The rise of M2M/IoT Platforms highlights new commercial dynamics, and new challenges

Machina Research

Over the last decade, a range of M2M platforms has emerged to assist with the development of M2M applications. Until recently, these M2M platforms have tended to focus on speeding the development of stovepipe M2M applications, rather than supporting an open application environment that allows application developers to easily configure applications that draw inputs from multiple M2M (and other) applications. Recently a new type of platform has emerged: the M2M/IoT Application Platform. Key movers in this space include Xively (who focus squarely on the value-added IoT application space), Thingworx (who seek to also support the stovepipe applications that underpin an IoT environment) and Bosch Software Innovations (who are bringing systems integration capabilities to the party).

The key functionality of an M2M/IoT Application Platform is the capability to abstract across a range of inputs, and to control a range of external processes However, it is clear that any potential provider of M2M/IoT Application Platform solutions must move significantly beyond this core capability in order to attract application developers and build the ecosystems necessary to gain critical mass. The M2M/IoT Application Platform thus provides the ‘glue’ that intermediates between application developers, M2M connected devices and a range of niche and specialised M2M platforms and wider enterprise IT systems. In the world of the M2M/IoT Application Platform, the application developer is king.

The emerging M2M/IoT Application Platform space highlights a range of key commercial dynamics. The first key concept is that of counterparty risk, concerning the ‘right size’ relationship between an end-user and an M2M/IoT Application Platform, which can potentially contribute ‘mission critical’ software components to a connected solution. Another significant effect is the potential commoditisation of mobile connectivity: M2M/IoT Application Platforms that can make MNO choice (and changes thereof) transparent to application developers will effectively commoditise mobile connectivity. And lastly, there are some intriguing dynamics around the monetisation of M2M/IoT Application Platforms. In particular, there is a risk that some players might offer M2M/IoT Application Platform services for free in order to secure related revenues (potentially for systems development, or niche application development).

But what about the actual applications? The focus of M2M industry participants on platforms to some extent distracts from the actual applications. M2M applications are at the core of the M2M opportunity. Every connected device must have an associated application, and the development of those applications represents a real commercial opportunity for any entity involved in the provision of an M2M service. In the case of M2M applications, the commercial opportunity is to a great extent proportional to the degree of complexity of application development, and is influenced by factors such as real time processing requirements, device integration considerations and any requirements for integrating with enterprise applications.

Overall, there may well be a significant commercial opportunity associated with the development of M2M applications, but any new entrant into this market should realize that the world of M2M application development is still anything but simple, irrespective of the benefits of the new breed of M2M/IoT Application Platforms. At least, the world of efficient M2M application development is anything but simple: it is, of course, possible to over-specify remote hardware with the aim of simplifying application development (perhaps leveraging a Java or Android environment on a remote device), but the winners in this race will be the ones with the most efficient software that minimizes the total cost of ownership of an overall solution.

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