The B2B consulting organization, Bain & Company, has been working to define, quantify, and understand the IoT space and what it means, and will mean, for their clients.
The firm recently released a report called Defining the Battlegrounds of the Internet of Things (Website | PDF) which grabs you in their opening paragraph as they describe how they see the overall addressable market:
The Internet of Things—a huge network of sensors and smart devices, combined with advanced analytics and cloud services to make sense of all the data—promises to augment and disrupt products and services across industries. Expectations grow more spectacular every day: Forecasters predict up to 20 billion Internet of Things devices within a few years, generating 5 trillion gigabytes of data every year and creating more than $300 billion in opportunities for tech vendors, telcos and device makers by 2020.
As I read this report, I kept coming back to one call-out which appeared on page one:
The Internet of Things is not one market but a set of overlapping markets with strong connections to the data center and analytics.I know that seems obvious to any of us in the IoT space, but on that same page they breakdown the emerging battlegrounds which defines the top five markets most likely for major IoT disruption:
When we look across consumer, enterprise, industrial and public sectors, we see a few major battlegrounds emerging, each with unique platform dynamics and growth opportunities.
Consumer. As leading mobile platform providers (Apple, Google and Samsung) extend their reach into wearables, smart homes, cars and other aspects of consumers’ lives, many software and hardware makers will find their place in these ecosystems. Successful players will invest in learning which platforms offer the best opportunities, depending on their region, target market and capabilities. Expect fierce competition among this small set of platform providers, using scale, developer communities, device partnerships and businesses subsidized by data. Creating platform stickiness and bridging customers across industry segments will be the keys to success.
Enterprise and industrial. As industrial and enterprise equipment and devices get connected, incumbents focused on specific industries are building on their domain expertise and customer relationships by expanding into broader offerings. Many will form partnerships, either to improve their capabilities (especially in analytics and security) or to acquire expertise in adjacent industries. Those that can build scale and make partnerships work can shape platform standards. Given the diversity of industries, expect a wide range of vendor platforms that may share common features but are tailored for particular uses.
Network and gateway. Connecting devices through the network provides opportunities for new products and services. Edge analytics and real-time (or low-latency) services will become increasingly important, close to sources of data rather than in the data center. Examples include patient monitoring in hospitals, quality control in factories and better customer experiences in stores. Therefore, many businesses will look to their long-standing relationships with network equipment makers (such as Cisco, Ericsson, Huawei and Nokia) and telecom service providers to capitalize on the opportunities. Telcos will aim to capitalize on the proliferation of devices and apps in several ways. They will improve connections with better directory services to locate, authenticate and connect remote devices. And they will offer life-cycle management services to maintain, upgrade, secure and provision the complex device and sensor networks—which others will compete to offer, too.
Analytics. Analytics will emerge as a critical platform battleground, given their importance for creating value from Internet of Things data. Traditional analytics vendors (for example, IBM, SAP and Microsoft), cloud service providers (such as Amazon Web Services and Alibaba) and system integrators could successfully extend their customer relationships and scale into tailored products and services, especially in instances in which Internet of Things data is critical but only one of many data sources contributing to insights and decisions. By contrast, new pure play vendors will offer custom analytic solutions in which limited integration with broader data sources is needed. For both horizontal and pure play vendors, partnerships with industry incumbents will be important—for example, IBM’s work with Medtronic on diabetes management, Amazon Web Services’ work with John Deere in agriculture or SAP’s partnership with Siemens on smart manufacturing solutions.
Autonomous. Robotics, drones and autonomous driving are among the most greenfield of all these applications. They differ in that most sensor information is collected locally and processed on board, with less (though not zero) connectivity back to the cloud, creating different demands on local vs. remote data storage and processing than other Internet of Things applications. Startups and incumbents are moving quickly to get in on the ground floor where current industry leadership and capabilities matter less than in other areas. For example, cars have long been sold on the driving experience, but that may be less important than reliability and safety for selling autonomous cars. Real-time capabilities and technologies such as computer vision and machine learning will be important differentiators for success.