Every time I meet with a client these days, be it in the Automotive , Manufacturing, Pharma, Aerospace, IT or any other industry, even industries you would not expect from like farming, the discussion sooner or later ends up on IoT platforms. It seems every product and service is becoming a platform. As a result, every industry is moving from offering products and owning assets to offering services and managing interactions. Platforms will underpin this shift with IoT fueling the revolution.
There are already hundreds of platforms out there, from enabling transactions and exchange, to sharing and even co-development and co-creation. As every industry converges into platforms, the key competitive differentiator between them will be their intuitive and cognitive prowess. As a result, commercial activity is moving now from industry specific to pan-industry, mega-platforms and hundreds of specialist and vertical-specific platforms clustered around them.
Tracking this activity reveals an intricate dance of partners, each seeking to assert control over an ecosystem of technology providers and application developers. The other key question is, will the Platforms become commodities? We think so!
Partnerships’ The Way Forward
The common refrain in IoT is that ‘no one can do it alone.’ This is certainly true and market share should be considered in terms of the dominance of cloud-hosted platforms and ecosystems, rather than customer numbers or revenues. Revenues today are still modest and say little about the competitive advantage in the future. Companies at this stage of the market are focused on partner selection and acquisitions to plug technology gaps and investment in platform capabilities in order to attract developers.
According to Frost & Sullivan’s IoT Tracker, 9 percent of company announcements in the past 12 months were about ecosystem building – typically involving technology partnerships and joint go-to-market strategy (Exhibit 1). Another 7 percent involved product co-development.
Of course, so-called ‘strategic alliances’ in the ICT industry can quickly fade away, as participants discover they have less to gain than they first thought. However, IoT suppliers are more dependent on their rivals and peers than in traditional ICT. IBM, for example, claims to work with some 1,400 IoT partners in one way or other. Though many relationships will be as loosely coupled and dynamic as the IoT itself, others are genuinely strategic and longer term.

Looking at recent announcements, a land grab is underway to secure access to vital competitive assets.  The likes of IBM, GE, Microsoft and Amazon Web Services, are augmenting their mega-platforms – filling gaps through acquisition, extending channels to market and giving away devices to developers (Exhibit 1).Exhibit 1: The Mega-Platforms’ IoT ecosystem announcements, 1H 2016
Untitled
Source: Company Announcements

Will Platforms Become Commodities?

Platforms are important for IoT market growth because they standardize key functions such as application development, connectivity and device management. The typical PaaS package includes freemium access to APIs, SDKs, templates, libraries and tools, built on cloud resources for scalability and public cloud for testing and development. Platforms are a cost-effective route to advanced services such as connectors to back-office ERP, analytics, security and even blockchain pay-as-you-go. SaaS applications then inject the vertical specific capabilities on top. However, with a plethora of platforms out there, is there danger they will become commodities?
It is to address this commoditization that companies are differentiating their platforms by talking about the customization, solution-based approach with advanced cognitive abilities. According to Sanjay Brahmawar, Global Head & Managing Partner of Strategic Business Development, IBM Watson Internet of Things, “Within the next two years, the Internet of Things will become the biggest source of data on the planet. For us to deliver on its true potential, we need to ensure that its value extends from the IT department to the boardroom. Cognitive computing systems like IBM’s Watson are making this possible. Watson uses machine learning to turn vast amounts of structured and unstructured data into valuable business insight. For example, natural language processing means that we can communicate better with devices and machines, making them more intuitive and easier to use. Together, these technologies create powerful decision support systems that enable leaders to not only monitor operations, but also predict future scenarios and determine the best possible action plan. With cognitive computing the Internet of Things is coming of age and the boardroom is set to be at the center of the revolution!”
This is where mega-platforms, like that of IBM above, come into their own. Hyperscale players such as IBM, GE, Microsoft and Amazon, can absorb the low return on commodizing services with an eye to the long-term prize. Furthermore, bigger opportunities will emerge as enterprises exploit the vast quantities of largely unstructured data that, to date, have been largely discarded or under used.
As Sanjay previously mentioned, we are seeing the combination of IoT with machine learning techniques that will transform enterprise operations and customer engagement. It is less clear if enterprises will become dependent on the mega-platform providers, essentially reconstructing the top-heavy structure of the IT sector. Alternatively, the need for constant innovation and broad participation in IoT could encourage market leaders to remain open to specialist and vertical-oriented platforms.

So What Next…………….Internet of People!We humans have made astonishing inventions and discoveries that have transformed our everyday lives. We found molecules, which ultimately triggered the Industrial Revolution. The 20th century was marked by a massive shift from molecules to electrons and there came electricity. We followed that with discovering waves which, in turn, led to the Telecom Revolution. Today in the 21st century, we sit in the era of Internet of things. However, just like previous discoveries that became commodities, IoT platforms will follow suit if they already are not. What will differentiate platforms in the future will be their ability to be cognitive and therefore offer solutions and services, not just a static network hub. Therefore, the question is, what next – perhaps internet of people where humans and machines are all part of one seamless eco system.