(Source: Mike Krell, Moor Insights & Strategy) 2017 will also be a year of contraction. There are way too many “platform” and hardware providers trying to gain traction in the market. Small platform providers will either disappear or get swallowed up by “bigger fish”, and we should end 2017 with many fewer than we have today. Hardware will continue to expand, but again, companies that only provide single or very narrow solutions will get swallowed up or disappear altogether, depending on the quality and security of their products. Here are key things to watch for 2017…
- IoT semiconductor and sensor volumes will skyrocket. 2016 was the year of consolidation for IoT semiconductor makers. It began with Broadcom and Avago (and then Broadcom jettisoning their IoT business to Cypress) and ended with Qualcomm swallowing up NXP (and the former Freescale in the process). I believe that NXP is one of the best positioned IoT semi vendors, and if a deal with Qualcomm is completed, I believe the combined company has the breadth of technologies and capacity to really dominate the IoT market. ARM cores will continue to dominate IoT, and sensor manufacturers will continue to see their volumes rise. For 2017 I don’t think we are done with consolidation. Watch Silicon Labs as a player that grows bigger or gets gobbled next as vendors fill out their IoT focused portfolios.
- The IoT platform shakeout will begin. The year started with lots of noise from new vendors with a definite slowing as 2016 came to a close. There are just too many vendors trying to push undifferentiated solutions. Look for fallout in terms of players disappearing or getting swallowed up.
- Changes in “edge” or “fog” architectures will become critical to implement—not just talk about. The edge or the fog is that ill-defined part of the network between the devices (where the data originates) and the cloud—and this critical juncture of the IoT system architecture needs an upgrade badly. Traditionally this had been a simple aggregation point or gateway, but that just won’t cut it for IoT. The massive amount of data generated by IoT devices will put strains on the network, requiring edge devices to get much smarter. Mainstream vendors such as Cisco Systems, Dell EMC and Hewlett Packard Enterprise (HPE) recognize this and are pushing smarter IoT edge devices. These devices are, in simple terms, a combination of a server and gateway. With the increase in computation, storage and networking capabilities we will see edge-based analytics become a critical element to the success of IoT. Watch the Open Fog Consortium as a key player in defining new IoT system architectures
- Telco and communication choices will continue to be messy. 5G is the panacea, supposedly. 5G, however, is many years from being realized in any meaningful way driving telcos to have to deal with new IoT models using alternative technologies today. Telecom operators’ strategies and business models for generating revenues from IoT will continue to develop through 2017—and won’t be set by this time next year. For telcos, we’ll continue to see the battle between NB-IoT and LTE-M play out based on region and monetization models through 2017. Infrastructure providers such as Ericsson and Huawei will continue to increase in importance, providing strong portfolios of IoT hardware and software solutions that everyone needs. Alternative LPWAN technologies will become increasingly strong in niches where the bandwidth, capacity and security of 3GPP standards aren’t necessary (or cost affective). These include LoRa, Ingenu and Sigfox.
- Regulation and standardization continue to come into focus but will evolve continuously through 2017. 2016 brought us a little closer to standards interoperability with the merger of OIC and the Allseen Alliance into the Open Connectivity Foundation. Other collaborations including ZigBee, Thread Group and Z-wave continue to move the market toward more cohesive and simpler solutions. However, we still have a great amount of fragmentation and no clear-cut winners. Apple HomeKit and Google Weave will play a role, but how this fleshes out is anyone’s guess going into and coming out of 2017. On the regulatory front, we haven’t seen much action yet, but expect to see more government interest in 2017, as IoT becomes more pervasive in smart cities, the public sector and energy.
- Security gets its due. We finally began to take security seriously in 2016, largely because we saw IoT hacks. The big denial-of-service attack in October, and the potential of a drone injecting a malicious virus via lights (from outside a building), caused great concern throughout the industry. We saw some solid announcements, such as the Industrial Internet Consortium releasing its security framework. With all the new vulnerable devices now being put into service, 2017 will see hackers continue to exploit IoT systems. Expect large scale breaches, as hackers look for newly connected devices in the energy and transportation areas.
- Smart cities will lead the charge in IoT deployments. The awareness of what “smart city” means has begun to come to the attention of residents. They value safety (smart lighting), convenience (transportation, parking) and potential cost savings (smart meters, on-demand trash pickup), and cities can deliver. Cities will continue to be strained by the need for money to support the deployment of sensors (to gather data) and the integration of citywide systems.
- Smart home technology will become, smarter, more secure and easier to use. We had great strides with the Amazon Echo and Google Home in 2016, both becoming more mainstream appliances in the home. However, networking bandwidth and connectivity between devices and systems is still a major problem for consumers. Networking continues to be painful. Streaming video rules the home entertainment market, and the need for increased bandwidth has put strains on home network bandwidth. Between painful network management and troubles getting consistent bandwidth throughout homes, networking needs a real overhaul in 2017. Expect to see lots of new announcements on mesh or mesh-like products with simpler network management in 2017. The other critical issue is bringing it all together in the home. There continue to be too many applications and too many technologies to choose from to make it all work together seamlessly. Hopefully we’ll see some real advancements in interconnection in 2017.