The internet of hype?

Published on the 05/07/2018 | Written by Pat Pilcher

IoT hype telco fail IDC

IoT overhype? The answer is not quite so clear-cut...

The gap between early hype and the reality of the Internet of Things (IoT) is starting to show according to a recent IoT confessional, and it’s largely due to telcos not understanding their customers.

There is also some understandable confusion around just what constitutes IoT, a long standing issue with hype-cycle technologies.

While the telco grumblings are out of Europe, IDC VP of IoT research in Australia, Hugh Ujhazy says: “Many of these deployments can be invisible. The sorts of use cases Australian companies are showing as ‘in production’ are things like supply chain optimisation and fleet management. Also, areas like monitoring retail and campus environments using cameras, sensors and analytics.”

“If your organisation doesn’t have a strong digital strategy for data, then attaining value out of your IoT solution will be difficult.”

Either way, selling IoT solutions can be a tough task for both telcos and integrators. The first hurdle they face with IoT is network investment. To this end, telcos on both sides of the Tasman have been busy.

Australian incumbent Telstra launched an NB-IoT (narrowband Internet of Things) network technology in January. NB-IoT was recently standardised and is based on cellular technology. It is designed to send small amounts of data at low power, allowing IoT sensors to operate for as long as 15 years on battery power. Telstra’s NB-IoT offering compliments their existing Cat M1 IoT coverage which was switched on in 2017.

Telstra’s NB-IoT moves follow Vodafone NZ’s. In July last year, Vodafone NZ announced they were upgrading their mobile network with support for NB-IoT. Not to be outdone, Spark launched their IoT solution in March this year. It uses a LoRaWAN technology which is both energy efficient and can transmit small data volumes over long distances.

Whether uptake by business justifies the investments remains to be seen.

Monica Collier, Ujhazy’s couterpart in New Zealand, agrees. She said growth is uneven and that regional variations throughout the Asia Pacific region need to be considered. “There has been growth, but it probably hasn’t met the big numbers that were being thrown around the industry a few years ago. IDC still anticipates double-digit connection growth between now and 2021 in the Asia Pacific, but the growth in New Zealand will be lower than what’s anticipated for China, for example, partly because the governments in Singapore and China are actively promoting Smart Cities initiatives”.

It is also possible that security concerns could be holding back IoT adoption in the wake of last year’s Mirai attacks. While deployment costs and hardware prices are falling, the upfront cost to deploy an IoT solution can still be an inhibitor. Collier attributes this to data analytics not being an integral part of many businesses digital strategies. “The real value in an IoT solution comes from the use of the data the solution collects,” she says. “If your organisation doesn’t have a strong digital strategy for data, then actually attaining value out of your IoT solution will be difficult and the business case may fall over. IoT needs to be a part of an organisation’s overall digital strategy.”

The next and most difficult hurdle facing telcos and integrators is developing an understanding of market verticals so an IoT deployment can deliver positive business outcomes. Doing so, said Collier, is both tricky and resource intensive. “I think this can be an issue for any service provider trying to provide domain-specific value-add solutions to customers. This is why the telcos have worked with sets of trial customers in specific domains. Both Spark and Vodafone have partnered with farmers and other agricultural organisations to understand what they need. The telcos are doing a lot in this space with the domains that they think are the biggest opportunities”.

An Australian IoT survey carried out by Red Hat last year shows businesses are taking a conservative and deliberate approach to implementing IoT solutions. The study targeted CIOs of Fortune 500 companies as well as local, state and federal governments. Only 12 percent of survey respondents said they are in the process of deploying an IoT solution. Red Hat said this aligns with enterprise adoption strategies for adopting newer technologies where roll-outs typically take considerably longer compared to consumers and SMEs.

Last but by no means least in the minds of customers and integrators is the fragmented state of the IoT ecosystem, Collier says. “The IoT ecosystem has many parts, devices, connectivity, platform, applications, security, professional services. It’s not apparent in New Zealand that any one set of providers in an ecosystem is taking up the role of holistic provider. Many have a good number of partners for customers to work with, but few suppliers’ strategies (including the telcos) is to take the lead position to create and manage the entire holistic solution for the customer. No one’s doing this because no one thinks it’s wise to spread themselves so thin over the ecosystem and yet this is what customers want.”

With IoT proving to be problematic for telcos and integrators, the news is grim for smaller players and proprietary networks such as Thinxtra (with their low cost Sigfox technology) and Kotahinet. While Kotahinet was the first to deploy IoT connectivity in New Zealand and now has 80 percent population coverage using LoRaWAN, they have had to reposition themselves as an end-to-end IoT solution provider. Key among the issues faced by smaller players is their limited resources for marketing compared with larger telcos. Pricing models are also an issue. With Thinxtra quoting $2/device/year alongside a Spark dairy cow tracking solution at $1 a day, per device, customers are left wondering what one gets for what.

But IoT needs not be the Internet of doom and gloom. Growth is happening, and several trends are driving deployments. The high penetration of broadband across the region, including substantial 4G coverage, the nationwide implementations of NBN/UFB in parallel with IoT-specific networks are contributing to IoT’s growth. Software vendors are also fuelling uptake on both sides of the Tasman said Ujhazy. “This is being driven by providers who are adding IoT capabilities to their software tools – SAP with their Leonardo solution and purchase of PlatONE to enable device management, AWS with Greengrass and a similar explosion of APIs and functions, and a positive smorgasbord of platforms”.

Another IoT driver is the trend towards more integrated sensors. According to Ujhazy, this helps lower hardware costs: “Products are coming to market with sensors embedded (pumps, vehicles, parking solutions, street lights) easing the way to enable data collection.”

IoT, like so many other technologies is still all about people. Adding smarts may seem like a compelling idea, but they must fit around people’s behaviour rather than people adapting to IoT smarts. An excellent example of this, says Collier, is Wellington’s Smart Motorways. They might be smart and loaded with sensors, but says Collier, “it won’t change people’s behaviour”.

While there is little doubt that the reality of IoT hasn’t met with early hype, the last word goes to Collier who said that while there is a lot of IoT out there, many implementations are not on prominent display.

“New World Supermarkets have IoT all over their stores with their electronic shelf labels, yet few people would see that as IoT. Tons of businesses out there track their fleets using internet-connected devices, sensors to measure humidity, temperature, speed, acceleration or connected OBD2 scanners that can send tons of vehicle information back to a supervisor or dispatcher but that’s probably not always seen as IoT”.

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