Not Large Firms, But Startups Will Drive IoT
While many are under the impression that the growth of the Internet of Things (IoT) is driven by large enterprises, and smaller companies will take ages to join the IoT fray, a new Gartner study proves otherwise.
According to the research firm, it is not tech providers or large enterprises, that would drive the growth in the Internet of Things, but a new breed of startup firms that will spur IoT growth through the creation of a multitude of niche applications, it says, adding that by 2017, 50 percent of IoT solutions will originate in startups that are less than three years old.
According to Pete Basiliere, research VP at Gartner, it is the startups that are shaping the IoT. “They are developing IoT solutions by taking advantage of low-cost electronics, traditional manufacturing and 3D printing tools, and open- and closed-source hardware and software to create IoT devices that improve processes and lives,” he says.
Basiliere also points out that product development processes within most large enterprises are very ROI-driven to produce anything but high-volume, lowest-common-denominator IoT objects. However, startups and crowdsourcing efforts will result in high numbers of low-revenue niche IoT applications.
For this reason, senior management and emerging technology strategists within large enterprises must transform their product discovery processes. Whether at consumer goods companies or in the healthcare, utilities, wireless, manufacturing or other vertical markets, managers must encourage IT pros within their organizations to develop IoT concepts.
“Innovation is necessary for an organization to sustain value over time and create competitive advantage. Yet in many big organizations, the corporate culture and processes stagnate and harden, discouraging innovation as a result. Basiliere draws a comparison. “On the contrary, startups worldwide are charging ahead with identifying numerous, often niche problems and innovating solutions using IoT concepts. They will drive not only consumer and enterprise acceptance of the IoT, but also the creative solutions that enterprises could not possibly discern, resulting in an “Internet of Very Different Things.”
For example some small and innovative entrepreneurs are leveraging the low-cost Arduino open-source electronics platform, entry-level 3D printers, and traditional woodworking and machine tools to build their own IoT devices. Gartner has found that these grassroots projects focus on managing and controlling devices in the home and are more focused on providing convenience than cost savings – which is the prime focus of enterprise-sector and public-sector IoT.
Similar to other technology advances historically, the growth promise associated with the early stages of IoT will lead to the creation and funding of a large number of startup organizations that will maneuver to capture what they perceive to be early opportunities or overlooked product niches, states Gartner.
This will lead to creative solutions and a wide range of products, many of which will fail in the market. “It won’t all be smooth sailing and many small businesses fail within five years,” believes Basiliere, but those who survive and emerge ‘successful’ will cater to underserved and niche markets worldwide who can benefit from connected devices globally, he sums up.
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