Today we visit with Dilip Sarangan, Principal Analyst for the Internet of Things (IoT) at Frost & Sullivan. In this interview Dilip introduces Frost & Sullivan’s IoT 2.0: Predictive Computing Practice, discusses what people may not know about Frost & Sullivan’s IoT coverage, highlights some key industry trends, and identifies a variety of growth opportunities.
“The Internet of Things is not new at Frost & Sullivan. We track the applications for IoT in a variety of vertical markets, and have done so for decades, helping clients identify viable growth opportunities.” – Dilip Sarangan, Principal Analyst, IoT, Frost & Sullivan
What is your role at Frost & Sullivan?
My role within Frost & Sullivan is to coordinate the research and consulting services for our unified Internet of Things program. In its 50 years in the business, Frost & Sullivan has covered most of the applications that now roll up into IoT. This is outlined in the image below.
In this new role, my responsibility is to consolidate this coverage under the IoT umbrella and synthesize it for an IT and Telco audience. This means addition of a layer of analysis that makes this great data available and relevant to IT and telecom vendors and service providers which will drive the growth of IoT over the next few years.
How do you distinguish between Machine-to-Machine (M2M) and Internet of things (IoT)?
M2M is about connectivity and connecting devices to the network. IoT is basically M2M 2.0—it is about creating the ecosystem to provide security, storage, the cloud, and data analytics to transform the data collected by devices into actionable intelligence. The graphic below shows a representation of how we define and differentiate M2M and IoT.
Who are your customers and what do they come to you for?
Our primary target audiences for the IoT program are large IT companies, Telcos, vendors, and service providers that develop solutions for IoT and are looking to partner with a large research firm that can develop the actionable intelligence needed to aid them in exceeding their growth objectives. In addition, we work with a large number of companies that are focused on solutions that may fall into one or more vertical markets for IoT.
Frost & Sullivan has many teams of analysts who are considered experts in their respective vertical markets or application areas. For instance, we have Sarwant Singh, who leads our global automotive practice and is one of the leading voices in the automotive sector. For healthcare, we have Daniel Ruppar who runs medical devices and mHealth research services. For industrial IoT, we have Sathyajit Rao who is considered one of the leading experts in industrial research and consulting. Our goal is to capitalize on this in-house expertise to help our customers identify near-term and long-term opportunities in IoT and help them develop strategies to achieve their objectives.
Our core IoT team is led by Vikrant Gandhi and me in North America, Sheridan Nye in Europe, Jayme Faria in Latin America, and Marc Einstein and Mark Koh in Asia-Pacific.
What differentiates Frost & Sullivan?
We find that there are quite a few factors that differentiate us from competitors:
- Our focus on growth: All services are aligned with growth to help clients develop and implement innovative growth strategies.
- Industry coverage: When it comes to IoT, our coverage not only has the vertical market aspect (which includes covering applications by vertical), but also the horizontal coverage of the industry ecosystem, technologies, cross-vertical platforms, different types of connectivity, and so on. This is unique because our competitors either cover specific verticals or applications, or they cover the horizontal vendor landscape, but not both.
- Global footprint: In all the markets that we cover, we take a hands-on, boots-on-the-ground approach. We have teams of people in each continent that are focused on their markets and applications and conduct primary interviews with end users, vendors, and service providers (in the local language, if needed). This helps set us apart from some of our competitors and provides our customers with the right narrative to achieve their growth objectives.
How do you segment your research?
Our coverage of IoT includes both a vertical approach and a horizontal approach. In both cases, we use primary research with customers, vendors, and service providers as the major source for data and information. The graphic below represents all the elements of our IoT program and how we work with our vertical market teams to pull together specific use cases in the Internet of Things.
Our vertical coverage includes data from various segments: automotive, industrial automation and process control, security and surveillance, connected consumer services, energy and environment, building technologies, healthcare, defense, and smart cities.
Our horizontal coverage provides a detailed analysis of IoT ecosystems, partners, platforms, connectivity, cloud, Big Data analytics, and so on. We also use Frost & Sullivan’s Mega Trends to provide relevance to why some of these IoT technologies have the growth trajectory they do by incorporating macro-level economic and social trends that have an impact on enterprise and residential customers.
What does the everyday person need to understand about the IoT?
While everyone thinks of IoT as connected devices, that is not always the case. With these devices being connected, enterprises must understand that people and processes are a vital part of what must be connected to really provide value and help achieve the typical goals or reducing operating costs, generating revenues, or improving organizational efficiencies.
From a consumer standpoint, they must really understand the difference between connecting devices to the Internet and the need to connect devices to the Internet. Not all devices need to be connected. There are significant privacy and security concerns with IoT today and consumers must really analyze the impact of putting private information online and tread that fine balance between convenience and security.
What are the biggest challenges that you are seeing in the IoT/M2M space?
Based on our research, there are some areas that are particularly troubling:
- Security and Privacy: Security is the biggest concern for all IoT applications. One of the factors that must be considered is the difference between security and convenience. IoT solutions (this is especially true for consumers) provide a large degree of convenience. However, at some point, security must be compromised to achieve convenience. What every manager or user must evaluate even before undertaking an IoT project is where is that line in the sand for me? At what point will enterprises and consumers give up convenience for better security? Until that question is answered, IoT will continue to suffer from being overly hyped.
- Cost: For enterprises, bringing all these disparate devices, processes, and people together to be managed with a central system that provides a 360 degree view of an organization, will not be cheap. In a lot of cases, it might require a complete overhaul of existing systems and retraining users on new systems. The costs can be to the tune of millions of dollars. This large upfront investment is hard for any organization to swallow. In addition, technology is evolving so rapidly now that a system that might work best today may be obsolete in a couple of years. Organizations must strategize on future needs and build the solution that will serve them best for the long term.
What are the biggest successes you have seen in the IoT /M2M market to date?
IoT applications that have been around for a long time have been the most successful till date. In my opinion, fleet management and asset tracking and monitoring are applications that have helped enterprises save money and increase efficiency. In addition, the industrial segment provides the most opportunity for IoT in the short term. This includes factory automation but also other industrial-type solutions such as oil and gas pipeline monitoring, tracking and monitoring at ports, agriculture, and so on.
From a consumer standpoint, the alarm monitoring industry has seen great success over the past 15 years. New market entrants aid in increased competition that will stimulate innovation and possibly make the vision for smart homes a reality in the next few years.
I think that the technology is now available to make the vision of IoT a reality. However, we are caught in the cycle of the “chicken or the egg”. We need the scale to reduce device costs but the cost is too high to increase the demand. At this point, it might be wiser for system integrators and service providers to take a hit on hardware costs to put the solution in that will help with long-term growth.
What are the biggest growth opportunities?
Within IoT, there are opportunities at every level of the ecosystem and within many vertical markets. For instance, in connected home, the real opportunity is not in connecting elements or hardware, but in the value-added monitoring capabilities and integration of the home with the vehicle. Just as with that example, IoT is really blurring the lines between vertical markets.
Take Oil and Gas (O&G) as an example. In the past, O&G vendors were interested in opportunities in upstream, downstream, and midstream. Now, integrated O&G vendors own gas stations and need to collect data from gas pumps, retail systems such as Point-of-sale (PoS) systems, digital signage, and so on. In addition, oil companies must understand the data collected by utilities about their residential and commercial customers, their energy usage, uptimes, downtimes, and so on.
Connecting billions of devices and sensors generates a large amount of data. Analyzing and creating intelligence from this data (and learning from it) will create growth opportunities for IoT service providers and their ecosystem partners.
What has been the biggest surprise about this market?
One of the biggest surprises in the market is that people think that the Internet of Things is a new concept. The term may be new but modern IoT is a variation of the IBM Smarter Planet concept that has been around for the past decade. Even the applications such as alarm monitoring, surveillance, fleet management, and others that now rollup into IoT have been around for the past 2 decades. IoT is not that dissimilar to the industry convergence that has been covered by Frost &- Sullivan for the past decade and it will remain at the forefront for many years as enterprises, vendors and service providers figure out new ways to integrate disparate and proprietary solutions.
In your opinion, what is the best way to catch your attention?
Well the best way to catch my attention on any new product or solution is with use cases. There are a lot of “cool” products out there. However, many of those are not likely succeed because they do not solve a real-world challenge. I am always interested in learning about solutions that solve a real business or societal need. For instance, I am not really a huge fan of smart watches. To me they do not solve a real need. Laziness is not a real need. I do not need a watch to vibrate every few seconds for emails and social media notifications. I have a phone that already does that. I would rather use a fitness band that tells me how much I have walked today or what my activity levels have been than use a smart watch.
From an enterprise viewpoint, show me the use cases of why your technology is better at solving real business challenges than what your competitors offer. There are many vendors that provide the same solution. The key to success is differentiation and that is what attracts my attention the fastest.
What are some of the topics that the IoT team at Frost & Sullivan plans to cover?
Some of the key areas we plan to cover include:
- IoT Ecosystem Strategies: Business Models and Vertical Disruptors
- M2M Outlook: Europe and North America
- IoT Connectivity: The Emergence of Low Power Wide Area Network (LPWAN)
- Quarterly Executive Brief: Top Trends and Strategic Recommendations (x2)
- Vendor Landscape: Securing the IoT
- Market Forecast 2015–2020
- IoT in the Home
- IoT Ecosystem Strategies: Platform Economics
- Vendor Landscape: Cloud and Application Enablement
- Vendor Landscape: Device Hardware
- Vendor Landscape: Connecting the IoT
- Vendor Landscape: Business-2-Consumer and Wearables
What are some of the ‘companies to watch’ in IoT and why?
Some of the leaders in IoT include some companies that you would expect:
- Connectivity Vendors
- Cellular Service Providers: AT&T, Verizon, Vodafone, Telefonica, Deutsche Telekom, Orange, and so on.
- Satellite Service Providers: Orbcomm, Inmarsat, Iridium, Globecomm
- Low Power Wide Area Network Providers: Weightless, LoRa Alliance, Sigfox
- Cloud Providers
- Amazon Web Services, Microsoft Azure, IBM
- Storage and Data Analytics
- IBM, Dell, HP Enterprise, Cloudera, Splunk
- Hardware and Software
- Honeywell, General Electric, Bosch, Cradlepoint, Philips, Siemens, and so on.
IoT is an evolving market, with new entrants in the ecosystem every day. To survive and thrive in this industry, companies must focus on enhancing their core areas of expertise and forging partnerships in areas where better solutions exist. Without a thriving ecosystem and constant evolution, companies will be finding things difficult over the next few years.
