Not-so-unpopular opinion: the Internet of Things is not a self-sustainable business.
There, I said.
After almost a decade of brainstorming, whiteboard-sketching, innovating, iterating, pivoting over creative business models, we can finally solve this puzzle by admitting that the Internet of Things, in fact, is not a money-maker.
I am a technologist, and I firmly believe that there is a place for every technology, as long as there is a strong demand for it. I learned throughout my career, that "pushing technologies" is not always the smart move; on the contrary, learning what the end user needs ("market pull") is a better way to guarantee your success.
But do not take my word for it, let's see what happened in the IT world over the past few years.
Here is an interesting timeline:
* August 2022 - Google Cloud will shutter its IoT Core service next year ([https://techcrunch.com/2022/08/17/google-cloud-will-shutter-its-iot-core-service-next-year/](https://techcrunch.com/2022/08/17/google-cloud-will-shutter-its-iot-core-service-next-year/)) and ([https://financesonline.com/news/google-cloud-iot-core-is-being-retired-tech-giant-to-focus-on-core-cloud-business/](https://financesonline.com/news/google-cloud-iot-core-is-being-retired-tech-giant-to-focus-on-core-cloud-business/)) * October 2022 - SAP IoT Retirement and SAP Asset Performance Management ([https://blogs.sap.com/2022/10/05/sap-iot-retirement-and-sap-asset-performance-management/](https://blogs.sap.com/2022/10/05/sap-iot-retirement-and-sap-asset-performance-management/)) * November 2022 - IBM is retiring its Watson IoT cloud management platform ([https://www.techradar.com/news/ibm-is-retiring-its-watson-iot-cloud-management-platform](https://www.techradar.com/news/ibm-is-retiring-its-watson-iot-cloud-management-platform)) and ([https://www.theregister.com/2022/11/15/ibm_set_to_retire_watson/](https://www.theregister.com/2022/11/15/ibm_set_to_retire_watson/)) * March 2023 - Latest Microsoft Layoff Wave Hits Supply Chain, Cloud, IoT Employees ([https://www.crn.com/news/cloud/latest-microsoft-layoff-wave-hits-supply-chain-cloud-iot-employees](https://www.crn.com/news/cloud/latest-microsoft-layoff-wave-hits-supply-chain-cloud-iot-employees)) and ([https://economictimes.indiatimes.com/tech/technology/microsofts-3rd-layoff-round-hits-employees-in-supply-chain-cloud-iot-biz/articleshow/98560001.cms?from=mdr](https://economictimes.indiatimes.com/tech/technology/microsofts-3rd-layoff-round-hits-employees-in-supply-chain-cloud-iot-biz/articleshow/98560001.cms?from=mdr)) * March 2023 - Ericsson announces closing of the transfer of IoT Accelerator and Connected Vehicle Cloud businesses to Aeris ([https://www.ericsson.com/en/news/2023/3/ericsson-announces-closing-of-the-transfer-of-iot-accelerator-and-connected-vehicle-cloud-businesses-to-aeris](https://www.ericsson.com/en/news/2023/3/ericsson-announces-closing-of-the-transfer-of-iot-accelerator-and-connected-vehicle-cloud-businesses-to-aeris)) * April 2023 - Twilio Sells Its IoT Business Unit to Kore ([https://www.cxtoday.com/data-analytics/twilio-sells-its-iot-business-unit-to-kore/](https://www.cxtoday.com/data-analytics/twilio-sells-its-iot-business-unit-to-kore/))
Already in 2018 we received the first signals that the ship was sinking, as both Samsung ([https://www.businesskorea.co.kr/news/articleView.html?idxno=27384](https://www.businesskorea.co.kr/news/articleView.html?idxno=27384)) and Blackberry ([https://www.forbes.com/sites/joecornell/2023/10/11/blackberry-to-carve-out-its-iot-business-via-ipo-in-1h24/?sh=764fc3145cee](https://www.forbes.com/sites/joecornell/2023/10/11/blackberry-to-carve-out-its-iot-business-via-ipo-in-1h24/?sh=764fc3145cee)) were already busy shutting down or off loading their IoT businesses.
But I thought the number of IoT devices was dramatically increasing!
Even though the facts speak loud and clear, we were all told that the number of IoT devices was exponentially increasing, year over year; and in fact it is, all market analysis corroborate it.
Number of wide-area and short-range IoT devices worldwide from 2014 to 2027 (in millions)
So why is this not driving revenues? Why so many cuts?
The answer is more complex that it seems. So far we have looked at very large IT companies, whose core business relies somewhere else and IoT is merely a drop in the bucket all things considered. Google main business is ads and data harvesting, Microsoft is a giant of computing broadly speaking, from laptops to cloud, IBM is a leader in AI and ML. These companies tried hard to make things work, but in the end they are still corporations and economics are more important that technical solution in the end.
To me, after almost a decade in the space, the biggest obstacles in running a successful IoT business are:
* Very low incremental revenues versus (potentially) high incremental costs; end users expects to pay less with more IoT devices connected, even though the data volume exchanged could significantly increase * Specific devices in specific applications require specific implementations; considering the environmental factors, there are a plethora of use case that require ad-hoc hardware constrains (casing, IP rating, battery life, etc...) making a generic IoT business too project-based and therefore non-viable * Data connectivity; relying on a stable stream of data is essential for every application, for consumer applications it is possible to rely on common protocols, such as Wi-Fi or Bluetooth, but for more industrial applications these might not be available at all * Additional hardware required; in some cases a data gateway or edge device is necessary to reliably connect and buffer data, adding additional efforts for maintaining (and securing) said device * Cybersecurity; still a very hot topic. Too many IoT devices are programmed and installed using poor security practices. Try going on Shodan ([https://www.shodan.io](https://www.shodan.io)) and have fun browsing random IoT devices from all over the world, you'll be surprised.
This is not a post-mortem analysis of the Internet of Things, do not get me wrong. I believe IoT is a great technology and it is here to stay.
What is absolutely clear, to conclude, is that IoT is an enabler, rather than a stand-alone technology.
One needs to have wearable devices to gather vital measurements; someone else could build a business on top of that by analyzing heart beats and daily steps. Your washing machine should be internet enabled, so that other businesses can flourish and design business models to offer repair services or even cleaning product refill services to their end users. Our cars are computers on wheels (software-defined-vehicles) and the data they produce will tell our driving habits, help us in case of an emergency, schedule a service appointment automatically for us, and much more.
In conclusion, the transformation in the strategies of large IT companies regarding IoT underscores the critical importance of viewing IoT as a facilitator rather than a standalone revenue stream. The lessons learned from the manufacturing sector's experience with industrial IoT emphasize the need for a holistic approach that integrates IoT into broader digital business initiatives. As the industry evolves, companies must navigate the challenges of accumulating data wisely to extract real value from their IoT investments.