7 Things We Learned At IoT World 2016

One of the largest IoT conferences took place last week in Santa Clara, California: IoT World 2016. The 3-day event which is in its 3rd annual edition, attracted a crowd of ~15,000 people with most of the major IoT vendors either exhibiting or speaking on stage.

IoT Analytics had 2 analysts on the floor at IoT World, we moderated 3 of the panel sessions and talked to many of the exhibitors and visitors. These are our 7 key takeaways of the conference:

1. We are starting to enter the second wave of IoT

Several panel discussions at IoT World introduced the notion of a second wave of IoT.

The second wave of IoT describes a development we have heard a number of companies talk about lately: The IoT industry is moving on from just connecting things and trying out what works (wave 1) to actually developing new IoT-based business models (wave 2).

The underlying theme of these new business models can be largely summarized as “Everything-as-a-service”. SAP highlighted projects with sporting goods manufacturers to deliver “fitness-as-a-service” while others talked about energy savings as a service or transportation as a service, all enabled by IoT. ADT delivers Smart Home Security as a service that lets you secure your house during vacation time only. Microsoft showcased how they support Rolls Royce’s jet engine as a service.

In some respects, this development is analogous to the transformation of enterprise software from perpetual licenses to Software as a Service.

2. The Internet of Things is overhyped

Even though there is a move towards the second wave of IoT there seems to be widespread acknowledgement that the Internet of Things is overhyped.

Not only did some of the speakers at IoT World mention this explicitly, it was also apparent on the exhibition floor.

Despite a packed exhibition floor, several of the exhibitors noted that the number of customers or prospective customers visiting the stands was below expectations.

One might argue that most customers will show up at vertical-focused conferences – nevertheless it can be interpreted as an indication that IoT is not picking up as quickly as some expect it to do.

This is also in line with some of our IoT market models (see for example our analysis of the IoT Platform market indicating that we are presently talking about a million-dollar not a billion-dollar market)

3. Everyone has an IoT Platform

It seems like you are only an IoT vendor these days if you have an “IoT Platform”. At the event, Hitachi, Hewlett Packard Enterprise, and Schneider Electric unveiled their new IoT Platforms. Hitachi says it is planning to invest $2.8B in IoT-related activities over the next three years.

IoT Platform was probably the most commonly mentioned word in the exhibition area of IoT World. Not only did most vendors highlight their IoT Platforms but they were generally all marketed as being secure, device-agnostic and end-to-end.

Cloud vendors like Microsoft were marketing their IoT Platform at IoT World, electronics distributors like Avnet, M2M communication module vendors like Gemalto, design firms, and even semiconductor companies like Dialog Semiconductor. Even though the marketing messages align, vendors on each of these levels take a slightly different approach, adding to the confusion.

Last year we counted 260 IoT Platforms worldwide – we are currently in the process of updating that list and by the looks of it we are now approaching 400 IoT Platforms. The updated list will be published at the end of this month on our website.

4. IoT Security is being recognized as part of the stack

A very positive development is the fact that IoT Security appears is getting more attention and depth. It is not anymore seen as an inconvenient afterthought but rather as a core element of every IoT Solution.

Several startups like Electric imp, Mocana, or Zingbox were highlighting specific IoT Security solutions at IoT World. Some of them are taking a holistic approach and some are looking at individual aspects of the security chain.

While the security landscape remains extremely fragmented, it is becoming apparent that IoT requires a new trust model–one that does away with the assumption of a secure perimeter and assumes operating in untrusted environments as the default. If you are interested to learn more on this topic, look out for an IoT Security report coming out in Q3 or join us at the Security of Things Conference coming up on June 27, and 28 in Berlin, Germany (20% Discount code: IOTANALYTICS2016).

5. Mesh networks are emerging as an alternative to LPWAN

On the communications side of things, Mesh networks made a few unexpected headlines at IoT World. Mesh networks are communication networks that rely on device-to-device communication rather than connecting individual devices to the network.

SilverSpring Networks introduced their new Starfish connectivity solution (based on the Wi-Sun Mesh standard) for smart meters and similar Smart City Solutions. The talk was also about connected car mesh clouds.

From a communications technology point of view, mesh networks represent an alternative to the heavily marketed low-power wide area networks (such as Sigfox or Lora) for low-powered devices that do not require large amounts of bandwidth – both technologies have their pros and cons.

6. Building algorithms as an asset

A lot of discussion at IoT World were still around the topic of where the value or profit pools lie and who will benefit the most. Rather than talking about data as an asset or services as the ultimate value-enabler, Tanya Rueckert of SAP introduced the notion of treating “algorithms as an asset”.

In line with that concept, several of the larger IoT Platforms showed how they are moving towards pre-defined templates for specific use cases. These templates let the user build specific IoT solutions like predictive maintenance or asset monitoring quicker and easier by working with pre-defined algorithms and configurations.

It still remains to be seen whether different IoT vendors can really differentiate each other by having more efficient or better algorithms than others. However, the fact that some vendors offer pre-defined templates for specific use cases while other vendors don’t seems to be a differentiating factor at this point.

7. Kickstarting IoT through value-based outcomes

Due to the IoT hype and its limited adoption in some industries, several sessions at IoT World discussed how vendors can help kickstart IoT. One possible answer to this question is “value-based IoT outcomes”. It appears as though more and more vendors are building IoT solutions in which the vendors have their own skin in the game.

Therefore, some IoT vendors are now charging for building the IoT Solution based on the value to their customer, not based on the effort that went into it. If for example, a manufacturer of a smart product achieves new revenue through the sale of products-as-a-service, the IoT vendor gets a fair share of that increase in revenue.

With this setup, OEMs and other companies developing IoT Solutions have a lower risk and a guaranteed ROI that helps accelerate their IoT deployments.

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<a href="https://iot-analytics.com/author/knud-lasse-lueth/" target="_self">Knud Lasse Lueth</a>

Knud Lasse Lueth

Since founding IoT Analytics in 2014, my focus has been to build a team that produces high-quality research in areas such as IoT, AI, Cloud, and smart manufacturing. Throughout my journey, I have authored or co-authored over 100 reports, always with a commitment to delivering analyses that are not only trustworthy but also rich in insight and uniqueness.

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