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The internet of things (IoT) will radically change society as we know it, but will not realise its full potential for some time without more innovative business models and joined-up thinking, according to speakers at a Westminster e-Forum event.
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Advisory service Analysys Mason’s Tom Rebbeck said IoT revenues for tech companies that have launched themselves headlong into the space, such as Intel, were hovering at below 5% as a proportion of total sales.
He said innovative – even radical – IoT business models were few and far between, and those models that already exist tend to be fairly simple ones.
“We’re mostly talking fitness tracking, smart metering, smart parking and fleet management,” said Rebbeck. “There are more complex systems, such as Nest, but these are the exception today.
“Radical business models are rare. It’s all about how the IoT will save you money on your existing systems, and reduce operating expense through monitoring and predictive maintenance. This is not to criticise, but it raises a challenge in how the IoT is sold. As a result, movement to innovative business models is slow.”
Gary Barnett, software analyst at Ovum and a keen IoT hobbyist, agreed that the bulk of IoT use cases over the next five to 10 years would be merely offering incremental improvements to existing services.
Too many cooks
Barnett expanded on a number of challenges facing the IoT at all levels, such as sensor design, communications, security, and integration and consumption of data, where many different voices from around the industry are pushing ideas about how the IoT should work.
Barnett said he saw a “horrible tendency” for technologists invested in one particular aspect of the IoT to focus all their attention on their own specialist subjects and ignore everything else.
“People in communications are all about communications and not bothered about security, and vice versa. You have to get all of these things right simultaneously, particularly security,” he said.
Funding the IoT
Roger Bickerstaff, partner at law firm Bird & Bird, raised questions around future funding models for the IoT. He said although sensors tended to cost pennies these days, the costs of deploying millions of them into the wild were becoming prohibitive.
He suggested the IT industry could do much worse than look to the example of the clean technology (cleantech) sector. The cleantech sector has gone from essentially a standing start eight or nine years ago to a well-funded ecosystem, with more than £12bn of debt-funded solar projects now in the field in the UK.
Bickerstaff said there would be three sources of IoT funding. These are corporate equity from the likes of Google and venture capital investors, which would be most useful for the initial startup and development stages of IoT projects; public sector money, of which there was not really enough; and debt financing, cash borrowed from lenders in the form of bonds or loans, which he anticipated would ultimately lead the mix.
The panel cited a number of challenges around standardisation and data governance that will be familiar to many people tracking the development of the IoT. It also touched on the pressing need to ensure access to superfast broadband services to enable user access.
Warman said the government was well aware that the IoT was coming, citing the government’s multi-million pound investment in autonomous vehicle technology as evidence of this. However, he said there was not yet a comprehensive plan in place, although Warman anticipates some firmer policy positions to be adopted later in 2016.
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