If you listen to almost any conversation about the Internet of Things you’re likely to find that it fairly rapidly degenerates into a conversation about the communication protocols. Should you use Sigfox or LoRa? How about GPRS? GPRS has already been turned off in most of the US, but it could be around for another decade in Europe. Or what about NB-IOT? Or maybe it’s better to go for LTE-M? Not to forget the new radio that will be coming along in Release 15. Or is it Release 16?
Almost all of this is irrelevant. We already have enough low power, low cost communication standards to fulfil almost any IoT use case we can think of. The problem with the overabundance of ways to transmit data is that it diverts everyone from the more important (and much more difficult) part of the IoT, which is the rest of the value stack. This is the first of two articles where I’ll explain the wider IoT value stack and why we need to stop fixating on the comms. In this one I’ll go through the basics and then, in the second one, follow that up with more detail on security, the business models and the skills you need to succeed in the IoT.
Back in 2010, Ericsson set the bar for much of the subsequent hype around the Internet of Things by making a very pubic prediction that by 2020 there would be 50 billion internet connected devices. Others have been more or less aggressive, suggesting “conservative” numbers of 20 billion, while some have stretched credulity with projections up to 1.5 trillion. The 50 billion isn’t just IoT, it covers everything from phones to smart TVs to tractors, but the biggest single element is what we now call the Internet of Things, with the original 50 billion prediction including around 20 billion cellular IoT connections.
Most analysts have supported the Ericsson line with an estimate somewhere between 30 and 50 billion. But just before Christmas, in their latest Mobility Report, Ericsson quietly changed their minds. They still kept the headline number of around 50 billion connected devices, but dropped the number of cellular connected IoT devices in 2020 from their previous estimate of 20 billion to just over 1 billion.
The important word here is cellular. This week, as the mobile community gathered in Barcelona for their annual jamboree, which is the Mobile World Congress, the industry was still full of expectation that they would own the Internet of Things, and more importantly, the revenue associated with it. Ericsson doesn’t want to spoil that hope with any blatant contradictions, but if you look more closely at the implication of their new numbers, the IoT aspirations of the networks look less than rosy, as their revenue projections begin to disappear into thin air.
All of a sudden, there’s a lot of activity in the Long Range wireless network community. In France, Orange has just announced that they’re going to follow in Bouygues’ footsteps in deploying a LoRa network for M2M which will cover the whole of metropolitan France. That in turn follows on from a similar announcement from KPN that they are planning to do the same thing in Holland, while Proximus are going to cover Belgium and Luxembourg. It’s a bit like a rerun of the SigFox PR offensive, after they managed to sign up operators in France, Holland, Portugal, Belgium, Luxembourg, Denmark, Spain, the U.K. and San Francisco. Nor is it just a European phenomenon. In the U.S., Ingenu, the company which was formerly known as On Ramp, has raised $100 million to roll out its own similar, proprietary network. It seems that there’s a new announcement almost every day. So it’s interesting to look at why mobile operators are desperately announcing new network technologies to support M2M and IoT applications, when just a few months ago they gave the impression that they would rule the IoT with their 4G networks.
When you stop and look behind all of this activity, you see something that should be worrying the M2M and IoT industry (which is not the same as the cellular industry). For the last fifteen years they’ve not had to worry much about how they make their data connections – they just embedded a GPRS module and bought a data contract. But look forward a few years and there’s a worrying hole in the air as networks start to switch off their GPRS networks. That’s just beginning to dawn on network operators, who see an unexpectedly unpleasant vision of the future, in which their anticipated IoT revenues could disappear into thin air.