Testing as a Service (TaaS) _ Utthunga.docx (10).pdf
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1. Embedding success in your business www.avnet-emb.eu
âThe year of the Internet of Thingsâ - this is how many
commentators are now describing 2014, and with good
reason. The number of internet-connected devices
that are not smartphones, tablets or computers has
skyrocketed in recent times.
According to opinion from Silicon Labs, for
example, PCs were the first 100-million-unit-
per-year market in the electronics industry
- but the IoT is poised to become the first
computing market to reach 10 billion units per
year.
Gartner have extrapolated this several
steps further, predicting 26 billion internet-
connected devices (again, excluding PCs,
tablets and smartphones) by 2020.
But there is a caveat. As Gartner have also noted, this
predicted growth in the Internet of Things is âpredicated
upon device manufacturers investing in innovation in
this area, and their ability to realize a meaningful return
on investment.â
So will we see device manufacturers (often OEMs, in our
parlance) expanding their hardware production to embrace
intelligent coffee machines, fridges, engines, and all the other
paraphernalia of the populist vision of the IoT, or are there other
IoT-related opportunities that they should be focusing on?
As ever, the answer to the question is complex.
Nick Donaldson, Director, Software, EMEA - Avnet Embedded nick.donaldson@avnet-embedded.eu
Introduction
Firstly, let us consider one potentially huge barrier to
the widespread propagation of the IoT â the fact that
every âthingâ (device) âspeaksâ a different language, and
therefore communicates online in a different way.
This confusion creates significant challenges for OEMs and
other partners who wish to benefit from the (hardware)
opportunities offered by the IoT. Applications have to be
device-specific, meaning that developers have to have
knowledge of multiple device languages if they want to
build applications for multiple devices.
In reality, what this means is that OEMs need to pay for
more developers (the EU application developer workforce is
projected by GIGAOM to reach 4.8 million by 2020!)
And since the type of device is very often specific to a
limited number of market sectors, or even just one, this
lack of a unifying IoT device âtranslatorâ means that OEMs
canât go after revenue opportunities in new markets without
hiring new developers each time. As expansion goes, itâs a
rather unscalable option.
The babble of the IoT
âDo OEMs Dream of Intelligent Coffee Machines?â
Why OEMs Need A New Approach to the Internet of Things
2. Happily, the IoT market is showing signs of emerging from
this rut, thanks to some recent innovations. One company,
for example, DQuid, has shown how it is possible to create
a universal IoT âtranslatorâ - a small module that can be
fitted to practically any electrical object to transform it into
an IoT-capable device.
Clearly, the future for a technology like this â and the OEMs
who could use it to break into new product markets â is
potentially immense. But the ramifications go deeper even
than that: the ability to create one common IoT âtongueâ
means that one developer can now build applications for
multiple IoT-connected devices.
Using fewer developers, and at lower cost, an IoT
âecosystemâ can be built that enables OEMs to rapidly âIoT-
iseâ and resell any kind of device in any kind of market.
Whatever markets OEMs currently focus on â from digital
signage, to automotive, to biometrics, and surveillance,
to healthcare, and everything else before, after and in
between â they should be looking long and hard at the new
opportunities to diversify their portfolio that the burgeoning
IoT ecosystem brings.
The emergence of an IoT ecosystem
Yet despite these undeniably exciting developments, the
consensus that comes through strongest in all the market
research and commentary that Iâve read is this: in the
words of Laurie Wurster, Gartnerâs Research Director:
â...the hyper-growth of IoT will require a rethinking
of manufacturersâ underlying business models...IoT
transforms all hardware and appliance OEMs into software
providers.â
What exactly does she mean by this? She continues:
âLicensing and entitlement management technology
provides the locking capabilities that enable manufacturers
to protect and monetize the embedded software IP running
on connected intelligent devices.â
In other words, what the IoT seemingly makes possible is
a fundamental switch in many OEMsâ value proposition.
Historically, end-user utility resided principally in the
products that the OEMs built â the enabling software within
them, however fundamental to the successful functioning
of the product, was a secondary play. At best, it was a
source of recurring licensing revenue to complement the
one-off ticket price of the product itself.
Cue a complete reversal in the gameplan. In the IoT
universe, products are no longer necessarily complex items
of hardware for which a big ticket price can be charged.
Indeed, as I have discussed above, they may simply be
domestic electricals, fitted with a DQuid IoT-enabling
module or similar, and sold on.
Big-ticket hardware items will continue to be in demand,
of course, but if OEMs really want to capitalise on the IoT
at both ends of the market and all points in between, they
need to be looking to new ways to sell the value in the
software that links the device to the IoT, rather than in the
physical device itself.
Or, as Wurster puts it: âDevice manufacturers faced
with increasing global competitive pressure to reduce
manufacturing costs that produce thinner margins can
leverage the value created with Internet-connected
products to increase revenue. However, to secure additional
revenue, manufacturers need to recognize the role
embedded software and/or software applications play in
the IoT, and monetize this value.â
âSimilar to the traditional software industry, device
manufacturers need to protect the intellectual property
contained in applications and monetize it through the
adoption of licensing and entitlement management
systems that control access to the Internet-connected
device, its functions and features.â
In short, the IoT is going to force OEMs to be less about
building hardware that contains software, and more
about reaping the fruits of the software that runs on
the hardware! Potentially, any action that that software
performs, any data it generates or stores, any analytics that
it can be used to produce, are all chargeable services.
Incorporate these into a managed service/cloud-type
model, where those services are 100% controllable and
therefore 100% monetisable by the OEM, and itâs not
difficult to see why hardware is now arguably a passenger,
even if itâs not quite been relegated to the back seat.
From hard to soft: change is afoot
âDevice manufacturers faced with increasing global competitive pressure to reduce manufacturing
costs that produce thinner margins can leverage the value created with Internet-connected products
to increase revenue. However, to secure additional revenue, manufacturers need to recognize the
role embedded software and/or software applications play in the IoT, and monetize this value.ââ
- Laurie Wurster, Research Director, Gartner.
