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IoT - Macro Convergence and Emergence of Markets

In a prior article, we talked about IoT being the connection of the physical and the digital worlds. That is, connecting those things that were physical in nature hitherto and now find a need to be connected to the digital world. This phenomenon about things/objects/entities is also influencing the enterprises in how they are transforming and shaping themselves to survive and thrive in the fast evolving world.

The enterprises across consumer, commercial, public, and industrial sectors that were born in the pre-Internet era (Honeywell, ABB, GE, Philips, Siemens, and so on) are making moves to position themselves as digitally transformed companies. More subtle are the moves being made by the Internet era companies (Google, Amazon, etc.) to integrate themselves with the physical world. Just as the enterprises from physical world have come to realize that they cannot compete unless digital technologies are leveraged to deliver value added products and services on top of physical assets (sometimes even in a freemium model with large physical assets being given free), the digital companies too realize that they cannot continue to enrich the end consumer's life only through pure software products/services. They recognize the need to blur the line by playing in the field of physical objects that humans touch every day (for instance, besides the much publicized Nest and self-driving car, it can be interesting for you to observe how many of the Alphabet companies are associated with the physical world). Even more interesting are the approaches of enterprises that are born to build physical assets in the digital era (Tesla, for example).

In tandem with the above phenomenon, there are a number of plays across IoT market that numerous enterprises see the opportunity to position themselves. (First, a disclaimer: the below is by no means a comprehensive list of areas or players and neither an endorsement of any enterprise; large dedicated teams of expert market analysts exist across organizations that spend full-time analyzing these areas and enterprises to enable M&As or partnerships or commercial relationships).

Semiconductor Chips: the physical assets have to be added intelligence to perform one or more of sense, connect, store, transmit, and compute functions. Such functionality can be added with semiconductor hardware, and so it became imperative for chip manufacturers (Intel, Nvidia, ARM, Qualcomm, Broadcom, etc.) to partner with various OEMs of the install base. Another angle for them also is the increase of complex compute needs in data centers and on clouds as billions of more devices pump data.

Install base of Physical Things: enterprises across consumer, commercial, public, and industrial sectors with their traditional install base are already in the game, and are now looking to wrest control of the majority pie with deeper integration across the value chain (for example by building the platforms and the value added software services).

Connectivity: Network service providers (AT&T, Verizon, Sprint, etc.); larger the install base better for them with more subscriptions, and so prefer as many physical assets as possible connected natively to the Internet, rather than to a local Edge device. Companies like Cisco (with Jasper offering) also have partnerships with network service providers in cellular connectivity play.

Platform: most misrepresented piece in the IoT space. An Edge device on premise (home, building, plant, etc.), with ability to receive data from sensors/devices, to store and process the data, and then to transmit command and control signals to those end points, is often positioned as a platform; sometimes referred as Edge Platform (Cisco, Dell, etc. play in this space). And, even a smart thermostat is referred occasionally as an IoT platform. And then there are large scale PaaS platforms on the cloud that enable end-to-end (connectivity to Commercialization with all things data in between). GE Predix, Honeywell Sentience, etc. fall under this category (more on the evolution of such cloud platforms in later months). So, your definition of an IoT platform can vary depending on where you are standing.

Cloud: service providers (Azure, AWS, Google Cloud, etc.) offer the infrastructure (IaaS), and they also often offer some out-of-box IoT specific services (PaaS) along with IaaS. To enable IoT platforms on the cloud, there is also a range of technology and commercial plays (Docker Swarm, Kubernetes, Pivotal Cloud Foundry, etc.) to make the platforms compatible or portable to multiple cloud service providers in order to serve expanded markets and geographies.

Security: cuts across all aspects of IoT, starting from securing the local devices to protecting the data and services on cloud, while also ensuring access to authorized people and systems. The security play has different implications, both from technology and commercial perspectives, for consumer IoT vs. industrial IoT solutions with the latter demanding far more stringent cybersecurity needs. Numerous enterprises are making mark in Identity management, device management/authentication, data encryption, secured data access, etc., both on the Edge and the cloud.

Data: its lifecycle management including ingestion, engineering, exploration, quality/integrity assurance & management, governance & compliance, storage, access at scale, and so on, within itself offers an area of unlimited opportunities.

Analytics: plethora of technologies for data discovery, machine learning, deep learning, AI, NLP, NLU, NLG, Multimedia (audio, video, image) analytics, real-time streaming analytics at industrial scale, augmented reality, virtual reality, self-service, visualization, and so on play a critical role in IoT. Numerous startups are emerging in these areas.

Beyond all these, a wide range of technologies that are significantly impacting the IoT include Block Chain, Drones, Robotics, and Biometrics, The list keeps increasing.

And, many commercial areas that influence and shape the IoT world include, System Integrators (SIs), Value-added Resellers (VARs), Commercial Service Providers, Data Aggregators (2nd party and 3rd party data providers), etc. Also include the enterprises that focus on building and delivering pointed IoT solutions embedding processes, methodologies, and practices for a specific domain (buildings, factories, electric grids, agriculture, infrastructure, transportation, oil & gas, etc.).

Global IoT spending is expected to reach a total nearly $1.4 trillion by 2021, per IDC spending guide, as enterprises continue to invest in the hardware, software, services, and connectivity that enable the IoT.

If so, what areas and which players do you think would derive or capture the most value?

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Ram is passionate about Life, Innovation, and the pursuit of Excellence. He is currently the Director of Product Management, IoT Platforms (Data & Analytics) at Honeywell and leads the global team efforts in building cloud-first, big data driven, analytics-powered multi-layered IoT platform stack for industrial, commercial, and consumer markets. In the past, he held leadership roles in product management and technology innovation at start-ups and Fortune 75 companies and created new lines of Data Analytics products (both enterprise and consumer) with impact for several industries.

Ram loves working with the most talented people from diverse fields, and outside the work he is a dedicated runner, hiker, and a marathon coach. He is an avid reader of American and Indian histories. He earned his MBA degree from the Kellogg School of Management (Northwestern University), and his PhD degree in Computer Engineering from the Iowa State University, with a Research Excellence Award.

Disclaimer: Ram takes sole responsibility for the opinions expressed in this blog, and the thoughts/opinions may not be attributed to his current or past employers.

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