Feb 03, 2019Business cycles don't always align to calendar years, but the arrival of yet another new year is a good time to reassess major trends happening in our industry. As it happens, this year is likely to see something of a reset among technology companies trying to extend their offerings into the world of the Internet of Things (IoT). That's only natural; in the last year or so, a lot of companies scrambled to start IoT projects as they tried to figure out a way to make the IoT work within their line of business. These companies reorganized their teams around the Internet of Things without truly rationalizing how the IoT truly fits into their core mission.
Case in point: A number of firms, in the last year or so, started to reclassify themselves as IoT companies, thinking that was going to be a booster shot for their business. But behind the scenes, they really didn't have an IoT solution or even a set of services—they were just responding to the hype.
Now we're going to start seeing the separation of true providers versus those that were just trying to piggy-back the hype. Without a solid foundation, many companies will either readjust their marketing to go back to what their core competency is, or—if they tried to take a quick run at a hyped technology—they will likely simply disappear.
But there's good news for both clients, and for the companies that find a way to truly leverage the Internet of Things in their core competency, which is this: the IoT is going to become mainstream. By this, I mean it will become much more integrated into broader solutions.
Think of it this way: These days, we think of the IoT as requiring a platform and a large set of professional services to make it useful for customers. In the future, it won't be so separate—it'll be subsumed into a solution and behave like just a feature within a broad package. At present, if you buy a license for PowerPoint, Microsoft might tell you that PowerPoint has some level of artificial intelligence (AI) baked into it. When you add an image to a slide, it might suggest a caption for the image. Microsoft isn't selling you artificial intelligence; it's mature and mainstream enough that it can simply say that PowerPoint is powered by AI. So I think we're going to see more of that in the future with the IoT—not necessarily a separate platform, but an integrated component of technology platforms.
Of course, we'll start to see a consolidation of providers as well. To some degree, that has already begun to happen a bit, such as when Google bought Xively in 2018 for $50 million. More of these acquisitions are going to take place, and some of the heavily backed IoT companies will start to acquire assets that can help them become stronger from a book-of-business perspective, as well as filling out their technology offerings.
Closely related to that, 2019 will be a year in which we'll see more and more standardization—of go-to-market, of value proposition, of pricing and so on. Pricing, for example, is wildly inconsistent right now, so in 2019, we'll start to see more standardization on that front. And that's just for starters: also look for protocols—communication, connectivity and interface protocols—and more to really become hardened.
Last—though certainly not least—the government will make its presence felt with regulation. We've seen this already starting to happen in California, which was the first state to regulate the IoT, by launching some compliance initiatives around it. There's little doubt we'll see more of that, due to what's happening in privacy, security and data protection. After all, with any commercial business, you need to ask: How can you insure something like the IoT?
Every time the IoT is implemented, people ask questions like: Who owns the data? What happens if there's a breach? At what level in the connectivity in the data stream is the breach? And who's accountable? Then there are all of the surrounding processes, like insurance. Underwriters need to understand and standardize the kinds of insurance required to protect both a business and its customers. As the IoT is taken to market, these are questions that will become ever more common.
If you want to see how this has played out in an adjoining industry, consider Uber. The company showed up one day and disrupted the entire ride-hailing industry without thinking through the regulatory implications. In short order, Uber has a workforce of 1099 employees who have replaced a traditional organized workforce. Eventually, the company, as well as government agencies, elected representatives and others, recognized that this was a unique and complex situation.
Now that there are commercial applications of the IoT, these kinds of questions are going to continue to arise, and we should expect what happened in California to ripple through the industry and across the country. But standing on the threshold of 2019, these are all great problems to have.
Steve Latham is the founder and CEO of Banyan Hills Technologies, an Internet of Things company based in Duluth, Ga.
