Bluetooth, Hearables, IoT, Smart Energy and other random Stuff
IoT (including LoRa, Sigfox and NB-IoT)
It’s back, and it feels busier than ever. Last year we had the Mobile “We’re not in lockdown” Congress, which was buzzy, but lacking the participation of most Chinese and Asian companies, and hampered by everyone having to wear masks the whole time. This year, the masks are gone; it really is a Mobile World Congress and everyone is back promoting all that’s new in mobile.
One of the memes that has been going around the industry this year, particularly amongst platform suppliers, is that the slow growth of IoT deployments is due to the fact that “Consumers don’t yet understand the real value of IoT”. It’s an incredibly arrogant statement, which tells us a lot about the current start-up mentality, where too many have the perception that they’re entitled to become a billion-dollar company just because they’ve had the presence of mind to jump on the IoT bandwagon. However, the fundamental fact remains that if you are going to succeed, you need a business model. Unfortunately, profitable business models in the IoT are rather thin on the ground, largely because many of the self-styled IoT experts don’t really understand the market.
What most people do agree on is that the IoT isn’t taking off at the rate which everyone had expected, although that’s no great surprise – technology growth curves almost never match the hockey stick curve that analysts predict. Gartner’s famous Hype Curve constantly reminds us that the path to ubiquity is strewn with failed ideas, many of which never emerge from the trough of disillusionment. The IoT suffers from a further problem, which is that the catch-all name has become to mean all things to all men (or maybe all machines). Many forget that the popular IoT poster children which the press pick up and promote as IoT are generally more fluff than substance.
Which brings us back to business models. The IoT will take off when companies work out how to make money out of it. Sadly, that’s proving harder than it may seem, with the more cynical concluding that the only people to profit from the IoT so far are conference organisers. So, let’s take a look at why developing a profitable business model is proving to be so challenging.
If you listen to almost any conversation about the Internet of Things you’re likely to find that it fairly rapidly degenerates into a conversation about the communication protocols. Should you use Sigfox or LoRa? How about GPRS? GPRS has already been turned off in most of the US, but it could be around for another decade in Europe. Or what about NB-IOT? Or maybe it’s better to go for LTE-M? Not to forget the new radio that will be coming along in Release 15. Or is it Release 16?
Almost all of this is irrelevant. We already have enough low power, low cost communication standards to fulfil almost any IoT use case we can think of. The problem with the overabundance of ways to transmit data is that it diverts everyone from the more important (and much more difficult) part of the IoT, which is the rest of the value stack. This is the first of two articles where I’ll explain the wider IoT value stack and why we need to stop fixating on the comms. In this one I’ll go through the basics and then, in the second one, follow that up with more detail on security, the business models and the skills you need to succeed in the IoT.
If history is anything to go by, it’s going to be unlucky for some, but it’s an indication of the momentum which is growing around cellular IoT that so many chip companies have jumped on the bandwagon.
It’s not cheap to develop a cellular chip, even one that is moderately simple, such as is the case with the NB-IoT standard. Back in 2012, when I wrote about the cost of developing wireless standards, I put it at around $6 million for each chip and protocol stack. That was looking at Bluetooth and Wi-Fi. With the additional complexity of any cellular standard, along with network interoperability testing, it becomes far more expensive, as you need to test with as many operators as possible. Hence the development cost to get a chip and stack to market is probably at least $15 million.
With thirteen different companies bringing chips to market, that’s an investment of around $200 million. Some of these have tried to cut their development time by acquiring start-ups which were already some way down the route. Sony purchased Altair, Huawei bought Neul, ARM bought NextG-Com and Mistbase, Goodix acquired CommSolid, while Nordic Semiconductor picked up around 60 engineers in Finland’s Oulu. We don’t know how much they spent on these acquisitions, but it’s probably well over $200 million. Add to that the costs of the standardisation process, infrastructure development and initial market trials and it’s clear that somewhere between $500 million and $1 billion has already been spent on getting NB-IoT to the point where it is today. That’s a level of investment that should be worrying competing standards like LoRa and Sigfox, as the NB-IoT companies will do all they can to recoup their investment.
For anyone involved with mobile phones, networks or the IoT, the Mobile World Congress in Barcelona is the place to be in February. Over four days, the industry reveals its latest and fanciest ideas in the ongoing evolution of mobile telephony. It is vast. This year around 2,300 companies were exhibiting, several with stands large enough to fit a passenger jet in; over 100,000 visitors were wandering around it, including senior politicians and royalty and the organising industry body – the GSMA (God Save Mobile Analysts) probably raked in around $100 million in revenue. Which is more than some of the sectors it is promoting will make this year.
It’s not a show famed for radical new technology. Unlike CES, which gives us technical wonders like the selfie stick, MWC is about gradual evolution. But that is gradual evolution of a very, very successful industry – one that likes to take the annual opportunity to convene in Barcelona and flaunt its success.
So what was new? For me, there were four things which stood out. That might feel minor, but when you’re trying to predict the future, it’s difficult to judge. These are the ripples and butterflies that could bring massive change. No-one in the industry thought SMS and messaging would take off. But they were happy to bet on WAP as the mobile internet, which only goes to prove you should never believe an analyst or futurologist. So here’s my choice of four things which took my fancy.
I’ve been wondering for some time how long it will be before Sigfox ditches their own proprietary protocol and adopts a different standard, probably going for NB-IoT. Whilst many may question why they’d do it, making the assumption that the Sigfox protocol is their crown jewels, I’d question that assumption. Last week, at the Sigfox World Expo in Prague, they made an announcement that suggests that that day may not be too far away. I firmly believe that it has to happen, because Sigfox’s business model is looking a lot like Uber’s, which means going for global domination by any means possible. The means to that end is probably not based on their own proprietary protocol.