In the first three postings, we learned what IoT (Internet of Things) is, its market prospects and applications as well as various IoT implementation technology trends. Today, let’s see how diverse companies are doing in the IoT market and what their strategies for survival are.
Alliances in the IoT War
Back in the mid 2000s when PCs were still a major force in the market, the industry was mostly dominated by a few companies like IBM and Microsoft. When the age of mobile devices started in the late 2000s, however, we began seeing much more diverse device providers and platform companies. The monopolizing enterprises have lost their power, and the competition to dominate the market has grown fiercer. The age of IoT is now taking us to a world where the boundaries between business territories are disappearing. Reflecting such trends, many companies are forming alliances in order to create their own ecosystems.
An American business research journal called BI Intelligence expected that the number of internet devices will grow from 1.9 billion at the end of 2013, to 9 billion in the year of 2018. When the market itself gets this big, it’s almost impossible for a single industrial sector or a single company to dominate the entire market. This is why companies are looking for ways to create alliances with those they used to fight against in the past.
How are they forming these alliances to survive in the IoT industry?
Movements and Strategies in Different IoT Sectors
The IoT industry can be divided roughly into device, network, and service sectors. The device sector is then subdivided into chips and electronics, the network sector into equipment/solutions and telecommunication, and the service sector into solutions and services. Let’s take a look at what type of strategies are being deployed by these companies in each sector.
The Device Sector
Chip providers are pushing to launch SoC (System-on-Chip) for intelligent objects as well as cooperation/strategic M&A with software and solution companies to have them use their chips. They also provide open platform/SDK (Software Development Kit) for easier connections, to create a new IoT ecosystem. These companies include Intel, Qualcomm, and ARM.
Intel’s strategy is to focus on an end-to-end solution covering the entire IoT service sector including intelligent equipment, the complex system, and data analytics. They’re introducing hardware products such as SoC and a 3D camera for intelligent objects like quark processors, intelligent gateways, as well as smart watches and personal assistant headsets.
Qualcomm, on the other hand, is working on creating a new ecosystem with SoC and an open platform. They provide AllJoyn an open source IoT software framework for peer-to-peer connections, in order to expand their own IoT alliance called Allseen Alliance.
ARM is responding with an aggressive M&A and cooperation strategy with software solution companies. They recently took over Sensinode and started the mbed project, while developing OneBox (IoT gateway) with Freescale and Oracle.
Electronic companies are focusing on building IoT ecosystems in which solutions for easy ‘connection’ among electronics and services for new values are combined, in order to increase their sales. Such movement is especially noticeable in the ‘smart home’ field.
Two industry leaders, LG and Samsung electronics are also showing this strategy. LG Electronics developed HomeChat through which you give commands to your electronics with IoT function directly through a messenger. You will be able to talk to your electronics as if you’re talking to people.
The electronics from LG are also linked to its NestThermostat (automatic thermostat) in order to keep an optimal temperature and humidity automatically.
Samsung Electronics also launched a smart home service. This service provides a platform on which various electronics work organically by connecting them to IT.
The Network Sector
Network equipment/solution companies
The network communication technology market has been expanding its portfolio so that existing network solution/hardware can include some IoT related functions. The companies which are most aggressively working on this are Cisco and Ericsson.
Cisco created the IoE (Internet of Everything) vision in 2012, and continues to actively run campaigns as well. They also introduced a data center, the enterprise architecture, and a product strategy that focuses on the IoE environment, while operating pilot and cooperation projects to create a new IoE ecosystem in various sectors such as public, security, and transportation sectors.
They’re also establishing the Fog Computing strategy that transfers the network edge to distributed computing infrastructures in case of massive data generation.
Ericsson has been suggesting a network society and running various related pilot projects and cooperative alliances with multiple providers. The Connected Vehicle Cloud with Volvo and Connected Vessel for tracking containers with the shipping company Maersk Line are some examples of this.
Judging that fragmentation of protocols is acting as an obstacle in the spread of IoT, they are working to implement ‘any protocol any device’ by developing a device connection platform.
Telecommunication companies in Korea and around the world are launching specific programs such as open innovations to overcome their own service development limits and to lead the ecosystem. Korean telecom companies like LG U+, SKT, and KT are trying especially hard to come up with new IoT related services.
LG U+ has created the LOIC (U+ LTE Open Innovation Center) establishment strategy in order to change the way of thinking for new ideas and to increase the success rate of their business through an ‘IoT ecosystem based on cooperation’. They also announced that they will establish an IoT infrastructure at DDP (Dongdaemun Design Plaza) in Seoul.
Under the motto of ‘Connect all things! Make Intelligence World!’, SKT is doing their best to create an ecosystem connecting the field of industry, academy, and research while developing a sustainable cooperation program. Besides that, they entered into a partnership with ARM and conducted joint platform research with KETI (Korea Electronics Technology Institute), to launch an open smart home platform called Mobius last May.
KT is planning to launch their own IoT platform as well, while working on cooperative projects with multiple companies over diverse industries including automotive, security, and medical care. One example is the LTE module project for vehicles to strengthen the telematics service working with Hyundai Motor Group.
Vodafone is staying active as an international telecommunication company as well. Based on their experience in mobile networks and customer services, they’re creating their own IoT solutions and forming strategic cooperative systems to be prepared for the fast changing IoT market.
The Service Sector
Platform Solutions and Service Companies
B2C service companies are going through aggressive M&A to develop their own hardware projects while actively adopting diverse hardware to enhance their services. Mobile platform companies are working to connect their devices such as automobiles, electronics, and wearable devices under a single operating system.
Google introduced Google Glass and an unmanned vehicle through Project X, and is now devoted to expanding their territory in the hardware sector by taking over 10 robot companies and Nest, a home thermostat provider. They also showed Brillo, an operating system for IoT at the Google developer conference called Google I/O 2015. Brillo is an Android based OS that runs on low-power devices, and is designed to operate as an integrated IoT platform by bringing together various operating systems that used to be provided separately.
Apple is concentrating on the Apple Watch as an IoT hub. At WWDC 2015, they presented a smart home platform called HomeKit, a smartphone application which controls home appliances through the home app.
The software solution companies are committed to creating a new ecosystem by launching IoT gateways and appliances that combine software and hardware through close cooperation with hardware companies. Oracle provides JAVA ME which helps simplify device development by establishing a portfolio that integrates the device sector, while launching an IoT gateway called OneBox with Freescale and ARM.
IBM, on the other hand, developed an IoT access appliance product by applying the MQTT (Message Queue Telemetry Transport) technology called MessageSight. They expect their IoT access appliance to control a massiveamount of sensing data faster and more effectively.
Today, we learned about what companies are doing in each IoT sectors and what their strategies are.
Their alliances can be roughly categorized into standardization, platform ecosystem, and open source. These alliances are intertwined inside and out like a spider’s web based on their relationships in the competition. This means that the market for IoT is in a very complicated situation.
All of these companies aim to reach a shared platform ecosystem in which all things are connected, not to mention, a vertical integration through software and hardware combination with their key skill sets in their own sectors. This IoT ecosystem is expected to take some time to be created, hopefully creating synergy through various strategic partnerships among corporations and open innovation instead of being led by a single company. What’s most crucial in this situation is for companies to get ready for the competition with their own distinguishing skill sets and strategic partnerships.
In the next posting, we’ll take a look at the prospects of IoT and the precondition for success as the last topic of the series.
Written by Sung Il Hong, Business Planning Advisory, Solution Business Division at LG CNS