Many experts these days are actively discussing “what kind of devices will appear after smart phones.” IDC, a market research institute, said although the smart phone market grew 39% last year, the growth rate will drop to 19% this year. The distribution rate of premium smart phones is leading with over 75% in advanced markets and their average price is continuously going down. These signs show that the distribution of smart phones in the markets of advanced countries is basically done. The smart phone industry thus should focus on the changing needs of advanced markets and lower priced smart phones for developing countries.
At Mobile World Congress, a major event for the mobile market held in February 2014, in Barcelona, Spain, we also witnessed new trends for smart phones. To name a few, there are ‘the limits of hardware innovation’, ‘rapid progress of the middle-low priced smart phones’, and ‘the changing center of the service from hardware to software’.
This phenomenon is actually not that new since we have already had a similar experience in the PC market. Though our focus is more on the price and design of PCs or laptops these days, the situation was quite different a while ago. In the 1990s and up to early 2000s, we had to study each PC’s CPU clocks, memory capacity, video card performance, etc. Since the competition on hardware speed gradually waned and the conditions on OS and software became more compatible, things like UI/UX service became much more important when choosing PCs and laptops. As some experts have pointed out earlier, MWC 2014 made it clear that the same thing was starting to happen in the smart phone market.
So what’s after smart phones? If you’ve guessed that I was considering three types of devices as the answer, you are very much right. In this first posting, I would like to start with the Internet of Things.
What is the Internet of Things?
IoT (Internet of Things) is a system where wired and wireless networks are connected to everyday objects in order to share information with other network devices. The other two types of devices (wearable devices and home gateway servers) are also parts of IoT, although I will explain them separately because of the uniqueness of each device. Today, I will introduce IoT, which is a bigger concept that covers many difference types of specific devices.
The reason why I am talking about IoT first is because you can collect, analyze, and manage data as well as give and receive feedback with minimal effort or without a person making such action. Once this function that IoT has meets other industries, the synergy will enable us to go forward to a new world. Many terminals that are used separately will also be connected to the internet (network) and will change the pattern of our daily lives. Google recently bought Nest Labs, a home automation company, for 3.2 billion dollars and this simply suggests how big the potential for the market of IoT is.
Various Ways to Utilize Internet of Things
The U.S. is pushing to make equipping V2V (Vehicle to Vehicle, a communication system between vehicles) mandatory. V2V is a system that shares information such as vehicles’ locations, direction, and speed between cars through wireless communication. This way, you can prevent multi-car collisions by giving information such as your accident with another vehicle in front of you to the car behind you. The traffic accident rate may decrease dramatically thanks to this.
IoT can cover such a broad range of industries, but so far is centered on smart grid and home automation. Up to now, many companies were only observing the market and conducting research instead of actively taking part in the market because of problems such as standardization issues and the lack of terminals. However, electronics and communication companies are showing an interest in getting involved in the home device market as well as chip manufacturers, which are developing the industrial IoT market aggressively by securing the platform.
Why Collaboration is Important for IoT
It is crucial to build a system that works collaboratively between industries for the success of IoT. One of the best examples of this is SK Telecom’s ‘T-Car’, a remote vehicle management system which ignored the importance of such collaboration. SK Telecom, a Korean Mobile Communication Company, came up with this without consulting any automobile companies. Major auto brands such as Hyundai and Kia as well as insurance companies announced that they will not provide warranty repairs to vehicles using the T-Car service since it is considered a type of illegal remodeling.
On the other hand, Apple’s ‘CarPlay’ is known to understand the significance of collaboration between different industries. Since the very beginning of CarPlay’s development, Apple built partnerships with other auto companies. Right now, they are partnered with 18 auto brands including BMW, Benz, Ford, and Toyota, with some of these companies planning to release their new products within the year.
It seems pretty clear that the success of the IoT market depends on collaborations not only among value chain companies in the industries, but also among network and terminal providers, and platform/service companies. Of course, the most important part to remember before all this would be if there is, or how much value is produced by connecting certain objects to such a network.
In the next posting, I will introduce you to two types of devices that belong to IoT, Wearable devices and home gate servers.
Written by Young-Ju Kim, Deputy Department Head at LG CNS / LG CNS Smart Blogger