The IoT market matured considerably in 2017. In this series of predictions, we take a look at how the industry will continue to grow up next year, while also consolidating.
2015 was a year of education for IoT, where the enterprise sector learned what the technology could offer to their organization on a theoretical basis. In 2016, most companies began to get a sense of the tangible benefits the technology could provide them. This year was the year the IoT market — along with IoT projects scaled — often extending beyond the awareness of many workers. But what will 2018 hold for the technology? Next year, expect IoT technology to become both more common, but less obvious. The number of connected devices, as well as IoT-driven projects, will continue to expand, but the technology itself will begin to become something like electricity — technology professionals rely on for their own operations and service offerings, but don’t necessarily think about. Instead, expect buzzwords like “digital transformation” and “digitalization” that include IoT as a component to gain ground — driven by vendors and analysts, along with industry-specific terminology such as “smart manufacturing” and “precision agriculture.”
To get a sense of additional trends on the horizon for the IoT market next year, we reached out to several professionals and came up with a dozen predictions. We touched on a variety of trends, ranging from the likely consolidation of the IoT platform market to the rise of IoT-enabled services.
1. IoT markets will consolidate and grow more integrated
In 2017, the number of IoT platforms surged to more than 450. According to MachNation, IoT platform revenue increased 116 percent in 2017. It is likely, however, in the coming year, some of the smaller IoT platforms will begin to fall away or merge with rival platforms. This trend will likely be similar to the search engine market in the 1990s. The market doesn’t need hundreds of specialized platforms that are nevertheless similar in function.
It is doubtful the IoT market for platforms will consolidate to anywhere close to the extent of the search engine market given the wide variation of IoT deployments across a diverse set of industries, ranging from aviation to healthcare. It is probable that, in 2018, the number of IoT platforms could begin a steady slide southward, perhaps shrinking from 450 down to around 100 or so, said Nitesh Arora, marketing leader at Cloudleaf.
Successful platforms will tend to be generic for IoT deployments from large tech vendors that support custom deployments. There also will be a vital role for specialized IoT platform vendors targeting niche industries. But many industrial companies are looking for a single IoT platform they can use for asset tracking and management. Fragmented IoT platforms will thus fall by the wayside.
Dave McCarthy, director of products at Bsquare, forecasts a move away from platforms to IoT driven applications. “Businesses will continue to create use-case based applications that solve specific business problems to maximize IoT outcomes,” McCarthy said.
Consolidation and continued integration will also be prevalent in the consumer realm in 2018, as the public begins to deploy a growing number of connected devices, yet grows weary of having to install specific apps for each new device they purchase. There is already evidence of this trend as two companies — Amazon and Google — have emerged as leaders of the smart home market, prompting the majority of smart home companies to integrate with those companies’ respective voice assistant platforms.
Smart home companies unable to create recurring revenue models will fail, said Patrick Maloney, the CEO of Inspire. Despite substantial advances in the smart home space, the market will likely consolidate, given the crowded marketplace and lack of differentiation of smart home products. These factors make it difficult to maintain long-term growth, Maloney said. “The revenue models for most smart home products and devices are transactional, one-time purchases,” he said. “Unless you are Amazon or Google, creating predictable and capital-efficient revenue streams is not likely.”[IoT World demonstrates how the next generation of IoT will converge to unlock the intelligence of things in the industrial, enterprise and consumer realms. Get your ticket now.]
The top four smart home companies — Amazon, Apple, Google and Samsung — have all built an ecosystem of smart products, but they have all created selectively open ecosystems. “The resulting walled gardens often leaving consumers frustrated when they need to use three different apps to get products to communicate, or stop communicating,” said Patrick Maloney, the CEO of Inspire. “Consumers want convenience, not walled-garden products.” In 2018, Maloney says he expects to see ecosystems built around best-in-class products. “The companies that make them work well together will be the ones to succeed,” he said. “This will come from seamless technology integration, interoperability between hardware devices and automation that adjusts energy consuming devices. Making energy the constant in the smart home ecosystem will add new value in a way that is tangible to consumers.”
2. IoT-related privacy concerns will continue, but won’t slow adoption
2017 was a big year for the IoT sector with many consumers embracing technologies such as smart voice assistants. In 2018, expect the technology to continue to make inroads with consumers, which will also help pave the way for the technology’s deployment in the enterprise. This trend matters for industrial and enterprise companies because, as IoT deployments mature, the number of B2B2C IoT projects is increasing, as Ed Abrams, vice president, enterprise IoT at Samsung Electronics America stated.
Many consumers, as well as enterprise-level users of IoT technology, will remain wary of the data that connected devices collect, as well as their potential for security problems. Part of the reason for their concern is the overall uptick in cyber breaches in 2017, as well as a rise in reports of connected devices that surreptitiously spied on users. “There is still a lot of work to be done to confirm who legally owns what data and how it can be used,” said Dave McCarthy, director of products at Bsquare.
Consumer IoT paranoia, however, will not meaningfully constrain adoption as the benefits of IoT technology with respect to convenience and efficiency continue to grow more apparent. Consumers and governments, however, are likely to clash on consumer protection issues, said Ankur Laroia, strategic solutions leader at Alfresco. “Here in the U.S., while consumers may favor strong privacy regulations, the current administration and Congress do not appear to be on the same page,” he stated.
3. Technical barriers to IIoT will fade, but the talent gap will remain a hurdle
In the past several years, technical challenges and IT/OT integration are just some factors that held back IoT adoption. In the coming year, expect technical hurdles to fade. “Plug-and-play IoT will replace expensive, lengthy, super-technical installations that have inhibited adoption,” said Dave McCarthy, director of products at Bsquare. “There could be a reduction in data scientists as deployment is simplified.”
To some extent, IoT deployments could follow in the footsteps of the traditional internet, which began to scale with the introduction of Apache, Windows Networking and WYSIWYG website editors. The debut of plug-and-play IoT could have a similar effect, enabling organizations to extend IoT deployments beyond critical systems, McCarthy said. “Success will lead organizations to explore other areas IoT can help deliver better business outcomes,” he explained. “Most companies focused on their most mission-critical equipment as part of their first wave of adoption. As they gain confidence in their IoT solution, these companies are now looking to expand their capabilities deeper into that set of equipment or widening their deployment to include less critical assets.”
But for many IoT deployments, data scientists and security experts will remain indispensable. “Our board of director studies show that talent and culture are top challenges for all functional leaders including CIOs,” said Peter Sondergaard, executive vice president of research & advisory at Gartner Inc. in a keynote address at the Gartner Symposium in Barcelona. To get around the hurdle, many enterprise companies will be forced to consider non-traditional strategies such as hiring freelance data science and security talent in addition to deploying artificial intelligence and machine learning tools to help fill the gap.
4. 3G-driven IoT deployments will fade into obscurity
Cellular connectivity is an increasingly popular option in the IoT market, but in 2018, fewer IoT projects will rely on 3G connectivity amidst the shift to technologies such as 5G and Cat-M1. “2018 will be the year Cat-M1 gets to scale, with a series of deployments being announced by mobile operators worldwide,” said Dermot O’Shea, co-CEO of antenna designer Taoglas. Verizon, for example, now won’t allow devices to connect to anything but LTE, so any new deployments have to be LTE-based. It’s a safe bet LTE will become dominant for IoT deployments, reaching 5.5 billion subscriptions by the end of 2023, according to the Ericsson Mobility Report.
5. Industrial uses of AR technology will gain ground, but will remain immature
There are a growing number of companies testing the use of augmented reality tools such as the second iteration of Google Glass or the Microsoft Hololens for industrial and maintenance applications. Expect this trend to accelerate in 2018. “AR/VR will make its mark on IoT,” said McCarthy. “Whether using full virtual reality to simulate responses to conditions in the field or augmented reality to put more information in front of equipment operators, new ways of interacting with IoT data will emerge.”
While the possibilities are impressive, it could be years before such technologies become mainstream in industrial settings. For one thing, many industrial facilities lack pervasive high-speed wireless networking functionality, which can limit the functionality of sophisticated industrial AR systems. Complicating matters, VR and AR technology have been relatively slow to mature. The term “virtual reality” dates back to the 1980s, yet Gartner still sees the technology as being two to five years away from the “plateau of productivity” stage in its famed hype cycle model. Meanwhile, many AR-based projects for industrial applications are pilot programs.
6. Micro-location will be a star technology of 2018
In one respect, it is surprising that a technology like GPS — with a resolution of roughly 10 to 50 feet — could have such a dramatic impact on how we navigate. While GPS accuracy is improving to rival the positioning aspects of smartphones, highly precise location accuracy — down to the centimeter level — will be a breakthrough technology of 2018, said O’Shea. He says he anticipates “a wealth of new use cases that require low-latency, real-time applications.” Ultrawideband technologies deployment will help drive applications such as crowd and warehouse management and logistics. “Outdoors, GNSS antennas will take applications such as navigation, unmanned aerial vehicles (UAVs), surveying, precision agriculture and connected cars to the next level, and will provide automobile manufacturers the technology they need to drive the autonomous vehicle forward,” O’Shea says.
7. IoT deployments will scale thanks to increased networking automation
In 2017, a growing number of networking companies such as Cisco and Juniper Networks began to step up their marketing for automated networking tools such as software-defined networking, arguing that the tools could help their customers scale IoT initiatives. Expect this trend to gain momentum as the numbers of enterprise and industrial companies with hundreds, thousands or more connected devices increases, making managing them with traditional resources untenable.
8. Pushes for IoT regulation will continue as new data governance frameworks emerge
Despite the introduction of a U.S. Senate Bill intended to regulate the government’s use of connected technology, passing new legislation remains a considerable challenge in the United States. The climate is different in Europe, however, where EU’s General Data Protection Regulation (GDPR) is poised to go into effect on May 25. New data governance frameworks will emerge as a result of GDPR, as well as the rise of cryptocurrencies, predicts Hu Yoshida, chief technology officer of Hitachi Vantara. Whether new IoT-specific legislation is passed or not, Mike Bell, EVP IoT & Devices at Canonical, says “governments and other organizations will try to get ahead of this by preventing purchases of devices that do not come with built-in security strategies.”
Corey Nachreiner, CTO at WatchGuard Technologies has a similar take, predicting the problem of IoT botnets will pressure governments to regulate IoT device makers. “IoT device adoption continues to skyrocket, adding billions of new network endpoints every year,” he said. “Attackers continue to target these devices due to their weak or non-existent security, both in development and deployment.”
One consideration is that the source code for one of the biggest botnets in history, Mirai, is freely available on the internet, enabling attackers to modify and improve the code to launch fresh exploits. “For example, the Reaper botnet actively exploits common vulnerabilities in IoT devices to gain access to the devices instead of relying on a hard-coded credential list,” Nachreiner said. “As attacks continue to grow in effectiveness, the damage they cause will grow until the IoT manufacturing industry is incentivized or forced to add stronger security to their products. Be on the watch for a major IoT botnet attack in 2018 that finally causes governments to address IoT security.”
9. Enterprise companies will see security breaches as a cost of doing business—while stepping up their defenses
There has perhaps been no year where security incidents have been as widespread as in 2017. While the Equifax breach was the biggest breach of the year, it seemed that few organizations were spared, including the NSA and Deloitte, which itself has a security consulting business. “The old saying will be proven correct: The only two kinds of companies are those who have been breached and those who don’t yet know that they’ve been breached,” said Simon Jones, evangelist at Cedexis. “As the attack vectors in the shape of IoT devices proliferate, traditional defense mechanisms will fold like a deck of cards, and breaches will come thick and fast.” Despite the increasing numbers of security breaches, many enterprise companies continue to deploy IoT technology as a part of digital transformation efforts. As a result, a growing number of firms are beginning to anticipate that they will be targeted. A total of 54 percent of cybersecurity professionals expect their organization will suffer a successful attack in the next year, according to the Cyber Security Trends of 2017 Spotlight Report from Herjavec Group. “Data Breaches Will Increase in Frequency and Scope in 2018. The reality is that we can expect data breaches to only increase in frequency and scope in 2018,” Laroia said. As a result of the situation, Jones also anticipates an uptick in defense mechanisms that are specifically constructed to keep IoT devices out.
Mike Bell, EVP IoT & devices at Canonical says he expects industrial companies to take a cue from the consumer space by triggering a growing number of device updates to download automatically. The need to keep industrial IoT devices updated is tantamount, given they can easily remain in use for 10 years and sometimes longer. “The ability to keep these devices updated and secured over that time frame is critical, but many of them have weak security, weak password solutions, no way to patch or install OS updates,” Bell said. Unless the industrial realm ups its game, Bell expects two or three large-scale “botnet-style attacks on IoT-related hardware in 2018.”
10. Medical devices will emerge as a vulnerable hacking target
Not long ago, few medical devices would qualify as examples of the Internet of Things. Now, connected medical devices abound. There is also an uptick in medical data trafficking on the black market. Hackers are stepping up attacks on connected medical devices such as IV pumps, heart rate monitors and X-ray machines, said Xu Zou, CEO and co-founder, ZingBox. Zou predicts an uptick in cyberattacks on healthcare systems in 2018 that specifically target medical devices because many have paltry security while also opening the door to a larger network. The stakes are high: A successful attacker can disrupt and paralyze healthcare providers from offering critical care, he warns. “As WannaCry demonstrated, the inability to provide patient care can be more damaging to healthcare providers than even losing patient records.”
11. LPWAN will pick up in industrial markets
Another trend that began picking up steam in 2017 and will continue to do so next year is the rise of low-power, wide-area networking (LPWAN). “LPWAN technology can be unwired and run for a long time, with minimal power consumption,” said Mike Bell, EVP IoT & Devices at Canonical. “Its potential applications include heartbeat communications and predictive maintenance for industrial equipment like basement boilers, which can be otherwise difficult to reach,” Bell said. “Typical GSM/LTE connectivity is dead in these scenarios; LPWAN provides better penetration and range in hard-to-reach areas, which opens the door for groundbreaking new industrial equipment use cases.”
12. Agile development picks up in hardware and manufacturing, but the Holy Grail will be services
A decade ago, a typical software release could take a year or two. Now, many software development teams are in the habit of pushing out new code on a daily basis.
While hardware design and manufacturing has become more efficient over the years, it hasn’t moved nearly as quickly as software. Expect the pace to pick up in 2018, said Rich Rogers, senior vice president, IoT Product & Engineering at Hitachi Vantara. “The pace of technology will accelerate, and hardware manufacturers will utilize incoming IoT data around how products are deployed and consumed, regional needs and vertical industry insights to directly influence how products are designed and manufactured in a more real-time manner,” he explained. “Just-in-time manufacturing will not simply be which options that a vehicle needs, it will begin to influence the options themselves.”
While hardware production and manufacturing will likely continue to grow more nimble in 2018, they will continue to get commoditized, said Arora of CloudLeaf. In fact, software is becoming increasingly commoditized, as well. In 2018, expect to see more industrial companies seek market differentiation by marketing services and experiences rather than traditional products or services.