With every new technology revolution, fortunes are waiting to be made. Who gets the early pickings? Usually, it’s the large companies that can afford the major upfront investments (and financial losses) of creating businesses in untested spaces. Or, it’s startups that solve problems for those early players—think Levis for 19th-century gold rush prospectors.
Who doesn’t get to play? Pretty much everyone else, who must wait for the new industry to mature so that risk is lessened, customers are clearly defined and the return on investment (ROI) is easily determined.
The problem this creates for any evolving market is that a relative handful of companies create tough-to-overcome barriers to entry. Think Amazon, Microsoft and IBM in the nascent cloud services industry of a few years ago—they are still dominant forces today. The second issue is that technology standards develop around the interests of these first-movers, giving them the structural advantage to sustain their market leadership.
So look around at the Internet of Things landscape today. The big investments (and some profits) are being made by deep-pocketed technology and communications companies, including the aforementioned three and other behemoths, such as Google, Intel, Cisco and General Electric. Cases in point: IBM’s October 2015 announcement that it intends to acquire The Weather Company‘s data assets in a deal estimated by the Wall Street Journal at $2 billion, or Google buying Nest, the digital thermostat and smoke-detector maker, for $3.2 billion.
In the startup world, venture-capitalist investments are starting to flow, with big money being pushed toward infrastructure providers that will build out the technical foundation of the Internet of Things. But what about the rest of the companies that are ready to innovate but can’t get a seat at the IoT table?
In the interest of full disclosure, my firm, Tata Consultancy Services‘ Oracle practice, had an idea about this opportunity and recently co-launched with Oracle our answer to solve it: a white-labeled solution enabling communications companies and other enterprises to deliver IoT services to their customers. A communications service provider (CSP), for example, could use one of our offerings to jump into a range of IoT-based markets, from remote health monitoring services to fleet management.
Other businesses are starting to address this market need as well. On October 30, Verizon announced ThingSpace, development kits that allow application developers, small and large, to add new information sources to IoT networks—technical challenges that were once costly and time-consuming to overcome.
White-label offerings can be a particularly valuable way for companies to get their IoT feet wet, since the host provider assumes the technical and infrastructure risk under a very affordable subscription model. For example, both SeeControl and Prodea allow service providers to offer home-automation applications under their own brand to their customers.
We need to challenge the IoT ecosystem to innovate as much on creating business opportunities as on creating technology opportunities. Doing so will benefit not only the companies that can suddenly ride the Internet of Things wave using their native strengths, but also the entire industry—by encouraging new areas of innovation, training existing developers and engineers on advanced technologies to work on the IoT, and quickening the IoT’s adoption as new products are invented, standardized and deployed.
For “not yet at the table” companies, such opportunities would mean the chance to learn and experiment with IoT products and services without incurring huge upfront costs or risks. It means the freedom to try stuff out and see what their customers will actually use and pay for. It helps them get the marketing right, develop new business relationships in the IoT space, reimagine their offerings and finetune their organizational support models.
And don’t forget the benefits to end users. By enabling many mid-range companies to bring white-labeled IoT solutions to market, not only could users take advantage of these offerings much earlier than otherwise, but their feedback would help service providers sharpen their offerings around the requirements and habits of customers in the field. In short, end users would be directly involved in IoT service and application design from the early days—encouraging faster and wider adoption and improved product iteration.
The McKinsey Global Institute‘s 2015 report, The Internet of Things: Mapping the Value Beyond the Hype, noted that “capturing the full potential of IoT applications will require innovation in technologies and business models, as well as investment in new capabilities and talent.”
The best way to ignite innovation and develop new capabilities is to offer the tools and services that will allow a wide variety on non-participants to join in the IoT revolution.
Sunder Singh, the global head of Tata Consultancy Services‘ Oracle practice, leads global teams that design, implement and optimize Oracle solutions to bring new innovations to TCS’ clients.