As with previous technology trends, companies looking to create new value through IoT are watching for signals that we are crossing the chasm, maturing and moving beyond the early exploration phase. There are a variety of signs in the market that point to progress, but there are also companies getting caught up in the promises of IoT rather than the reality of creating customer value. There are three key items that are great pillars for assessing our progress to date in 2016:
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- Success of connected product adoption, both by companies creating products and by end users
- Investment and improvement in IoT solutions that help companies bring products to market
- IoT enablement of a variety of use cases across verticals by creating products as a service
Success of connected product adoption
IoT in 2016 started strong right out of the gate with CES where thousands of newly minted IoT connected products were looking to transform our daily lives. Samsung showed us a suite of devices and how it is trying to solve the home interoperability challenge with its SmartThings hub. Sleep Number showed off a connected bed that will track and improve your sleep by talking to your thermostat to turn down the temperature automatically if you are too hot. There was a variety of companies coming out with home safety and security solutions that included cameras, in-home monitoring and smart alerting systems that protect people beyond what the traditional fire alarm can do. In addition to the innovation from big companies, many new companies came on the scene and showed us that there is room in the ecosystem for companies of all sizes. However, a common trap for both small and large companies is thinking that IoT connectivity alone makes for a good product. There were still too many examples at CES of connected gadgets that take old products, add connectivity and promise amazing new value for the end consumer. A connected grill cleaner or connected umbrella may intrigue some people, but the added value of these products over their unconnected siblings is small at best — and likely destined for the junk drawer. Companies must focus on creating real value for the end user through IoT connected products.
Investment and improvement in IoT solutions
Building on the strong start to 2016 at CES, we have seen a variety of IoT ecosystem investments and improvements that are helping to move the industry forward. Overnight, Amazon’s Alexa and Echo product became a smart home IoT hub, allowing users to control connected devices in their home with their voice. Amazon moved front and center in race to control the connected home, testing Samsung, Google and Apple for the best solutions. The innovation and improvement is great, but it also adds another platform that connected product companies need to integrate with and design features around. There are still too many standards and ecosystem wars happening that are making IoT adoption challenging for both product companies and end users. The good news is that consolidation and collaboration is occurring and bringing better solutions to market. Groups like the AllSeen Alliance, wireless long-range protocols like LoRa and tools like IFTTT are all trying to make it easier for companies to develop connected products. Furthermore, IoT solution providers are consolidating, as seen with Cisco’s acquisition of Jasper, which will create better solutions for companies looking to manage cellular connectivity for IoT. This all shows that the market is maturing and it will only get easier to get products to market and drive adoption.
Enabling a variety of use cases
Finally, the first half of this year has shown that there is real value in IoT by enabling products as a service. There are numerous companies that are creating real innovation in how they deliver value through a connected product, or a product as a platform. By connecting a product you open up that product as a platform for both internal and external development. Companies need to start with a core value of why they are connecting a product such as a new feature, service or recurring revenue stream. This will drive adoption and sales, but will more importantly get a product to market to open up new customer engagement and business models.
The first half of 2016 has shown us that getting a connected product to market now can lead to first mover advantages in customer insights. It is critical that companies plan for both the initial value of connecting a product as well as for the additional possibilities that await.
2016 has been a banner year so far for IoT and I am really looking forward to seeing what the rest of the year brings.
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