IoT success = cutting-edge engineering + out-of-the-box business thinking
Internet of Things, or IoT in short, is going to be the biggest revolution of this century. However the engineering challenges are massive. Billions of low-energy sensors will have to be invented, produced, integrated, operated and maintained. These sensors will talk to millions of gateways over new network protocols. The gateways will communicate via next-generation network devices and software-defined networks to public and private clouds. These clouds will run scale out big data solutions that will dwarf even the biggest supercomputers today. Billions of containers will be running massive micro-services IoT business solutions. One mistake and a hacker from a country you don’t even know to locate can bring down a whole house, a whole company, or worse a whole country.
The business side is looking even less clear. The open source IoT tsunami that is coming means asking for licenses is suicide. Open source hardware and 3D printing result in razor thin hardware margins. Privacy will be central when technology is so central to people’s home and businesses. If it is free then you are the product will become harder if a dot com can know what you are doing in bed, with whom and even if you liked it. Business SLAs will be stricter than ever because customers will expect answers in sub-seconds however human operators will no longer be able to find and fix problems because of the overall system complexities. Roll-outs will be global even if telecom operator’s networks don’t cross borders and electricity plugs and voltage are super local. Ask a customer what IoT solution they want and they will answer you what is IoT.
In these circumstances you might be surprised that I will be focusing on solving these challenges and Telruptive readers will be the first to know when some are resolved…
Why is IT solving problems people haven’t experienced yet?
Normally I write blog posts in which I answer questions. This time I would like to have somebody else provide the answer. Why is IT solving problems nobody has experienced yet?
I attend a lot of professional events around cloud, big data, IoT, etc. Hardly do I meet customers there. Mostly I meet suppliers that show me the solution to a problem that perhaps Google will experience in 5 years. I am overreacting but most IT problems are about scaling beyond terabytes. The problem is that most enterprises can’t find a quick way to setup a sub domain or to provision a new user in a central identity management system. Most enterprises need weeks if not months to do tasks that IT companies solved 5 or even 10 years ago in minutes. So why is it that trivial problems seem to capture enterprise attention? Just look at what is currently hot! Tableau software, Amazon Redshift and Dotcloud Docker. You would say that SAS, IBM, Teradata, Canonical, RedHat, Solaris/Sun/Oracle, etc. would have solved reporting, data storage for analytics and packaging Linux software. The market does not seem to agree. Can it be that the initial problems where aimed at early adopters and more and more features where added? The result is that by the time the majority started to use the “solution” it was already to complex?
Why do companies like complex solutions? Why are early adopters the drivers of people’s roadmap and not the majority? What does the IT industry need to do to better understand its enterprise customers? What are enterprise customers telling the IT industry? Are they saying one thing and doing another?
5 Ideas for Amazon AWS
Although the number of solutions Amazon AWS is offering has become very large, here are 5 ideas of what Amazon could be adding next.
API Marketplaces
There are thousands of APIs out there. However what is missing is an easy way for companies to control their costs. In line with other marketplaces Amazon runs, there could be an API marketplace. An API marketplace would allow third-party API providers to let Amazon do the charging. Companies would be able to pay one bill to Amazon AWS and use thousands of APIs. Also third-party API providers would be winning because they often can not charge small amounts to a large set of developers. Amazon already sends you a bill or charges your credit card, hence adding some dollar/euro cents for external API usage would be easy to do. The third-party API provider would avoid having to lock-in users in large monthly usage fees to offset credit card and management charges. Amazon of course would be the big winner because they could get a revenue share on these thousands of APIs. End-users would also be winning because they can easily compare different APIs and get community feedback from other developers and pick those APIs with the best reputation. The typical advantages of any online marketplace. Also cross-selling, advertisement, etc. and other areas can be reused by Amazon. A final advantage would even be to have Amazon be in the middle and offer a standard interface with third-parties offering competing implementations. This would allow developers to easily switch providers.
Language APIs
A lot of applications would be helped if they could use language APIs that are paid per request. Language APIs is a group name for text-to-speech, speech recognition, natural language processing, even mood analysis APIs. These are all APIs that are available individually but there is a clear economies of scale effect. The more speech you transcribe or text documents you process, the better your algorithms become. Also there is an over-supply of English language APIs but an under-supply of any other language in the world, except for Spanish, French and German perhaps. Another problem with existing APIs is that a high monthly volume is needed in the even the most basic subscription plan. Examples are Acapela VaaS pricing that costs a minimum of €1500. Very few applications will use this amount of voice.
M2M APIs and Services
Amazon is already working hard on Big Data solutions. M2M sensors can generate large volumes of data pretty quickly. S3 or DynamoDB would be ideal to store this data. However what is missing is an easy way to connect and manage large number of sensors and devices and their accompanying applications. There are few standards but with examples like Pachube, Amazon should be able to get inspired. Especially the end-to-end service management, provisioning, SLA management, etc. could use a big boost from a disruptive innovator like Amazon. Also M2M sensor intelligence could be offered from Amazon, see my other article about this subject.
Mobile APIs and Solutions
With billions of phones out there, mobilizing the Web will be the next challenge. Securely exposing company data, applications and processes towards mobile devices is a challenge today. BYOD, bring-your-own-device, is a headache for CIOs. We do not all have a MAC so we can not sign iPhone apps and launch them on the App Store. Ideally there would be a technical solution for enterprises to manage private app stores, deploy apps on different devices and be able to send notification to all or subsets of their employees. Also functionality like Usergrid in which developers would not have to focus on the backoffice logic would be of interest. Also tools to develop front-end for different devices would be appreciated, examples like Tiggzi come to mind. There are a lot of island solutions but few really integrated total solutions.
Support APIs and Services
Amazon is becoming more and more important in the global IT infrastructure business. This means that solutions will move more and more to the Cloud and sometimes be hybrid cloud. With these complex solution scenarios in which third-parties, Amazon and on-site enterprise services have to be combined, risks of things going wrong are high. Support services both from a technical point of view:
- detect failures and to automatically try to solve them
- manage support ticket distributions between different partners
- measure SLAs
- etc.
as well as from a functional point of view:
- dynamic call centers with temporary agents
- 3rd party certification programs in case small partners do not have local resources
- 3rd party support marketplace to offer more competition and compare reputations
- etc.
are all areas in which global solutions could disrupt local and island solutions that are currently in place.
M2M sensors without batteries
In the computing trend that will change everything, MIT’s Technology Review is showing how power consumption for computer resources has improved at the same speeds as computer chips. Especially the analogy of a Macbook Air with the efficiency of a PC from 1991 would run through a fully charged battery in 2.5 seconds. The trend is to continue with wireless no-batteries sensors. Sensors that get their energy from harvesting existing radio waves. Find out more on powering the internet of things without batteries.
Imagine the possibilities if sensors did no longer have to have batteries. Everything from traffic, the weather, human health, retail, etc. can be revolutionized. Mobile sensors will start generating massive amounts of data, called nanodata. The sensors are unlikely to hold a SIM because of the importance of energy efficiency. Operators should look for M2M business models that go further than only connectivity and should think about low-cost and low-energy wireless mesh networks instead of 3G/4G/5G…
10 ways telecom can make money in the future a.k.a. telecom revenue 2.0
LTE roll-outs are taking place in America and Europe. Over-the-top-players are likely to start offering large-scale and free HD mobile VoIP over the next 6-18 months. Steeply declining ARPU will be the result. The telecom industry needs new revenue: telecom revenue 2.0. How can they do it?
1. Become a Telecom Venture Capitalist
Buying the number 2 o 3 player in a new market or creating a copy-cat solution has not worked. Think about Terra/Lycos/Vivendi portals, Keteque, etc. So the better option is to make sure innovative startups get partly funded by telecom operators. This assures that operators will be able to launch innovative solutions in the future. Just being a VC will not be enough. Also investment in quickly launching the new startup services and incorporating them into the existing product catalog are necessary.
2. SaaSification &Â Monetization
SaaS monetization is not reselling SaaS and keeping a 30-50% revenue share. SaaS monetization means offering others the development/hosting tools, sales channels, support facilities, etc. to quickly launch new SaaS solutions that are targeted at new niche or long tail segments. SaaSification means that existing license-based on-site applications can be quickly converted into subscription-based SaaS offerings. The operator is a SaaS enabler and brings together SaaS creators with SaaS customers.
3. Enterprise Mobilization, BPaaS and BYOD
There are millions of small, medium and large enterprises that have employees which bring smartphones and tablets to work [a.k.a. BYODÂ – bring-your-own-device]. Managing these solutions (security, provisioning, etc.) as well as mobilizing applications and internal processes [a.k.a. BPaaS – business processes as a service]Â will be a big opportunity. Corporate mobile app and mobile SaaS stores will be an important starting point. Solutions to quickly mobilize existing solutions, ideally without programming should come next.
4. M2M Monetization Solutions
At the moment M2M is not having big industry standards yet. Operators are ideally positioned to bring standards to quickly connect millions of devices and sensors to value added services. Most of these solutions will not be SIM-based so a pure-SIM strategy is likely to fail. Operators should think about enabling others to take advantage of the M2M revolution instead of building services themselves. Be the restaurant, tool shop and clothing store and not the gold digger during a gold rush.
5. Big Data and Data Intelligence as a Service
Operators are used to manage peta-bytes of data. However converting this data into information and knowledge is the next step towards monetizing data. At the moment big data solutions focus on storing, manipulating and reporting large volume of data. However the Big Data revolution is only just starting. We need big data apps, big data app stores, “big datafication” tools, etc.
6. All-you-can-eat HD Video-on-Demand
Global content distribution can be better done with the help of operators then without. Exporting Netflix-like business models to Europe, Asia, Africa, Latin-America, etc. is urgently necessary if Hollywood wants to avoid the next generation believing “content = free”. All-you-can-eat movies, series and music for €15/month is what should be aimed for.
7. NFC, micro-subscriptions, nano-payments, anonymous digital cash, etc.
Payment solutions are hot. Look at Paypal, Square, Dwolla, etc. Operators could play it nice and ask Visa, Mastercard, etc. how they can assist. However going a more disruptive route and helping Square and Dwolla serve a global marketplace are probably more lucrative. Except for NFC solutions also micro-subscriptions (e.g. €0.05/month) or nano-payments (e.g. €0.001/transaction) should be looked at.
Don’t forget that people will still want to buy things in a digital world which they do not want others to know about or from people or companies they do not trust. Anonymous digital cash solutions are needed when physical cash is no longer available. Unless of course you expect people to buy books about getting a divorce with the family’s credit card…
8. Build your own VAS for consumers and enterprises – iVAS.
Conference calls, PBX, etc. were the most advanced communication solutions offered by operators until recently. However creating visual drag-and-drop environments in which non-technical users can combine telecom and web assets to create new value-added-services can result in a new generation of VAS: iVAS. The VAS in which personal solutions are resolved by the people who suffer them. Especially in emerging countries where wide-spread smartphones and LTE are still some years off, iVAS can still have some good 3-5 years ahead. Examples would be personalized numbering schemas for my family & friends, distorting voices when I call somebody, etc. Let consumers and small enterprises be the creators by offering them visual do-it-yourself tools. Combine solutions like Invox, OpenVBX, Google’s App Inventor, etc.
9. Software-defined networking solutions & Network as a Service
Networks are changing from hardware to software. This means network virtualization, outsourcing of network solutions (e.g. virtualized firewalls), etc. Operators are in a good position to offer a new generation of complex network solutions that can be very easily managed via a browser. Enterprises could substitute expensive on-site hardware for cheap monthly subscriptions of virtualized network solutions.
10. Long-Tail Solutions
Operators could be offering a large catalog of long-tail solutions that are targeted at specific industries or problem domains. Thousands of companies are building multi-device solutions. Mobile &  SmartTV virtualization and automated testing solutions would be of interest to them. Low-latency solutions could be of interest to the financial sector, e.g. automated trading. Call center and customer support services on-demand and via a subscription model. Many possible services in the collective intelligence, crowd-sourcing, gamification, computer vision, natural language processing, etc. domains.
Basically operators should create new departments that are financially and structurally independent from the main business and that look at new disruptive technologies/business ideas and how either directly or via partners new revenue can be generated with them.
What not to do?
Waste any more time. Do not focus on small or late-to-market solutions, e.g. reselling Microsoft 365, RCS like Joyn, etc. Focus on industry-changers, disruptive innovations, etc.
Yes LTE roll-out is important but without any solutions for telecom revenue 2.0, LTE will just kill ARPU. So action is required now. Action needs to be quick [forget about RFQs], agile [forget about standards – the iPhone / AppStore is a proprietary solution], well subsidized [no supplier will invest big R&D budgets to get a 15% revenue share] and independent [of red tape and corporate control so risk taking is rewarded, unless of course you predicted 5 years ago that Facebook and Angry Bird would be changing industries]…
SIMless M2M Strategy
For all operators that are counting on selling a lot of SIMs for M2M, they might have to think again. Yes there will be M2M devices that will incorporate a SIM but they probably will be the exception.
WiFi and other free standards are a lot more likely choice for device makers then SIM-based solutions. Costs of incorporating and managing a large SIM-based deployment are high. Industrial, retail, medical, consumer, etc. markets are more likely to accept WiFi-based solutions since they often already have WiFi deployed.
Designing a SIMless M2M Strategy
In addition to any SIM-based M2M strategy, operators should also design a SIMless M2M strategy. Operators are experts at deploying, managing, monitoring and maintaining  millions of data streams and devices. These core competences are not readily available in other industries. Operators should understand the customer pain points and work together on industry-specific solutions. Hosted M2M management solutions, and especially cloud-based, can become a lot bigger revenue stream then selling SIMs at rock-bottom prices. The telecom industry is uniquely positioned to span multiple industries and offer a base platform on which niche players can build up their business. Also the support business (monitoring, call centers, field force management, SLAs, etc.) should form part of the SIMless M2M strategy. Since data volumes are likely to skyrocket over the coming years, network as a service will be vital. Dynamic routing of data, loadbalancing on demand, fail-over, securing access to devices, quality of service, etc. can all be offered as part of a M2M network as a service offering.