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Internet of Things, a future hype or a huge opportunity for the channel?

FlorianKampes

 

Internet of Things (IoT) is gaining more and more popularity. The adoption of IoT is rising massively through every industry, with the majority of large companies having offerings or evaluating their IoT strategy.

For our channel partners, this emergence is a big enough reason to dive deeper into the IoT topic and learn something about the opportunities for them - regardless of whether they are a Service Provider, an Independent Software Vendor or a Reseller.

IoT, according to Gartner, is one of the mostly hyped topics in the IT world at the moment.

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I was looking at the 2010 Gartner Hype Cycle and noticed that at the peak was Cloud Computing. In 2010 Gartner has prognosticated that Cloud Computing will be market ready in about 2 to 5 years. And where are we now? Everybody is talking about cloud, and everybody is setting up a cloud environment.

It is common knowledge the big players in the public cloud are Google, Microsoft Azure and AWS; channel partners trying to get into this business will have strong competition from these  major cloud players.

But there is a new, maybe even bigger opportunity for channel partners – Internet of Things.

What exactly is Internet of Things (IoT)?

According to McKinsey, “the physical world itself is becoming a type of information system. In what’s called the Internet of Things, sensors and actuators embedded in physical objects—from roadways to pacemakers—are linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet. These networks churn out huge volumes of data that flow to computers for analysis. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly”.

To get this simpler, IoT is the connection between different devices, so that they could communicate with each other, or the cloud, in a way of Machine 2 Machine (M2M) communication. This enables you to generate and use much more information than have been possible in the past. Some examples:

  • What if I tell you that your fridge will order new ice cream whenever you run out?
  • What if I tell you that your car could communicate with other cars to evaluate the traffic on your route?
  • Or to get more on a business use, what if your manufacturing facility will be fully connected with your supply chain and your quality assurance to accelerate production, improve the idle time and enhance the quality of your products?

All this sounds great, doesn’t it? This is the promise of IoT.

But why is IoT such a great opportunity for the Channel?

According to IDC the IoT segment will have a Compound Annual Growth Rate (CAGR) about 17.5% in Installed Base Devices. The revenue in the IoT segment will rise to about 20.4% CAGR from 2013 to 2020. This means in real counts a growth from 9.1 B devices to 28.1 B devices and a revenue growth from $1,927.5 B in 2013 to $7,065.3 B in 2020.

Installed base for regions.PNG

 

 

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So as you could see, the IoT market is a huge opportunity.  IDC does not stand alone in these forecasts, with many more analysts and companies predicting similar growth. 

Why should I believe these forecasts are accurate?

Well you definitely couldn’t be sure that they are completely accurate.  However, the direction is clear from industry watchers, and the key market drivers for IoT are strong and reasonable:

  1. The costs of Internet connected sensors continue to fall. Goldman Sachs recognized a drop in the last 10 years about 60%.
  2. A huge amount of money is being invested in IoT and there will be a lot of other investments in the near future. Google acquired NEST, a home automation vendor, large IT companies like Cisco and Dell are investing in R&D for IoT products, and IoT startups are gaining huge funding.
  3. The global availability of Internet connections will grow. The International Telecommunication Union states that 40% of the global population is connected today. By 2019 it should be about 51%.
  4. The smartphone, tablet and wearable distribution is growing rapidly. At the moment about 69% of globally sold mobile-phones are smartphones. These devices will act as sensors or controllers for IoT. They could track your movement and body values. Or they could support the growth of other IoT segments by acting as a controller for, for example, home automation or connected cars.

Large companies, regardless of segment, are looking for IoT services. According to McKinsey, there are five broad ways in which IoT, combined with big data, is generating value for these companies.

  1. Much more information will be transparent and usable
  2. This data empowers companies to collect more accurate performance information
  3. The information could be used to develop products which fit for customers’ needs
  4. The decision-making in your company will be enhanced
  5. You will gain a competitive advantage by being able to use this information

So as you could see, IoT is a huge, rapidly growing segment. There are significant benefits for customers who want IoT. Channel partners can take advantage of this need, and develop expertise in areas where the channel ecosystem can solve customer pain points, such as data sovereignty, compliance, hosting, etc. I will discuss areas that are a huge revenue opportunity for the channel in my next blog.

If you are interested in IoT and want to learn more about real world use cases check this article. Or just visit Hewlett Packard Enterprise’s IoT website to learn more about how the Converged Systems could enable you to provide IoT services, or how the Edgeline servers bring compute-power to the edge.

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About the Author

FlorianKampes

I am studying Business Information Systems at Hewlett Packard Enterprise Germany in the DualStudy Program. This program combines 50% high-level academic study at university with 50% practical on-the-job experience. My studies combine business knowledge with IT and technology skills like programming, database development and development of distributed systems. During my studies I worked for Hewlett Packard Enterprise in various positions. In my current internship in Palo Alto I help to run the marketing for the Evolution of the Channel.

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