By Hatem Oueslati, CEO & Co-Founder, IoTerop
During the last twelve months, IoT faced something of a perfect storm. Covid-19 slowed business activity. A global chip shortage negatively impacted supply chains until at least 2022. Complex international logistics issues led to higher costs and capacity crunches. As a result, although expected to bounce back, IoT spending and growth were down from 2019’s double-digit rise.
Some of these issues will recede, like the logistics and investment issues. Others, like the global chip shortage, will be an issue the industry struggles with for a while. Still, the IoT market faces deeper issues. The terms best encompassing the current IoT market for most business people are “complexity” and “lack of clarity.”
State of the Industry: IoT Challenges
IoT is still very much a nascent industry. Historically, IoT projects were proprietary efforts focussed on a single business unit or problem since standardised building blocks from device to cloud didn’t exist. Increasingly, IoT visions are much more encompassing which means that past approaches will not support digitalisation strategies moving forward.
IoT development compared to other IT sectors is challenging and expensive. Whether it is the applications themselves or getting the data from the devices to the cloud, many organisations lack the internal skills and requisite experience to build meaningful solutions efficiently. There are not enough blocks (developer Legos) from the devices to the cloud, which makes creating secure, robust solutions more difficult.
In addition to technical challenges, there are also business hurdles that companies face when it comes to leveraging IoT. In an increasingly data-centric world, IoT plays the role of nerves and fingers to artificial intelligence’s brain and nervous system. The two technologies are complementary and inseparable in many ways. Yet, despite IoT’s disruptive potential, many organisations still struggle with the who, what, where, when, and why of building and deploying IoT solutions.
Then there are the security challenges. The security issues are too vast, deep, and pervasive to address in this article. Let’s just say IoT is not secure, data is not encrypted, and threats abound. Poorly secured, remote, vulnerable IoT devices are the equivalent of embedding Achilles’ Heels in the goods and services we need to live.
The Business of IoT
IoT represents significant business investments with long life cycles. Poor choices will have significant consequences. For example, smart meters have life spans measured in decades. What happens if one company’s operational costs are twenty percent higher?
Looking at the consumer IoT market, recent research shows consumers are keen to connect everything, but what exactly are they keen for? The modern global consumer, starting with myself, demands simplicity and convenience and has little tolerance for anything overly complex.
Does anyone remember what PCs were like before the advent of Plug and Play (PnP) and USB? I do. What happened to the PC and after-PC market once these two technologies matured? Explosive growth.
Business IoT adoption must overcome the same constraints. Proofs-of-concept, testing, deploying, securing, and value creation are all too hard, too unproven, too costly, with too few established use-cases.
The good news is, change is coming, and it is coming in the form of standards.
There are many types of IoT. The single largest IoT sector by far and the one that will have the most immediate tangible impact on our lives is massive Machine Type Communications (mMTC). This sector includes smart metering, logistics, smart lighting, and agriculture. It is not an exaggeration to say that these solutions sending small amounts of data regularly up to the cloud have the potential to revolutionise whole industries and how we live.
City lights, for example, represent up to one-quarter of the average city’s budget. What if we could save ten percent on our collective electricity bills while making cities safer?
Smart meters reduce truck-roll or house visits, reducing not only direct costs, but also work-related injuries and the ROI continues from here.
Early mMTC solutions relied on many types of LPWANs for connectivity. IoT mMTC 2.0, starting with China and the Asia-Pacific region, increasingly depends on telecom-centric cellular NB-IoT.
Technically NB-IoT is an excellent solution fit delivering:
- Quality of Service ─ NB-IoT uses existing cell towers and is effective at both long ranges and penetrating walls, ideally suited for many mMTC use cases.
- Battery-optimized ─ Battery-operated solutions must stay in the field as long as possible. Non-necessary human interventions mean non-necessary costs. Recent NB-IoT smart water meter solutions have arrived at the all-important ten-plus year mark.
- Security ─ Telecom-operated networks use standardised AES encryption that require device authentication, and have enough bandwidth capacity to deliver firmware updates ensuring IoT solutions meet basic (and increasingly legislated) security standards.
Equally important are NB-IoTs business benefits:
- Build once, deploy anywhere ─ As a global standard NB-IoT for IoT, like PnP and USB for PCs a generation before, unlocks connectivity interoperability. Now, a developer or company can invest in innovation, build a new device, and sell that device into global markets. One recent innovation example I love is a small boutique German IoT company that designed a NB-IoT CO2 smart building sensor to reduce Covid-19 indoor transmission rates. This story correlates very well with IT’s historical roots of two guys in a garage innovating with standards helping to make this possible.
- Proof-of-Concept costs ─ Testing a solution withnon-standardised LPWANs is more complicated and hence more costly. Testing a solution with NB-IoT is now as simple as organising device delivery and installation, reducing costs.
Although much criticised and still maturing as an ecosystem, NB-IoT provides a single, global communication standard for a communication-dependent industry.
Device Management Standards
The last twelve months in IoT, although disappointing from an adoption standpoint, have seen other promising industry developments.
The UK, Europe, and the US all proposed IoT cybersecurity legislation and guidelines followed by industry associations announcing support for new IoT standards. The FIDO Alliance is now promoting the FIDO IoT specifications and the Zigbee Alliance rebranded as the Open Connectivity Alliance.
One recent example of an important value creation and cost-cutting step was the uCIFI Alliance, an IoT alliance of important industry actors dedicated to smart city interoperability. uCIFI announced the creation of common data models under all smart city applications that would reduce the barriers to securely sharing data, the digital economy’s oil.
Device management standards that address a wide range of factors, including device onboarding and sharing data, benefits everybody by making it a snap to securely use any device by adhering to the standards. Think about it. Would you buy a car that didn’t meet your country’s road safety standards? Do cars meeting road safety standards contribute to fewer injuries and lower operational costs? IoT should and will eventually do the same.
IoT adoption and accompanying benefits will explode when we get to the point where adding a device, securely sharing data, and the accompanying benefits, are as simple as just a few mouse clicks and not a “project” similarly to the PC market before PnP and USB came along.
Technology’s killer applications are common sense and convenience. Businesses, like people, hate risk, complexity, and uncertainty. As the IoT ecosystem matures and scales, costs will come down as the risks are better understood and there are more use-cases available. The dual forces of device management and connectivity standards are already at work rewriting IoT macroeconomics.
NB-IoT modules went from nearly ten dollars a unit in 2017 to four dollars in 2021 and are expected to reach two dollars per unit in the next few years, barring continued chip shortages. This is due in great part to competition aligning around a single standard.
The same thing is happening to connectivity costs. One European vendor recently announced a flat rate of ten euros for ten years of NB-IoT connectivity, roaming included, removing obscurity from NB-IoT pricing modules.
The next step is to get to a point where any device, designed anywhere, can be securely operated by anybody, and have its data shared with just a few mouse clicks.
Once IoT fundamentals fully support basic economics and common sense, there will be no holding IoT back.