Decoding the opportunities and challenges for entrepreneurs in IoT
“In the next century, Planet Earth will don an electronic skin. It will use the Internet as a scaffold to support and transmit its sensations.” – Neil Gross, 1999
It was predicted that the Internet of Things would transform the way we live, work, and play, and enable new interactions between humans and machines.
IoT is also called the ‘Internet of Everything’ (IoE) by CISCO, the ‘Industrial Internet’ by GE, and the ‘Smart Planet’ by IBM.
Most of the people also call this Industrial Revolution 3.0, as IoT is emerging as the third wave in the development of the Internet. The Internet wave of the 1990s connected a billion users while the mobile wave of the 2000s connected another two billion.
So what do we mean by the Internet of Things? Often when we think of the Internet of Things, we focus on the ‘things’, and then we focus on connectivity. That was the original idea when people coined the term IoT about 20 years ago. But what’s really important here is not just the fact that we have things, and these things produce data which we can then run all sorts of analytics on – like Machine Learning, Deep Learning, and so forth – to gather insights. Then we can bring a variety of these insights and data streams together and process them together for machine-to-machine (M2M) interaction, or give it to people to make better and more informed decision making.
Thus, IoT is much more than things and connectivity. It digitizes physical assets – sensors, devices, machines, gateways, and the network. It connects people to things and things to things in real-time. I think that’s where this whole aspect and this whole ecosystem coming together makes it extremely interesting. This data opens opportunities for significant value creation and revenue generation.
Speaking of opportunity, just how big is the opportunity presented by IoT? Let’s go through some numbers first. The IoT market in India is expected to grow significantly, with the number of connected devices expected to grow about 32 times to 1.9 billion and revenue expected to grow around seven times to USD 9 billion by 2020.
IoT is seeing exponential growth, and almost every industry and vertical is trying to understand how best they can capitalize on the advantages that it offers. According to a research report published by Forrester, one in five firms globally have already adopted IoT, which constitutes about 19 per cent of the total number of firms. It also states that another 28 percent are planning to deploy it in the near future.
Speaking of India, there is a lot of buzz around IoT. In fact, IoT is an intrinsic part of many innovations and business success stories across sectors. NASSCOM expects the industry share of the IoT market to be 60 percent, with 40 percent for the consumer market. Application vendors are expected to garner 50 percent share of the India IoT market by 2020, followed by system integrators (20 percent), network operators (20 percent), and hardware vendors (10 percent).
Driving this excitement and development are the government and industry, especially startups. The country has witnessed the growth of IoT startups working on solutions in diverse areas. Six industries which are defining larger opportunities for entrepreneurs in this segment, in India, include healthcare, manufacturing, energy, transportation, cities, and retail.
Whether hardware, software, or services, a whole new set of values needs to be added. There are likely to be more vertical solutions. It is not going to be just a horizontal platform – each vertical and specific industry will see value-add.
You are either selling in order to create ability to increase revenue or to reduce cost. As an entrepreneur, one thing that needs to be kept in mind is that you are selling to business units. It is not just a traditional IT sale. It’s about the industry, the vertical, and the value that you generate, and ultimately it’s about the cost you save.
Another major opportunity for all of us is data analytics. Due to the increase in the number of connected devices, there is an explosion of data and there will be a huge demand to analyze the same. We are developing technology which can analyze usage patterns on a real-time basis and prepare personalized campaigns that potentially increase revenue per user.
With opportunities always will come their respective challenges. But I believe IoT brings more business opportunities as well.
32 percent of IT leaders cite security as one of the top barriers to IoT success, according to Gartner’s 2016 IoT Backbone Survey. Think of all the devices being connected – if something goes wrong, like a malware attack, it could be a complete nightmare.
Security is a big umbrella field, but we need to focus on three key aspects. The first one is authorization, i.e., when I send or receive the data stream, the device has the authorization to receive or send all that stream of data. The second one is that when you want your network to deal with something more important which is open ported, you do not want to have your devices connected with open ports and then connected to the internet as well. This is a big issue as you are never going to protect the device if it’s listening to an open port. The third area of security that we should be concerned about is encryption. The data needs to be encrypted end-to-end.
One of the important challenges IoT will bring along with the advantages will be cybercrime. Imagine a smart refrigerator being hacked and sending malicious emails. This has huge potential to give rise to a new era of cybercrime. British newspaper The Guardian has even gone on to say that IoT is the new “magic ingredient” for cybercriminals.
Some of the other important challenges for IoT entrepreneurs in India will be:
- Availability of hardware at a low price: 65 percent of India’s hardware is imported, at a cost estimated to be the same size as India’s petroleum imports. It is embarrassing that for a supposed IT superpower, many of India’s hardware components in the burgeoning cellphone assembly industry are imported from China or Taiwan, and that tests of locally developed hardware components often have to be done in the US, Europe, or China. If IoT has to take off as an entire sector, India needs to get its hardware act together.
- In IoT, data available will likely be greater than the available bandwidth. The large volume of information fetched from multiple sources, and then taking action on it in real time, is going to be a huge challenge.
- Power consumption
- In addition to the usual suspects above, the unique needs of the Indian environment will have to be factored in, such as extreme temperatures, high levels of humidity and dust, erratic power supply, and spotty telecom coverage.
The other challenge that I have personally experienced amongst startup founders is to validate and navigate the five-phase path – from idea to PoC to prototype to product to mass market.
In conclusion, I feel safe in saying that one company will not make a difference. The entire ecosystem needs to work together – startups, new companies, established companies, and so on and so forth.
Jaimin Shah is MD and CEO at DEV Information Technology Ltd and Chairman of the NASSCOM Domestic Council.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)