To make money from IoT buy into a law firm

27 Jul 2015

As featured in DisruptiveViews

I had the great honour of being part of an expert panel at Mobile World Congress in Shanghai earlier this month discussing the pros and cons of M2M, IoT and big data – and all that in just ninety minutes!

In keeping with the current optimism around all three topics, moderator Godfrey Chua, from Machina Research; David Yuan from Ericsson; Kangrim Choi from Korea Telecom and Alfred Boediman from Samsung all gave very positive outlooks for the future in their introductory presentations. It was left to me, at the tail end, to shed a little darkness on the show by pointing out where it might all go wrong and not bring the revenue salvation network operators are being led to believe.

Massive amounts of small data

Whilst there is no doubt that IoT will generate massive amounts of ‘small data’ that will traverse networks around the globe, there is no guarantee that operators will benefit unless they are integral in managing that data or adding value to it. Most IoT devices will connect directly to a home management system, app or smartphone and the data will simply be part of the package the subscriber of these services has.

Corporations may wish to arrange special deals for M2M rollouts like smart meters, monitoring sensors and surveillance cameras, but this will amount to a small percentage of the projected connected device traffic the analysts are predicting.

I highlighted that we are currently going through the ‘Internet of Silly Things’ stage where a new and often useless IoT device is invented daily and will likely disappear as quickly as it appeared. But there will be a plethora of perfectly sensible ‘things’ that will take hold, especially around home management, energy controls, connected cars and personal health and monitoring. Knowing which to invest in will be quite a skill.

Those selling the devices will realise the first tranche of revenue and if the device comes with an ongoing data collection and presentation app, they will also see some recurring revenue. For them, the simplest and cheapest option is to connect to the user’s smartphone or home broadband and avoid incurring any network charges.

Unless the networks are the distributors of these ‘things’ or have equity in the companies that produce them, they will not benefit in any way. However, they could offer to provide cloud services that collate and process the data. All that ‘small’ data will soon become big data and CSPs keep talking up how good they are utilising it so maybe they could sell that skill on.

‘Crude oil’ needs refining

Data has been referred to as the new ‘crude oil’ and it is only after it is processed or refined that it gains maximum value. For many IoT providers it is the selling of this refined data that is seen as the big money spinner.

Of course, once we start talking about private or personal data being ‘processed’ we start to delve in the dark world of regulation, and you can guarantee that it won’t be long before governments and regulators start to get really interested. It may be legally binding for IoT and app providers to get people to commit to unwieldy terms and conditions (that nobody ever reads) but it will only take one very public court case or class action by disgruntled customers to change forever the way data can be handled.

Of course, things will escalate very quickly if that data falls into the wrong hands. Security may be another area that operators could add some value, but will it be worth the risk and will they be held responsible if the data they are protecting is hacked?

So it seems, from my point of view at least, the only sector that looks like it could make a lot of money out of M2M, IoT and big data will be the lawyers. Unless network operators have plans to invest in a big law firm they might just miss out on all that massive revenue the analysts are predicting for the sector.

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