IoT's Year Zero
The dust has just about settled on Mobile World Congress (MWC) 2016 and, from the millions of lines of reporting and press releases as well as hundreds of hours of video footage of the event, what were the key takeaways? What will shape the telecom industry -- and indeed the world -- over the next five years? One thing's for sure: The Internet of Things (IoT) will be front and center. In the last 12 months, it has already disrupted the 4G roadmap and become a prime driver of the 5G specification process. At MWC, IoT was present in every hall and touched everything from components, devices and applications to RAN, core and BSS/OSS. It is a driver of innovation in wearables, smart cities and drone applications.
Monetizing the opportunity
Whereas last year it was a struggle to find people who knew enough about IoT to talk to, this year there were numerous attendees with IoT in their titles -- and Nokia, only seven weeks after the close of its merger with Alcatel-Lucent, has created a dedicated IoT team across its core units.
On the operator front, Telefonica typified a move that will become prevalent this year; it has shifted from the IoT innovation and business development focus it had last year to a dedicated business unit led by Chief IoT Officer Vincente Munoz. The reason for this is very simple: Everyone is looking to monetize the IoT opportunity. History shows that the best way to create traction is to dedicate a team and give it the autonomy to do what's necessary to create and grow a profitable business. That, after all, is how cellular prospered in the early days.
LPWA and NB-IoT
On the Sunday prior to the start of the conference, the majority of media attention was focused on the narrowband IoT (NB-IoT) summit, and what this means to the industry. It was, in some respects, a public admission that the mobile industry has been asleep at the wheel and that it's now racing to embrace the low-power wide-area (LPWA) business opportunity. Consequently, numbers were being quoted by Telecom Italia that the opportunity in Europe could be as much as 10 billion units, and China Mobile said that it could see a 6 billion unit opportunity in China. The cynic in me can't help wondering about these forecasts, when the GSMA foresaw only one billion cellular connected devices by 2020, with the caveat that this could be 2 billion if all things fall into alignment. It could well be that this new technology will truly create new opportunities not previously conceived; we'll have to wait and see.
The network edge
Smart meters and utilities are the prime battleground for NB-IoT and the alternative LPWA providers, such as Sigfox, LoRa Alliance and Ingenue. However, transport and security are two other areas where the operators and the LPWA players are beginning to wrangle. In these segments -- as well as industrial IoT (automation/smart factory/logistics) -- the operators and the vendor community are focused on developments at the edge of the network. This is the interaction space between wide-area access technology and enterprise capillary networks (WiFi/ZigBee/802.15.4 and mesh networks). This edge space is set to become a dynamic area where gateways, security, edge computing, storage and data analytics technologies are rapidly developing, and will have a significant impact on the transformation of operator and enterprise business models. This is the convergence space where traditional IT, operations technology, cloud and communications theories, practice and experience will have to rapidly adjust and adapt.
The vertical industries have always been the IoT focus of companies such as Cisco, Symantec, Dell, HPE, Jasper, SAP, IBM, Wind River and Accenture. What was interesting at MWC, however, was the increased focus of traditional telecom vendors, Ericsson and Nokia, on these verticals as end markets in "coopetition" with services providers. They're arguing that they are in a better position than operators to deliver global capability and orchestrate partner relationships, and that, by leading the charge and working with the operators, it is a "win-win" scenario -- yet another example of the turbulence that IoT is unleashing in this hitherto very conservative and traditional market.
Another focus market that consistently came up in discussions was smart cities, where vertical suppliers such as utilities, waste management, lighting and public safety, are selling services. The opportunity that vendors and operators see is in the horizontal management of these different verticals for data management, analytics and coordinated insight, as well as the possibility to create service marketplaces for third parties and city dwellers. Clearly, the ability to design and deliver a platform that has both the flexibility and scalability to accommodate multifaceted service and business models across diverse technologies, and that interfaces to disparate ecosystem partners, is the key to winning in this arena.
Platforms and fragmentation
At MWC, platforms featured prominently as a panacea to multiple vertical industries' IoT applications. These platforms are being applied at many stages along the various value chains to assist vendors in providing end-to-end IoT solutions. However, many of these platforms tend to be proprietary and are not designed to work together. Consequently, this is compounding the fragmentation resulting from a multiplicity of standards, wireless technologies and protocols already prevalent in M2M applications. Fragmentation is the biggest enemy of all participants of the IoT ecosystem -- particularly startups. While operators and enterprises are happy to embrace the concept of innovation and incubation in an IoT ecosystem, not much is being done to ensure that the wheel isn't being reinvented by new startups. For example, in many cases, security is being overlooked because fundamentals are not understood by startups, or are being specified and required by ecosystem partners. Addressing these issues, along with interoperability, openness and common interfaces, will go a long way to helping the industry crack the monetization challenge of IoT. Based on a cursory review at MWC, monetization is still at an immature and exploratory stage.
On the horizon
There were indicators at MWC that IoT will become the focal point of other impending challenges and opportunities in the not too distant future). Among these will be IoT roaming, IoT signaling, location beacon technology linked with augmented reality (AR), wearables (including clothing), and biometric sensor technology as security mechanisms for mobile payments.
As evidenced at MWC, IoT is accelerating rapidly and is set to experience an exponential expansion in terms of the technology and applications across a broad and expanding number of industries and sectors in 2016. Major vendors and operators are seen to be realigning and have shown a determination to move rapidly if they think they might be out of step or missing out on this opportunity. In summary, 2016 is set to be a pivotal year for IoT and will set the stage for the telecom industry over the next five years.
— Steve Bell, Senior Analyst, Heavy Reading