Sachin Mahajan, TELUS
It’s 1998 all over again- the technology hype of IoT/M2M is hitting it’s peak! There is intense excitement at all levels from CEO’s to analysts to grass roots developers; expecting a windfall overnight, so to speak. Well, I really wouldn’t blame them given the hype created by the latest acquisitions of Google Nest,Thingworx (IoT Platform)and a few others. The ecosystem and all other external/internal factors are coming together to make it a tangible reality in the short term- but let’s peel the onion a little bit to better understand how we monetize it and make a decent return on invested capital.
Like building a house where you have different contractors come do the flooring, wiring, painting etc in the M2M world we have 4 different components- the app provider, system integrator, connectivity provider and hardware manufacturer. Off the lot the hardware manufacturers take home abt 30-40% of the revenue, and the rest split 3 ways for the other 3 today. Going fwd., given the fast commoditization of the bit pipe the connectivity providers will be left with 2-3% of the ecosystem’s revenues and hence the large scramble from operators to move up or down the value chain- namely fabricating solutions/apps for their customers.Clearly, the smarts lie in choosing the right application group to cater to. At last count we had 12 different industries, 58 application groups and thousands of use cases to tap into. Despite all the hype and the choices, the majority of the revenue is coming from a few applications, namely in the IIoT space.
Outside of logistics, fleet and asset tracking there is not a significant revenue stream today, but in the next 3-4 years, the hope is nearly 50-60% would be attributed to healthcare
, public safety and connected buildings. Secondly, when i first started talking to clients to know what they wanted…the common feedback was that we love IoT but feel as if we are standing in an Ikea
without a wrench or a manual trying to put together a solution which we have no idea about. Wouldn’t it be great if the traditional telcos sold as IoT in a box, and charged us a monthly subscription fee which we were used to paying. The third learning I had was that there are certain IoT solutions which are not vertical specific but more horizontal-ized and cut across almost all industries, and that really is the sweet spot most companies should focus on.
Regardless, its a very exciting time. The power of IoT has not necessarily been unleashed completely, but we are getting there. Things which were considered science projects a few years back are now coming to life and everyone wants a part of it. Drones are delivering couriers, a tap on a phone and a cab shows up and chances are it might not even have a driver. Imagine the look on the face of a cop who pulled up a driverless car a few months back to give them a ticket for impeding traffic, just to find out that it was driven by an algorithm. My plants text me when they need to be watered.…my house tweets whenever there is a knock on the door…what a fascinating fascinating world, wit IoT truly unlocking “The Art of the Possible”!