The Economic Value of IoT
Lost in the current blog and conference discussions about IoT is talk about the potential economic value of IoT. Like with most evolving technologies it takes a while for the true economic value to clearly appear so instead discussions abound about potentials and examples pulled from the real world or the imaginary world of conference rooms and offices. As most companies are very private about their detailed budgets and financial statements, real world examples have to be guessed or depend on public statements by corporations and individuals. Which leaves us with the imaginary world of opinion, exaggerated statements and outright hyperbole.
The current IoT world is filled with a combination of experts, consultants, studies delivering a steady stream of exaggerated consulting reports (I love those press releases stating that so-and-so predicts the IoT market will be $X Trillion by 2025), opinion blogs (like this one?), papers and presentations created in conference rooms (four walls marketing) or in front of a computer screen (one wall marketing?). This world generates anything from fluffy aggregates to guesses of regional, vertical or specific market sizes.
What is missing is a more focused bottoms up analysis starting with examples of companies that are 100% IoT. Yes, such pure player companies exist and they report revenues. A good example in the consumer IoT device space is FitBit, Inc which reported $300M in Q1 2017 revenue from selling 3 Million devices. Many pure play IoT companies are startups, privately held or part of a larger corporation but sometimes results are announced as part of corporate positioning or a need to show growth in new areas. While these numbers are often a combination of services, direct and indirect sales and sometimes just statements of won contracts, they do provide an indicator real revenue. Equally informative can be the analysis of press statements regarding IoT deals. Combining these it is actually possible to create a view of the current state of IoT revenues, the reason this is not done is simply that there is a lot of insights and hard work needed in order to put such a summary together.
Another way to look at the economic value of IoT is to look at the value chain for IoT starting from chips and devices and moving towards services and applications. There is no doubt that the world's chip manufacturers are selling a lot of IoT chips and that the world's gateway/controller suppliers are selling a lot of Iot gateways and controllers. Equally the world's communication providers are selling communication services that are used for IoT whether shared as part of Internet connections (very low % compared to normal web application traffic) or as direct revenue for devices connected via metered services like IoT cellular.
Finally, the most relevant way of addressing the economic value of the IoT is to simply look at use cases for IoT and associated revenue streams. An example of this would be premium IoT enabled connected versions of existing products. In the example of the connected pump, refrigerator, heater or air conditioner $10 worth of IoT electronics can typically generate $100-$500 or more in increased margins. Now that is real economic value of IoT floating directly to the bottom line!
The current IoT world is filled with a combination of experts, consultants, studies delivering a steady stream of exaggerated consulting reports (I love those press releases stating that so-and-so predicts the IoT market will be $X Trillion by 2025), opinion blogs (like this one?), papers and presentations created in conference rooms (four walls marketing) or in front of a computer screen (one wall marketing?). This world generates anything from fluffy aggregates to guesses of regional, vertical or specific market sizes.
What is missing is a more focused bottoms up analysis starting with examples of companies that are 100% IoT. Yes, such pure player companies exist and they report revenues. A good example in the consumer IoT device space is FitBit, Inc which reported $300M in Q1 2017 revenue from selling 3 Million devices. Many pure play IoT companies are startups, privately held or part of a larger corporation but sometimes results are announced as part of corporate positioning or a need to show growth in new areas. While these numbers are often a combination of services, direct and indirect sales and sometimes just statements of won contracts, they do provide an indicator real revenue. Equally informative can be the analysis of press statements regarding IoT deals. Combining these it is actually possible to create a view of the current state of IoT revenues, the reason this is not done is simply that there is a lot of insights and hard work needed in order to put such a summary together.
Another way to look at the economic value of IoT is to look at the value chain for IoT starting from chips and devices and moving towards services and applications. There is no doubt that the world's chip manufacturers are selling a lot of IoT chips and that the world's gateway/controller suppliers are selling a lot of Iot gateways and controllers. Equally the world's communication providers are selling communication services that are used for IoT whether shared as part of Internet connections (very low % compared to normal web application traffic) or as direct revenue for devices connected via metered services like IoT cellular.
Finally, the most relevant way of addressing the economic value of the IoT is to simply look at use cases for IoT and associated revenue streams. An example of this would be premium IoT enabled connected versions of existing products. In the example of the connected pump, refrigerator, heater or air conditioner $10 worth of IoT electronics can typically generate $100-$500 or more in increased margins. Now that is real economic value of IoT floating directly to the bottom line!
The exploration of IoT's economic value in this blog is insightful, highlighting the importance of tangible examples over theoretical discussions. Similarly, in the realm of property security, tangible solutions like Palisade Fencing offer measurable value and effectiveness for home and business owners.
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