Phil Skipper, Head of Business Development, Vodafone Internet of Things (IoT), gives his predictions for the year ahead.
IoT isn’t new anymore. There is already a significant penetration of digitally-connected devices in homes and industry, and we will continue to see the market grow at a rapid rate. Vodafone’s latest IoT Barometer shows that the proportion of companies using IoT leapt from 12% in 2013 to 29% in 2017. That figure will rise again by the end of 2018.
Indeed, here at Vodafone, we are adding more than a million IoT devices per month. It’s not just about connections, though. The data being consumed on these connections is also rising fast – by as much as 40% a year. This is because organisations adopting IoT are doing more with it, applying it wider and embedding it deeper within their businesses.
So, 2018 will be characterised by more IoT adoption, and more consumption of the services in place. That’s a key trend.
Low-power, wide-area wireless technology (LPWA) provides battery-efficient, out-of-the-box connectivity that will unlock massive value for billions of devices around the world. As the technology matures, you’ll begin to see new application areas that will transform some age-old business models.
For utilities, LPWA will allow the cost-effective networking of water and gas meters, which are often installed in hard-to-reach locations. That’s an exciting proposition, helping utilities digitise for better coverage, while bringing them closer to their customers.
LPWA will also open up some completely new ecosystems, connecting multiple devices across wide areas for the very first time. Take pest control, for example, where changes in legislation means that humane capture should be used wherever possible. To do that, you need to know when traps have been triggered so that the rodents can be released without harm. However, traps are often placed in remote locations where there is no electricity or any boots on the ground.
The low-power, cost-efficient nature of LPWA would provide the perfect solution. Smart rodent devices with embedded sensors and mobile connectivity could immediately alert pest control operatives that an animal has been captured, allowing its release in a timely manner.
The focus of IoT has shifted from how it works to what it can deliver. A couple of years ago, all the talk was about the technology behind the connection. Now, we see a much broader vision, where customers want to buy a certain output that enables them to meet their particular needs.
Here’s an example: a while back, Vodafone developed an IoT-enabled stolen vehicle tracking product that would tell someone their car had been stolen and provide details of its location. Now, that product has been developed into a stolen vehicle recovery service, which provides location details to the Police, while providing the victim with a hire car. We’ve gone from an asset tracking technology to an IoT service which provides a useful solution for the end-user.
This is what the IoT is all about. Yes, we can connect machines and gather data. But, ultimately, the aim is to make the most of connected technologies and to develop solutions that can transform lives and businesses.
IoT has predominantly been an enterprise play of B2B or B2B2C. Not anymore. These days, consumers see connectivity as a crucial component of their daily lives. Smart homes have networked heating, lighting and security, while a host of other consumer devices such as eReaders and cameras are connected wirelessly to the internet.
More recently we’ve seen a surge in popularity of intelligent voice-activated personal assistants such as Alexa by Amazon. And it won’t stop there. Consumers want to live in networked spaces, and they want to take their connectivity with them, wherever they go, from the house to car to work.
That means that the consumer has become a crucial channel for IoT, and the pace of adoption will accelerate across 2018. The challenge for telecoms providers is to enable consumers to add gadgets quickly and easily to their existing contracts, as their network of connected products gets wider and wider.
Here at Vodafone we’ve entered the IoT consumer market with the launch of “V by Vodafone” enabling consumers to connect selected products to our dedicated global IoT network – the largest of its kind in the world. An initial product range includes a connected car dongle, a 4G security camera, a pet location and activity tracker and a bag location tracker.
In IoT, someone has to pay for the hardware and someone has to pay for the software. Increasingly, though, it’s becoming more difficult for communications service providers to make a lot of money from the devices or the connectivity, so they are looking at the creation of innovative services to produce recurring revenues.
What does that mean in practice? Well, imagine sticking an LPWA sensor on a pane of glass. The cost of the device and its connectivity is minimal, so it could be given away free of charge. That device might send two messages a year: the battery is OK and the window is broken. This won’t generate any revenue. However, the connectivity provider could get commission when the glazier is alerted that the pane has been broken. All of a sudden, a different business model has been created whereby no-one is paying for anything until value enabled by IoT is realised.
Now, the business model has become far more lucrative. It’s no longer dependent on a monthly connection charge, but is instead based on monetising the output that the customer buys.
No look forward is complete without a mention of artificial intelligence (AI), which will increasingly converge with IoT to result in a more connected and more efficient world.
In an industrial context, AI has the potential to deal with the problem of data over-load. As companies rush to adopt IoT, they fit more sensors and create more data. Soon, it becomes difficult to manage, analyse and create meaningful insight from the information that’s been collated. In time, these ever-increasing data flows can become totally overwhelming.
That’s where AI comes in. By enabling truly smart machines, which can simulate intelligent behaviour and make well-informed decisions with little or no human intervention, it becomes possible to unlock the value from large volumes of digital data. For some, this combination of IoT with AI is the holy grail for industry: it’s the only way of improving the speed and accuracy of big data analysis, providing true insight into what’s working well or what’s not.
There’s no doubt that AI is creating a buzz. The Vodafone IoT Barometer 2017/18 found that 79% of IoT adopters think that more than half of enterprises will be using AI and machine learning to make sense of their IoT data by 2022.
And it’s not just enterprises that are excited by AI. Here at Vodafone, we think AI and IoT will continue to merge, with device self-diagnosis enabling products to monitor themselves, and the automation of customer service via chatbots and virtual sales assistants. Friendly bots, like Vodafone’s TOBi, are already interacting online by using human-style conversation to help solve customer problems.
We won’t realise the full potential of AI in 2018. But we will start to use it to optimise and improve the quality of service we offer, and it will start to give us a better understanding of how our networks and our customers behave over time.
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Gartner names Vodafone as a Leader in its 2019 Magic Quadrant for Network Services, Global.