Speeding Up the IoT Market Growth Rate - I

Last month I was at an IoT event at Koc University Incubation Center. Good audience, good subject and a good question at the end to start a discussion: Why IoT market growth rate is lower than expected? Lots of ideas, but mostly blaming the consumers, companies and institutions etc. I think the problem is more tangible and the solution is simple, but not easy to achieve! 

We need some technological breakthroughs

By the reduced price per computing power, Internet of Things phenomenon has been a hot topic since 2000. Even earlier, in late 1980's Mark Weiser from Xerox PARC defined ubiquitous computing, which is the foundation of today's IoT vision.

More than twenty years have past after Weiser's statement. How far have we come? We are now surrounded with pads, smart phones, TVs, boards, watches, thermostats and so on... Cost per GFLOPS has decreased more than a billion times since 1984, world wide web is established, acquiring knowledge and collaboration has never been easier. Yet, I am not happy with the current situation and I feel obliged to share my thoughts on this. We need some technological breakthroughs and a comprehensive approach on IoT in order to speed up things up.

The reason why I think this way is; there are some milestones in the IoT journey that cannot be overcome without any foundational technological improvements. Some major problems are: reducing the unit costs of IoT devices, improving eco-friendliness and ensuring interoperability both in physical and abstract spaces.

My first consideration here is that we should find a way to reduce the total cost of ownership of IoT devices. Hence, it may create an avalanche effect in widespread IoT adoption, thus speeding up the market growth with an inconceivable rate. For instance; in smartphones industry, it has been confirmed that the adoption is linked with cost of the phone and cost of services. Smartphones below 200$ are increasing in percentage also implies this.

Low cost smartphone market growth implies cost vs adoption correlation
Source: ABI Research

But, does lowering the prices make any sense? There are two edges in this context. First one is economical and the second one is technological. Technological perspective is about the feasibility and economical perspective is about the gains after the aforementioned price reduction. I am going to discuss the technological feasibility and future directions. You may find articles like this one for the economical perpective, if you are not convinced about the economical gains.

It is hard to reduce the TCO with current methods

Mankind has been dealing with large scale electronic device manufacturing and modern ICs for more than 30 years. Electronic components have become smaller, cheaper and more powerful, enabling us to create amazing products. Yet, reducing the unit cost of an IoT device, while maintaining profitability and customer attraction is not an easy problem, especially when considering the costs of all processes from design, production, quality assurance, marketing, sales and after sales plus unit cost of the device plus companies' margins. For instance; a simple IoT device may include an MCU, a wireless communication interface, battery, PCB, casing and supplementary components like memory, connectors etc. Depending on the quality, design and functionality, unit cost of a connected device may be $5.00 at the minimum level such as an active RFID tag with some sensors. Higher functionality items surely will cost more. According to CNN for instance, cost of a Nest thermostat is around 69 USD without the development, production, support and marketing. Considering the rule of thumb to set the sales price to at least 4x-5x of the unit cost, it seems hard to sell a connected device without providing direct benefit to the end user through that connectivity. However, our concern is to create a stack of connected devices that would work in harmony and lead to situations where one plus one is greater than two.

In my humble opinion, attention should be paid to new technologies that can be utilized in the IoT phenomenon. I have been doing a little research about this subject and so far I am impressed with the following concepts:

• Evolution of Wireless Networking
• Chipless RFID
• Backscatter Sensor Networks
• RF Energy Harvesting
• Graphene

I will try to explain how these can alter the IoT market on my upcoming blog posts.

About me

I am an IoT enthusiast and an entrepreneur enjoying Istanbul. I have been working on IoT product development for 4 years. I am one of the co-founders of Pubinno, where we are creating the next generation beverage dispensing nowadays. 

I am leading the electronics, firmware and software designs of our products as well as guiding my company in the IoT era. As I find some spare time between soldering, coding and debugging; I will share my opinions on IoT and our work at Pubinno. I will also try to share some parts of our designs that might help the maker community. Thanks for following and please feel free to disagree and discuss ;)

Disclaimer
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.
All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.