Category Archives: IoT

Is IoT All Win-win?

A recent Freakonomics podcast got me thinking about the creative destructive potential of the Internet of things. Thinking simply, there are three reasons business will embark on IoT projects: save money, make money, and help with regulatory requirements.

If you think about the potential of those, they sound great. The creative efforts there don’t seem obviously destructive for many use cases because we’re adding sensors and collecting data in places we just didn’t watch before. It sounds like a story with no losers because efficiency is an all upside conversion, right?

As I thought about it, I realized it’s not that simple. Here is an example.

If you’ve every been to a wine bar, you’ll know they sell wine by the glass and by the bottle. The wines at a wine bar are higher-end than a typical bar, so when they open a bottle to give a customer one glass, they are taking the risk that they may not be able to sell every glass in that bottle. There are tons of varieties and once opened the bottle only stays fresh and sell-able for so long. This can create a large and expensive waste of wine.

What if new IoT corks with sensors in them could track the quality of the wine and time since each bottle has been opened? The wine bar owner could then have a daily report of what is available and offer specials on opened wine they need to sell to get the most out of the bottles they have already opened.

It sounds all win-win, right? Customers get a daily special, the owner wastes less wine.

But this probably results in the wine bar owner buying less wine because they are wasting less. That’s where the savings comes from. So the wine sellers are likely to sell less wine over time because in the current system, the amount they sell includes the wasted wine.

Like the piano makers at the turn of the last century, it seems there are few acts of creative destruction that can be purely, or even mostly, win-win. In the past, these disruptions have always led to more and better opportunity. Depending on your view, this may still be the case with the internet revolution in general. In the IoT business specifically, at least in the near term, the huge amount of work to implement and get the full value from the new data should offset the losses from the creative destruction. The longer-term impact is much less clear.

 

IoT and Network Neutrality

In all of the news around the FCC’s net neutrality deliberations, I haven’t seen much discussion around what the network means to the future of the Internet of Things (IoT). The focus for now is on the current users of the majority of the internet bandwidth, Netflix and other video providers, and rightfully so. Compared to video streaming, the simple messages passed back and forth to network connected devices are an order of magnitude smaller. So why discuss network neutrality in the context of IoT?

As IoT technologies expand into industry, companies will rely more and more on the real-time data points from throughout their infrastructure. This data will become essential to understanding what is happening at any given time, so all of those IoT messages and what they tell the business will become valuable. As more things are monitored, the number of devices and volume of data from those devices will also increase.

At some point will these messages get important enough that businesses will pay for better networks and higher delivery rates?┬áThe answer is yes, and the solution at that point will be private networks that the business controls, because it will be worthwhile to do so. Companies like the France-based Sigfox are already building alternate networks to serve these needs in some parts of the ecosystem. But even these offerings will rely on the open internet to ultimately get data to a customer’s servers.

The open internet needs to remain open for us to get to that point. Consumer services and entry level devices and services for small businesses need to run well enough on the open internet for users to get value and for the IoT ecosystem to develop without being crippled by potential network taxes. Even large companies need to be able to focus on deploying new IoT infrastructure without worrying about whether their real-time data is really as close to real time as they need it to be.

ISPs, as network experts, need to see this for the opportunity it is. As network use expands, the pie of users gets bigger, which increases the opportunity for them. Setting up limits on networks will only slow development of IoT and hobble the growth the ISPs can tap into, ultimately leading to less profit going forward.

The network neutrality debate may become a huge factor for the development of IoT in addition to all the other areas it will impact. For the sake of the amazing potential of this new platform, networks need to remain ubiquitous, stable, and neutral. There are plenty of other parts of the IoT system we do need to figure out without spending time on the parts that are already solved.