In search of the IoT gold mine…

It's clear that IoT has been hot these last few years.

In the consumer domain we have few obvious winners so far:

- An interesting category has emerged: Fitness bands and smart watches where the early winners are being slowly displaced by some bigger players who were just waiting to see which category is worth investing in
- An unexpected cool and sexy thermostat that came out of nowhere really
- And a bunch of established Technology players who are all aiming to be the one enabling this new world (and capture a good slice of the IoT market value irrespective of who the ultimate product winners are)

A quick look at any crowdsourcing sites and you will see that there are many hopefuls who would love to join /replace those early winners.

 

But so far, I have not yet seen an offer that would make me say,

              Wow !

              YES !

     I have to have it !

  I can't leave without it !

      Where do I sign ?

 

Don't get me wrong, I love the IoT promise of intelligent appliances and gadgets that makes my life easier and even solve the problems I didn't know I had.

Unfortunately the use cases proposed are either:

- So focussed and narrow that they are not addressing something important enough for me to bother experimenting further

- So generic and incomplete that I am not yet sure what they stand for (even if they appeal to the geek in me)
 

It's also fair to say that the Consumer IOT ecosystem is still fragmented and that there is no elegant way to easily manage a range of gadgets from different providers even if by working seamlessly together they would offer a much more compelling story.

Have a look at a recent Financial Times article from Tim Bradshow to sympathise at his attempt to make it all work together.

 

In my mind, a specific category of IoT gadgets will only make sense from a business point of view if the potential market value is big enough.

In practice it means that

a) Price and margin are high to generate enough value despite relatively low expected volumes
b) Volume are high to generate enough value despite low price and absolute margins

c) And of course the best case scenario of high volume and high price/absolute margin

 

If we believe that the value of any IoT product is positively correlated to the value of the problem solved or opportunity realised, then the biggest opportunity should be for IoT products addressing companies biggest problems (B2B case).

==> That would explain why the IoT revolution was initially harnessed by utility companies for instance, implementing smart meters to save (them) money

 

But of course there are things that money can't buy (easily ?), like good health or long life, which could explain the success of fitness bands and smart watches that promise to coach you into living a healthy life (quantifying-self movement, Consumer case)

The success of Nest thermostat is a bit more complicated to explain.

- Saving yourself some money makes sense of course and would appeal to our rational side but when was the last time you bought something just because it was a rational things to do ?

- For me, Nest thermostat are successful because the product appeal to both our rational side (saving money) AND our emotional side (beautiful object, easy to use, so "cool" that you can show it off to your friends when they visit home (we are clearly getting in the Apple territory here ;-))

 

Another way to think about the value of the IoT world is by looking at the network effect around IoT:

For instance:

- Owning 1 Philips hue light is fun at first until you slowly forget you have it and stop using it

- Having your full house set up with home IoT gadgets that seamlessly talk to each other to solve your personal problems would deliver so much more value to the owner that they would be in use continuously

 

So, if you are one of the thousands small IOT companies that want to become the next unicorn (companies with 1+Bn$ valuation), then I would suggest you focus on where the money is and aim to either solve a problem that other companies would handsomely pay for or aim to solve a life & death type problem for individuals.

Alternatively, ignore everything I said, just follow your passion and solve a problem that matters to you, with a bit of luck it will also matter to other people.

 

If you are an established (read big) Technology player, please stop this pissing contest and collaborate with your competitors to makes the life of your customers & consumers easy by ensuring that your IoT products / systems work with everybody else's, you'll be amazed by how much faster IoT adoption would take off that way.

 

At the end of the day an IoT product is just an enabler to something bigger and that bigger thing is what will make your company successful...

It's my first ever blog, so thanks Sanda for the opportunity and I look forward to reading what you think and any advice or suggestions to make this a more interesting blog.