Machina Research analysts, out in force at MWC this year, noted that IoT was yet again top of almost everyone’s agenda, in particular issues related to Low Power Wide Area networks and data management.
Every year Machina Research’s analysts are out in force at Mobile World Congress in Barcelona, with seven of our analysts in attendance. This year marked an important milestone as attendance surpassed 100,000 for the first time. The sheer scale of the event is important because it demonstrates that this is no longer just a show for the mobile industry; MWC is now a showcase for a much wider ecosystem of operators, technology players, service professionals, developers and customers. In particular it has become a critical talking shop for all things related to the Internet of Things, the importance and relevance of which continues to grow with each passing year. Machina Research analysts chaired conference sessions on the connected home and IoT security, topics which just a few years ago would not have found a natural home at the event. MWC is an important IoT show, which is why we have always prioritised attending (some of us are well into double-figures in terms of MWC attendances) and why we focus a lot of attention now.
In the interests of self-publicity, one of our key takeaways from the event was that it was confirmed that two out of our thirteen Predictions for IoT in 2016 are set to come true in the coming few months. Which of the two? That will become clear enough in good time! Of course, we expect a stack more of the remaining predictions to fall into line before the end of the year. Beyond our predictions, the team’s observations revolved around developments in the network, MNO strategies, and the pursuit and capture of value in IoT.
LPWA was again the important network story in IoT. Momentum this year was bolstered by the work of the 3GPP on finalizing Release 13 standards. The work group’s recent gathering in Malta reportedly finalized the specifications for LTE-M modules and continued to make progress on NB-IoT module design and parameters. The NB-IoT standard, which is now expected to be completed in June 2016, was broadly heralded at MWC as a long-awaited vehicle for ushering in an age of “massive IoT” for MNOs. Specialized LPWA players (e.g. SigFox, Ingenu, and LoRa partners) are gaining increased traction around the globe. Ingenu announced a major global expansion effort that looks impressive. Award-winning Sigfox sharing details on major deals and an impressive catalog of devices already running on its network. In this context, the standardisation of NB-IoT and LTE-M is crucial to narrowing the window of opportunity for these competing technologies. While the continued delays in finalizing the NB-IoT specifications and branding (i.e. what NB-IoT will be officially called) is causing some consternation and confusion among MNOs, the completion of the LTE-M modules specification does offer them a new tool to become relevant in a much broader array of IoT applications. Vendors and operators alike were keen to share with us their plans for the availability of LTE-M and NB-IoT devices and networks.
When it comes to MNOs, it was evident that their IoT strategies are evolving further as commitment to the business heightens. Early results shared by some of the leading MNOs in IoT indicated that growth remained robust in 2015. IoT is the bright spot in the overall business for many and consequently several are looking to double down on IoT. Conversations around analytics, security, e-SIM and to a lesser extent 5G and NFV/SDN were especially relevant to the global leaders. Amidst heightened competition, MNOs are looking for whatever edge they can find to deliver better IoT services as well as tools (and partnerships) that will allow them to extract greater value from the opportunity. We therefore expect greater investments in technology, infrastructure and capabilities in the coming months. These investments will be further fueled by the simple fact that there will be more MNOs embarking on the IoT journey. IoT discussions at MWC are no longer confined to just a handful of leading MNOs. Rather the rest of the MNO world is catching up. They are forming IoT teams and thus beginning to ask about organizational structures, go-to-market strategies and platforms.
Speaking of platforms, it was in this realm where we saw the IT giants awakening. The buzz about and visibility of traditional IT players in IoT at MWC was tangible. With IT behemoths like Intel, Qualcomm, Microsoft, Cisco, and HPE seeking to drive IoT ecosystems and over 300 IoT ‘platforms’ in the space, the already consolidating platform segment may well see an acceleration in activities in the coming months. Concurrent with the rise of the big players in IoT platforms is the strength of SIs on display. Accenture, IBM, SAP, Tata and others were demonstrating that they provide proven IoT and analytics solutions and can offer either the glue – the integration – for other IoT platform players, or the actual productized solutions that enterprises in this space are looking for. The willingness of the technology ecosystem to work with SIs – their important role in engaging with enterprise customers being well acknowledged – was another key observation. As one IT behemoth emphasized, the goal for them is not to create the IoT products and solutions themselves, but rather to provide a kind of environment and toolset highly attractive to SIs and solution developers – the goal is to make their technology ‘sticky’.
One of the joys of a major event such as Mobile World Congress is that it allows analysts to gauge the feeling of the industry for macro-level trends. So rather that announcements or product launches, it’s about getting a feel for how tech companies are thinking about IoT. Often this is the most informative thing about the event. Conversations throughout MWC reinforced that the sector is waking up to the notion that IoT value resides in thinking beyond physical ‘Things’. We should not just think of the ‘Things’ that constitute IoT as being limited to physical devices. Much more important are the datasets and business processes which are typically not thought of as being things, but are really where the value lies in the IoT. So rather than focusing on the number of connected objects, the industry needs to shift to thinking about the number of connected business processes and available data sets generated by remote monitoring devices, and similar other measures of the growth of IoT.
Data management was consequently on everyone’s lips when discussing IoT. The issue of how to get data off devices and into back-end systems is increasingly being resolved (albeit with some major shifts coming such as LPWA). What has not yet really been resolved is who gets to make money out of that data. In particular who plays the role of the broker of data, and who plays the role of the manager of the data repository. Perhaps it is the same player doing both. We wrote about this topic of IoT Service Marketplaces extensively in 2015, most notably in the report The Emerging IoT Landscape (December 2015) and it is nice to see this theme permeating the industry. To be sure, there are lots of potential candidates for that role.
This brings us to the ultimate question of who has started to yield value in IoT? The answer thus far is SIs, large enterprises and advanced analytics companies. Players in this space are raising their game, for instance Accenture with its Insights Platform and Oracle with its IoT Cloud Service. Even enterprises such as Hitachi Digital Services which has traditionally been quiet about its IoT efforts is entering the IoT space with the analytics capabilities of its acquisition, Pentaho. Many industry verticals such as manufacturers, retailers, and transport companies are identifying and achieving huge improvements in business efficiency. In the advance analytics space, Cloudera efficiently enabling enterprises to manage substantial amounts of data, or Infobright adding more speed to large scale queries with its new Infobright Approximate Query (IAQ), shows that the focus has moved to processing and creating high value yields and outcomes from data. Innovators such as Argyle Data look to bring fraud analytics for operators to new heights, while more established players such as Pentaho extend and improve on the outcomes of their big data blueprints. IoT brings with it a deluge of data. Advanced analytics will be the key to extracting maximum value from that deluge.
Across the Machina Research team we managed 183 meetings, 18 working dinners, and a few too many late nights during our week with the great and the good of IoT, including mobile network operators, software, device and infrastructure vendors, IoT specialists, SIs and many others. As a result we emerged with sore feet (there’s a lot of walking to get around the enormous Fira site) and even better understanding of what’s going on in the IoT.
If you’re interested in learning more about the work that we do looking at IoT, or would like to follow up on any of the issues raised above, don’t hesitate to get in contact.