IoT? Internet of Things....What is a Thing?

Internet of Things, or IoT, is a topical conversation these days.  Companies with vested interest, such as Cisco, have announced this market to be $Billions and $Billions in the not so distant future.   What is the internet of things?  What are the “things”?

The word “thing” is a good one here.  You can add “no” and “every” to the front of it and get other proper words.  So IoT can mean “nothing” and “everything”.   That exactly what it means today! 

A market of nothing and everything is not a real market.  It’s either a ZERO billion dollar market (nothing) or an infinite billion dollar market (Everything).   Zero dollar markets don’t sell market research reports and space at trade shows.  So the industry tends to favor the infinite dollar market.  So we see reports of IoT being a $19 TRILLION market (Cisco), $14 to $33 Trillion (Mckinsey) and a mere $2 Trillion market (Gartner). 

We’ve seen this movie before.  In the 1990’s the market for “Multimedia” was predicted to be many billions and more recently we hear the market for “Cleantech” will be multiple billions.  Yet, like the term IoT, these words meant nothing and everything. 

When asked what multimedia applications were the answers were always video editing, video conferencing, training and kiosk.   Not sure about “kiosk” but the other three are not multimedia applications they are specific identifiable markets.

Similarly, what are cleantech applications?  Energy efficiency, renewable energy and smart grid are often the answer.  Here again, these are not cleantech applications, they are specific identifiable markets. 

So let’s drop the hype around IoT and start talking about real markets that combine sensors, IP networks and analytics.  I almost said “Big data”, but that’s another “nothing” and “everything” market.

For further discussion please contact me at gwhelan@greywale.com

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Cleantech: Can’t Change the forces of Physics or the forces of the Market

 “Save the Planet”.  Now that’s an admiral goal.  What’s next?  “Save the solar system”?  In all seriousness, inventions and innovations that reduce energy consumption and CO2 emissions are worthy goals.  But, just as the cleantech entrepreneur needs to address the laws of Physics they need to address the laws of the Market. 

New technology adoption, in any market, must address fundamental forces to succeed.  Cleantech, like every other market faces the classic  S-Curve and Gaussian adoption curves.   Both of these models address that fact that customers have implemented the current generation of technologies and solutions.  They are familiar with them, they know how to manage them and they have paid for them. 

The cleantech entrepreneur must develop, and articulate, a solution whose value proposition is so compelling that customers will risk, yes risk, the implementation of them.  Very few, there are some, will implement a cleantech solution only to “save the planet”. 

The entrepreneur must ask three basic questions:

1. Can my target customer make money with my innovation?
2. Can my target customer save money with my innovation?
3. How easily can my target customers implement my innovation?  

If the answer to both question 1 and question 2 is “NO”, then perhaps you should go back to the drawing board.   If the answer to either of them is “YES”, the answer to question 3 will determine your strategic marketing plans and your target “innovators” and “early adopters” defined the Gaussian technology market adoption curve made popular by  Geoffrey Moore.  The larger the effort to implement your solution the more compelling the value proposition must be.  

Apple, 10% Market Share in Smart Device. I've See this Movie Before

Is Apple destined for 10% market share in the smartphone & tablet markets? I’ve seen this movie before.  The big killer is looming.

Apple is great at innovating, branding and selling really cool products.  From its inception Apple has pushed the proverbial envelop over and over again.   The iPhone and iPad products have clearly been pioneers in the entire industry. 

However, like the Macintosh, the inherent forces in the technology universe will overcome them yet again.   The reasons are too numerous to mention.  A fundamental reason is the aggregate sum of R&D and Marketing budgets. 

By Apple’s own doing, there are ZERO competitive forces for iOS products.   Yet in the Android and Window markets there are many manufacturers fiercely competing both against Apple and against each other.   As big and profitable as Apple is they cannot compete over time against the aggregate sum of R&D and marketing dollars of an entire industry. 

One case in point is in semiconductor devices.  For any given common function in a phone or tablet there’s likely to be at least two semiconductor device manufactures competing fiercely for market share.  This in turn drives innovation and economics in that segment.  The same goes for glass, plastics, software and every common component.  If you add up the total R&D investment in the supply chain the problem gets worse for Apple.  Once the “non Apple” solutions start gaining market share, Apple’s slippery slope accelerates.  More R&D and marketing forces and more economy of scale create an unstoppable downward force on Apple. 

Then, the big killer sets in.  No longer do software vendors start with Apple and then migrate to Android then Windows.  They lead with Android and then decide “which one next” Apple or Windows? This too creates a competitive innovation engine that puts further downward pressure on Apple.

Yet, as in the previous “movie”, Apple will have its die-hard consumers to protect a lower market share and provide it profits to continue to innovate.  To their credit, Apple is leading the brand wars, at least in the U.S.  and among the under 25 year old demographic.   Perhaps this movie will have a different ending.

Invention vs. Innovation

Over the years I’ve had the same conversation dozens of times.  It seems that the words “invention” and “innovation” are assumed to be synonymous.   They aren’t.   Simply put inventions generate patents and innovations generate profits.  The clearest examples are the following.   The laser was an invention, FedEx was an innovation.  I’ve chosen this comparison since the laser is generally perceived to be an advanced technology and FedEx is generally perceived to be a boring post office like delivery company.  

Bell Labs, an American icon, invented the laser in 1958.  Scientist figured out how to excite certain chemicals to generate a single wavelength of coherent light.  Think of a single sine wave moving across a PC screen, a single dimension.  For years the laser was called a solution looking for a problem.  Today, over 50 years later we see lasers prevelant in our every day lives.  We have lasers in our homes with CDROMs and DVD players.  We have them in our offices in printers and in hand held pointers.  We see them in our hospitals as tools for all types of surgeries.  The uses of the laser are the innovations that make money.  

FedEx is an innovation, since it revolutionized package delivery. In fact, according to them, they were created to innovate.  They determined that the "information about the package is just as important as the package itself". With access to this information their customers have created new business models and new supply chain efficiencies that have revolutions industry around the globe. Yet, they are not done innovating. They are a major mover in sustainable transportation with 365 hybrid vehicles and 43 electric vehicles (source FedEx.com).

Inventions are great and help propel future industries. But, it's those that can turn an invention into an innovation that make money and drive economies.

Call me at 978 992 2203 or at gwhelan@verizon.net to discuss how this impacts your technology and business strategies.