The Internet of Things World conference held in Santa Clara from May 10 – 12, 2016 was one of the larger IoT conferences, encompassing three events (Connected Cars, Wearables and IoT Apps) co-located at the same venue. With over 10,000 attendees, we were able to speak with and hear from a diverse set of participants, ranging from technology providers and vertical industry practitioners to investors and academics. For those who were unable to attend, following is a quick summary of the conference’s key themes:

1. Proliferation of IoT Platforms Continues

Adding to the already crowded IoT platform space, several new platforms were launched at the conference, including HPE’s Universal, Samsung’s Artik Cloud, and Hitachi’s Lumada. These were just the announcements from the scaled providers. Add to them the plethora of announcements from startups, and it is easy to see why this particular category has become crowded. In our estimation, there are nearly 200 to 250 IoT platform solutions currently in the market.

On the demand side, this platform proliferation poses a number of challenges for end users and IOT solution providers in navigating the landscape and selecting a platform. They are having to get a lot more discriminatory in their specific requirements, such as the set of use cases to be supported, the industry vertical specialization requirements of the platform, supported communication protocols, platform scalability, etc.

On the supply side, platform providers will need to become laser focused on target segments for initial market penetration and think through their differentiation and value proposition in those target segments. Additionally, careful thought must be given to their ecosystem strategy, which is a key element of the overall value proposition of a platform play. It wouldn’t surprise us to see substantial levels of consolidation start to take place in the near to medium term.

2. Scale of Deployments Continues to Remain Modest

Through our conversations with conference participants, the impression we got was that while there are plenty of IoT related projects in flight across multiple industries, the vast majority are pilot projects and/or small scale deployments. And despite the proliferation of IoT enabling technology options, widespread deployment of IoT solutions remains nascent.

While overcoming the technological complexity of assembling an end-to-end solution is certainly an issue, there is another factor inhibiting widespread deployment: Companies are wrestling with the transformational business and operating model changes necessary to realize success with IoT at scale.

These factors shouldn’t be a challenge for too long, particularly as the technology matures and/or service providers such as systems integrators step in to shoulder some of the heavy lifting. In the short term, IoT solution providers should develop capabilities around Customer Success, which can play a critical role in helping to broaden deployments, drive usage, and, ultimately, realize the value from IoT investments. In addition, providers need to give careful thought to their services strategy – whether they will develop services capabilities such as technology implementations, data integrations, configurations, etc. in-house, or instead tap into and leverage ecosystem partners.

3. New and Emerging Trends in IoT Will Necessitate a Strategy Refresh

A handful of emerging trends were evident at the conference. Most prominent of these was the need for fog computing, or edge-device processing. IoT solution providers and users are rapidly realizing that the current architecture of edge devices collecting data and transmitting en masse to a centralized cloud for further processing just won’t cut it. Not only does this architecture put pressure on existing infrastructure such as the bandwidth needs of data networks, the computing capacity needed in a centralized cloud, etc., it also severely limits the ability for the solution to scale. As an alternative, there is growing thinking that the smarts to analyze and prioritize data need to be built into the edge devices themselves.

Additional emerging trends include the availability of 5G networks in the next 12 to 24 months and the rapid growth of virtual reality/augmented reality solutions. While the technology is still nascent, the potential use cases, especially in enterprise security, servicing, etc., promise to drive continued investment in these technologies.

Taken collectively, these emerging trends will necessitate an evolution of the IoT strategy, particularly for IoT solution providers. In addition to the obvious technology architecture changes, providers will need to understand the implications of these new technologies to their current offerings and pricing models, the cost structure of service delivery, and the types of partners they will need to recruit and foster as part of their ecosystem.

Given the slew of new product announcements, emerging trends, investments, and acquisition activity, it is clear that the IoT market is highly dynamic and rapidly evolving. Regardless of where IoT solution providers are in their evolution, be it at the early stages of considering market entry or further penetrating the market with an expanded portfolio of IoT offerings, the need to rapidly assess their competitive and strategic situation and adjust their play books based on market dynamics is more critical than ever before.

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If you would like to discuss these themes in greater detail and the potential implications for your business, feel free to contact me at hselvanathan@waterstonegroup.com, or find me on LinkedIn at www.linkedin.com/in/huberts.

About the Author
Hubert Selvanathan

Hubert Selvanathan is a Partner at Waterstone. At Waterstone, Hubert’s work with Software businesses focuses on transitioning to and optimizing Subscriptions business models, including pricing of subscription offerings, re-aligning post-sales organizations, design of key customer facing processes, and improving Customer Success and Support models.