Microsoft puts $5 billion down on the Internet of Things

via Flickr © PhotoAtelier (CC BY 2.0)

via Flickr © PhotoAtelier (CC BY 2.0)

  • IoT on Microsoft's radar for many years
  • Is investing $5 billion because it wants to light 'dark end-points 

Microsoft has virtue signaled its commitment to IoT with one of those ‘we’re going to spend big research money’ announcements. In the past we’ve called out companies such as IBM for turning what is obviously just a change in research and marketing emphasis into what, at first glance appears to be a big dollop of new cash and declaring that it’s mounting of a real push into an area.

Microsoft appears to have played the same corporate PR wheeze today with an announcement that it intends to spend $5 billion on the Internet of Things ‘over the next four years’. Done the sums? Yep, just over $1 billion per year.Which is fine because it’s about what we might expect Microsoft to spend on what, everyone now seems to agree, is clearly going to be a huge 2020s market growth area.We know so because the 5G proponents are urging mobile operators to go after the same pot of gold, and it’s a huge pot with a large price tag.

But today Microsoft is worth around $703 billion, just tucked in behind Apple and Alphabet (Google), and it generates revenues of $85.3 billion. In that context preparing for a major IoT market by spending a paltry $1.2 billion per year seems a little on the cheap side.

According to Microsoft it’s mostly about altruism. The press release says that “the reason we are doing this is simple: Our goal is to give every customer the ability to transform their businesses, and the world at large, with connected solutions...our customers are delivering electricity to schools in Africa, creating better patient outcomes with predictive care, improving worker safety on job sites and driver safety on Alaskan roadways.”

Like many companies, Microsoft claims it’s had IoT on its radar for many years. “We’ve been invested in IoT before the term was coined, when enterprises had these endpoints in their factories, buildings and other devices that were totally “dark.” Today, we’re planning to dedicate even more resources to research and innovation in IoT and what is ultimately evolving to be the new intelligent edge. With our IoT platform spanning cloud, OS and devices, we are uniquely positioned to simplify the IoT journey so that any customer - regardless of size, technical expertise, budget, industry or other factors - can create trusted, connected solutions that improve business and customer experiences, as well as the daily lives of people all over the world. The investment we’re announcing today will ensure we continue to meet all our customers’ needs both now and in the future.”

Microsoft quotes researchers A.T. Kearney which currently predicts that IoT will lead to a $1.9 trillion productivity increase and $177 billion in reduced costs by 2020. This effect will be pervasive, from connected homes and cars to manufacturers, to smart cities and utilities—and everything in between.

Yes, yes, we all know all that

We can already see a looming squabble over which sector can claim to be having the most macro impact on the global economy through the fostering of IoT. The cloud and IT/device specialists like Microsoft can make fairly substantial claims. So too can the fibre builders who have long been in the business of charting the economic and societal impact likely to accrue from their efforts.But the sector making the biggest noise at the moment is the US wireless industry which claims it contributes $475 billion annually to the US economy and supports 4.7 million jobs there.To keep this happy state humming it’s urging lots of 5G investment. And 5G, as we know, is also hugely dependent on the scheduled growth of the IoT for its business case.

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