The Internet of Things (IoT) has had a major impact on the electronics market this year, and it looks like 2015 marks a tipping point. In much the same way that there was a lot of debate over the definition of cloud computing in the early days, so, a similar phenomenon has happened with IoT. The discussion around what IoT is, how it is defined, and how it differs from M2M, has died down, and the focus and discussion is now on delivering solutions and demonstrating value.
One example is that we have stopped talking about is numbers. Back in 2014, everyone would start their presentations with numbers: 5 billion, 10 billion, 20 billion connected devices and how many trillions of dollars were developing in market opportunity. As 2015 progressed, people stopped talking up the numbers as everyone acknowledged that IoT is going to be BIG.
Similarly, by breaking down IoT into the different levels of technology, architecture and topology, industry commentators are now talking about a fairly consistent architecture with cloud connected gateways connected to things and devices. This demonstrates that the industry is starting to converge on its understanding of IoT, and the education phase is moving to a focus on implementation.
Going forward into 2016
There are a number of factors that will prove to be crucial for the development of IoT during 2016:
Return on Investment
In 2015 it was important to clarify the architecture and the use cases for IoT. Now businesses are beginning to think about some of the business justifications and quantifying the return on investment (ROI) for deployed IoT solutions. There is currently a real desire to ‘show me the money’ in the market that says: “Okay, so show me what money can be saved and what new revenue streams I can derive?” Our customers are very interested in that transformational aspect of IoT. That's going to be a big theme in 2016 – talking about real deployments and real value propositions.
Changing business models
Another factor that has evolved in 2015 is a recognition that there's an emerging preferred consumption model, which is closely linked to value delivered. Subscription services are moving from charging for fixed assets and a one-time fee to charging for a service. People are willing to pay for the value they receive and are very open to having multiple suppliers who can provide the different parts. However, charging a regular fee for an ongoing service means you really have to demonstrate a tangible and on-going value proposition. That's all part of the on-going ROI discussions.
As people start deploying true IoT systems, fully understanding the security use cases and the deployment models of security is going to be essential. Rather than security being a ‘check-the-box’ exercise, we're going to have to start talking very specifically about what security measures we put in place, not only for end-to-end systems, but across the complete lifecycle of the devices in the network.
This is going to include issues such as decommissioning boards and devices if the ownership of devices moves from one customer to another. How can I do a clean wipe, for example? If you sell your mobile phone you do a hard reset, but how do you reset devices that are deployed in the field when their ownership moves from one customer to another and still maintain connection to the system? This notion of life cycle security and privacy is going to become important to address these issues.
IoT in 2016 – the year of the cloud
IoT business models are changing as a result. Companies are moving from selling development tools and systems to deploying networks of devices connected to the cloud. The business model has to focus on the way companies deliver recurring value through that cloud.
The Wind River Helix Cloud family of SaaS products and Wind River Rocket are good examples of this. It is a very different business model from Wind River's historical approach. The Wind River Rocket operating system, for instance, is an open, freely available, small real-time operating system that we're making available free of charge, while the development environment sits in the cloud.
That shift to a cloud-enabled business model is transformational not only for Wind River, but also for customers. It allows IoT companies to develop and use a much broader ecosystem. This is beneficial to everyone as it enables a standard way of developing device software for a broad developer population with a very low overhead.
2016 will see continued investment in cloud offerings to solve more and more customers' problems and only then figuring out a smarter way to monetize that solution over time.
You'll hear a lot of talk about the cloud in 2016 because this really gives the IoT true scalability. For Wind River, the cloud is an integral part of our future success and the future of our customers. It is also helping drive the transformation the industry is experiencing. I for one look forward to seeing what 2016 brings.
Gareth Noyes is responsible for overseeing Wind River corporate strategy and mergers and acquisitions activities, as well as for leading the chief technology office.