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What’s in store for IoT in 2016?

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By Matt Hatton, Founder & CEO at Machina Research.

Every January, an analyst’s thoughts inevitably turn to the coming year and the likely future developments. As Machina Research we publish a set of predictions every year. This article provides a summary of some of the key trends we see defining IoT in 2016. Machina Research published its full set of predictions for IoT in 2016 on Thursday 14th January.

The most important thing to watch this year in IoT will be the adopters, and specifically enterprise adopters. We are in a new phase of IoT adoption as companies shift from adopting IoT to drive internal efficiencies towards using IoT as a tool for business transformation. We’re all familiar with the emerging ‘servitisation’ models whereby enterprises shift from selling products to selling services. This will be the year in which we determine whether enterprise IoT has really crossed the chasm from early adopters to mass market.

This year we’ll also see the first serious heartbeats of what we’re referring to as the new IoT economy. The ability to constantly monitor remote assets and the ensuing fuller transparency of the operations of those assets has some, as yet, under-explored implications. For instance, it is likely to have a substantial impact on risk assessment, for instance in the insurance sector, or for the second hard market, where the previously asymmetry of information between buyer and seller is potentially re-balanced.

Another major trend which we expect to see is that communications technologies will be a hot topic again. Over the last few years there have been only a few significant shifts in access technologies. The emergence of the Low Power Wide Area network category has been the obvious one. But things are set to get much more interesting in 2016. 5G is starting to get onto the agenda and suppliers, at least, are looking closely at what the implications might be for IoT. Similarly, the industry is exploring Network Functions Virtualisation/Software Defined Networks (NFV/SDN) which is likely to be recognised as providing some valuable tools for supporting IoT. At the other end of the spectrum (if you’ll pardon the pun) is 2G and 3G switch-off. This is now firmly on the agenda for mobile operators around the world. A few countries have been in the vanguard, notably Japan, Korea, Australia, US and Singapore. During 2016 we expect a lot more operators to make announcements. Uncertainty over the availability of networks won’t help IoT deployments.

Returning to the LPWA topic noted above, we expect 2016 to be a crunch year. 3GPP is due to deliver the standard for Narrowband IoT. The stated expectation is to see a final standard around March or April. We expect a little later in the year. All of which means that MNOs may well have a new IoT-related string to their bow next year. In the meantime the likes of Sigfox and LoRa a jockeying to take the lead position as main alternative to NB-IoT and will be hoping that delays in NB-IoT’s arrival will provide an opportunity to further establish themselves as the low power choice.

Without doubt IoT will be a roller-coaster ride in 2016. We expect the trend of sky-high valuations to continue, with lots more M&A in the sector. But at the same time there may be a shaking out of some of the companies that have overstretched (in the wrong direction) in IoT. Systems Integrators will be active on both sides of M&A, we expect, and platform players will continue to be targets.

Another area we will inevitably be focusing on is security and privacy. Perhaps counter-intuitively we think 2016 might be the year in which companies realise that they can’t ‘solve’ IoT security, and they certainly can’t do it now. It will be a gradual process over the next 10-20 years. Legal and regulatory issues, in contrast, will become more challenging. We’ve seen a flurry of regulatory issues arise in the last few weeks including accident liability in connected cars, conflicts about the legal implications of the accuracy of data, and challenges arising from the safe harbour issues between Europe and the US. We expect verticals that properly address, and therefore, resolve issues of legal liability will thrive while those that constantly duck the issue will see slower growth.

This is just a glimpse into what 2016 holds. Also on the agenda (literally for us in the case of our recently published Research Agenda are topics as diverse as digital twins and avatars, Blockchain, drones, product lifecycle management, software bots, fog computing, semantics and ontologies, energy harvesting, and smart buttons. It promises to be a fascinating year.

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