-system
  • Satellite operator Orbcomm acquired MobileNet who provides custom mobile data solutions for the heavy equipment and railroad industries
  • Wipro and Axeda announced a strategic alliance to provide services and end-to-end solutions to help organizations connect with any asset, leverage machine data to enhance business processes and develop new innovative enterprise applications.
  • TeliaSonera, France Telecom-Orange and Deutsche Telekom collaborate to increase the quality of service and interoperability for machine-to-machine (M2M) communications
  • Claro Brazil joins a growing list of Jasper Wireless operator partners including AT&T, América Móvil, NTT DOCOMO, Telefónica, VimpelCom, KPN, SingTel, Etisalat, Telstra, Rogers, CSL and more
  • Several operators including TeliaSonera, Swisscom, XL and have signed up with Ericsson to use DCP for improved M2M service delivery
  • AT&T has several M2M initiatives including AT&T Control Center together with partners like Jasper Wireless, Axeda, Sierra Wireless and SensorLogic.
  • Airbiquity and China Unicom are teaming up to provide telematics services for the Chinese automotive market
  • Vodafone Vehicle Connect and Towers Watson’s ‘DriveAbility’ programme will accelerate the pace at which insurers can get new services to market, and at a competitive cost
Looking at mobile operator subscriptions for M2M, the market continues to grow roughly 25-30% per annum. The number of cellular M2M subscriptions nearly doubled between 2010 and 2012 to reach 143.7 million according to Pyramid Research. They also claim China is growing over 40% per annum and will become the largest cellular M2M market this year. We should remember that a lot of M2M applications share cellular subscriptions or use other technologies to connect.

So operator’s M2M business is growing quite rapidly but from small numbers. In a fairly well-developed M2M market like Sweden, M2M subscriptions are roughly 20% of all mobile subscriptions today. But still most of the market potential is untouched. Policy-driven markets like smart meters, big global markets like connected cars and consumer oriented stand-alone solutions are all fairly well addressed. But small business is big business also when it comes to M2M, and these companies are only addressed by independent Service Enablers, developers, integrators and turn-key solution providers. The alliances, partnerships and M&A activities aren’t reaching that far. A company connecting 100 of their “things” per year in maybe 25 countries across the globe is simply of no interest to any of the large players. The same goes for ,a company who want to develop a specific application to connect 25 of their “things” in a country, unless they are filthy rich.

Success in SME will come from successful platform support for specialist service enablers, developers, integrators and turn-key solution providers. That has little to do with technical issues and a lot to do with trust and business models. This has to be resolved before M2M will grow up.


M2M is not a solution – it’s a way to segment the market

March 15, 2013

Beecham Sector Map kopiaM2M is not a solution. It is a way to segment the market: are we connecting a business, person or a thing to the Internet? The actual connection is of less importance to users – it is what it enables that makes sense. And the data created makes even more sense. We have seen the movie before – when people and business were connected to the Internet we started focusing on the connection. Then we discovered enormous benefits when processes became much more efficient. And finally innovative solutions and business models started change industries upside down. We entered the “as-a-service” era.

Over the last 18 months we have seen a clear change from the 50 billion devices approach to M2M towards a more user oriented approach where a range of M2M solutions are part of the ICT toolbox. If we compare to when Internet arrived we are leaving the connectivity period and enter the enabling user value era. We solve customer problems, we save money, we increase efficiency, we bring cost down or save energy. We create operational value. Previously everyone talked about smart meters and connected vehicles due to the large numbers involved. Now the addressed markets discussed are increasingly granular. The further we go down this road the more critical specialist service enablers become.

Last year the Connected Home pavilion at MWC in Barcelona was an important frequently visited showcase for M2M solutions and M2M was mentioned in most key notes. This year, the Connected City pavilion at MWC was a quite boring and less crowded but in every corner of the show and at every party people discussed what could be done with M2M solutions.

Mobile operators all try to figure out which role to play. Subscriptions alone seem less interesting. Adding device connectivity on top of the network helps deliver a better service. Going after large applications like smart meters, ebooks and connected cars is a no brainer. But how to win and deliver the second and third-tier of opportunities is the thousand dollar question of today. Small business is big business. I am convinced that those who can find a way to collaborate with the specialist service enablers will win. And such collaboration is not a matter of technical integration – it’s all about trust, business models and how to go to market. Our Swedish M2M Service Enablers alliance is always interested in efforts to answer the thousand dollar question of today.


%d bloggers like this: