Another year over and IoT is still missing in inaction
- IoT is seen as a key 5G application but at present most telcos don’t seem to be putting their money where the industry hype is
- Where are all the springboard LTE-M and NB-IoT services?
- Where is ‘Industry 4.0?
An essential element for revving up telco enthusiasm for 5G has been the promise of all those extra IoT revenue streams it’s supposed to bring in its wake. In particular, consumer IoT (especially when attached to the smart home concept), and industrial IoT where 5G is widely expected to transform industrial command and control with low-latency services enabling real-time (or near-time) control of industrial processes and robots.
If we were listening to the hype we should be seeing CSPs warming 5G up on the touchline while the opening 20 minutes are played by LTE (and 2G for that matter). But they aren’t.
Most IoT-oriented CSPs are continuing to play by the old 2/3G rules, especially when it comes to the business models and tariff structures.
To recap. You might remember that when M2M became IoT, it was supposed to be excitingly viable because both the device and data costs were to be driven down to commodity levels, or even down to free because the lifetime cost of the IoT-enabled device and attached service (whatever it was) could often be recovered by its purchase price.
But today, cellular IoT tariffs are still high and charged by the kilobyte. Most of us thought the key to IoT - both mobile and sedentary - was to develop, new, forward-priced service offerings (ie prices set at a level to encourage exponential growth). They’re not in evidence either - at least they’re not on offer by many (if any) telcos.
Consumer IoT needs a telco boost
According to ABI Research aspiring service providers should be playing be playing a much more cunning game. It points out that while the Internet of Things (IoT) is primarily associated with the industrial and enterprise markets, there is an adjacent opportunity emerging for Mobile Services Providers (MSPs) to spur the growth of a consumer IoT market.
"Consumer IoT is a nascent and fragmented market where connectivity is an essential enabler. For these reasons, MSPs can play a key role in driving the growth of the consumer IoT market from tracking applications to the connected car – direct to consumer (D2C),” said Pablo Tomasi Senior Analyst at ABI Research. “MSPs must find the right balance between their traditional connectivity centered business model and the need to grow the market and develop new use cases.”
It claims MSPs should by now be launching consumer IoT products with flexible business models, possibly bundled with current smartphones and data plans. This way MSPs will help to generate customer demand, which in turn will attract more OEMs to produce consumer IoT devices. Of course some telcos have been hatching new business IoT offerings, but given the long run-up these are few and far between
“MSPs must look at their consumer IoT and smart home offerings and create a comprehensive strategy that will drive synergies to connect devices inside and outside of the home,” claims ABI. (see - Consumer IoT is a US$6.6 billion opportunity that telcos must shape).
Things aren’t looking too positive on the industrial side either. It's easy to overlook that what telecoms is calling industrial IoT already has a long history and its own ecosystem of suppliers. In fact, far from surrendering M2M to the telecoms industry, companies like GE are doubling down to absorb IoT as IIoT and, as GE puts it below, "expand [the] company’s leadership in [the] IIoT market and better serve industrial customers.
GE Advances Digital Leadership with Launch of $1.2 Billion Industrial IoT Software Company
- New GE-owned, independently run entity will be established to expand company’s leadership in IIoT market and better serve industrial customers
- GE selling majority stake in ServiceMax
BOSTON – DECEMBER 13, 2018 – GE (NYSE: GE) today announced plans to establish a new, independent company focused on building a comprehensive Industrial Internet of Things (IIoT) software portfolio. The company will start with $1.2 billion in annual software revenue and an existing global industrial customer base. The company is intended to be a GE wholly-owned, independently run business with a new brand and identity, its own equity structure, and its own Board of Directors. The proposed new organization aims to bring together GE Digital’s industry-leading IIoT solutions including the Predix platform, Asset Performance Management, Historian, Automation (HMI/SCADA), Manufacturing Execution Systems, Operations Performance Management, and the GE Power Digital and Grid Software Solutions businesses.
Additionally, GE announced an agreement to sell a majority stake in ServiceMax, a leading provider of field service management software, to Silver Lake, a leading private equity firm focused on technology investments. With these actions, GE will sharpen the focus of its IIoT portfolio to position the new business for future growth. The transaction is expected to close in Q1 2019, subject to customary closing conditions and regulatory approvals.
“As an early leader in IIoT, GE has built a strong business with its industrial customers thanks to deep domain knowledge and software expertise," said GE Chairman and CEO H. Lawrence Culp, Jr. "As an independently operated company, our digital business will be best positioned to advance our strategy to focus on our core verticals to deliver greater value for our customers and generate new value for shareholders."
The IIoT is a nascent market but is expected to have significant growth. According to Gartner: “Innovations such as smart, connected products, the industrial Internet of Things (IoT), ‘digital twins,’ advanced analytics and artificial intelligence will be key to productivity improvement and new IT demand in this sector through 2022. The proliferation of digital products and subsystems to enable the IoT in downstream industries and generate revenue from smart products over their entire life cycle will be the most promising (and complex) driver for new IT spending growth through 2022.”*
GE’s independent software business moves into the market with a strong position, building on the company’s experience and success developing solutions to drive the outcomes that matter most for asset-intensive industries.
GE’s new IIoT business would provide software for these asset intensive industries with a focus on the power, renewables, aviation, oil and gas, food and beverage, chemicals, consumer packaged goods and mining industries. These industries build on GE’s foundation and expertise as a leading MES provider for nearly 20 years. With an already thriving business in these areas, the new digital organization is positioned to accelerate GE’s ability to deliver IIoT solutions that meet the needs of these industrial customers, addressing the most impactful aspects of the asset lifecycle.
GE Digital CEO, Bill Ruh, has decided to depart GE to pursue other opportunities. The company intends to conduct an internal and external search to identify the CEO for this new independent company. Further details on GE’s new IIoT software company will be announced in Q1 2019. This plan is subject to customary regulatory approvals, including information and consultation with employee representatives where required.
*Source: Forecast: Enterprise IT Spending for the Manufacturing and Natural Resources Market, Worldwide, 2016-2022, 3Q18 Update
About GE Digital
GE Digital is reimagining how industrials build, operate and service their assets, unlocking machine data to turn valuable insights into powerful business outcomes. GE Digital’s Predix portfolio – including the leading Asset Performance Management and Field Service Management applications, as well as Predix Private Cloud – helps its customers manage the entire asset lifecycle. Underpinned by Predix, the leading application development platform for the Industrial Internet, GE Digital enables industrial businesses to operate faster, smarter and more efficiently, wherever their operations require. For more information, visit www.ge.com/digital.
GE (NYSE:GE) drives the world forward by tackling its biggest challenges. By combining world-class engineering with software and analytics, GE helps the world work more efficiently, reliably, and safely. For more than 125 years, GE has invented the future of industry, and today it leads new paradigms in additive manufacturing, materials science, and data analytics. GE people are global, diverse and dedicated, operating with the highest integrity and passion to fulfill GE’s mission and deliver for our customers. www.ge.com
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