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Five Years Ago and Today |
NEWS |
Before discussing how the DIY market has changed, it is worth defining what is a DIY IoT solution. An IoT solution comprises several components, so it is never the case that enterprises will do everything (such as cellular connectivity management) themselves. Additionally, many times a DIYer may rely on outsourcing some aspects, such as some bespoke application development work, to an System Integrator (SI). But in general, a DIYer will do everything from device engineering, device-to-cloud services, application development, and analytics.
Five years ago, the DIY market was playing a large role in IoT solution enablement. In 2014, ABI Research estimated that 40% of all M2M/IoT connections were from enterprises who built the IoT solution themselves. This should not be considered unusual because, compared to today, there were far fewer connected devices, and deployments by company were generally much smaller (less than 1000 connected devices). The profile of the DIYer from five years ago included all types of companies from industrial to consumer products and both product Original Equipment Manufacturers (OEMs) and services industries. Generally, DIY activity came from larger companies who have robust Research and Development (R&D) and product development groups.
Since that time, what has changed is that enterprise clients are buying more and more portions of the IoT solution rather than building it. Ownership is still common in certain areas, such as analytics, and will likely remain as companies want to retain ownership of the Intellectual Property (IP) on their products or services. Considering vertical markets, segments that are starting to cede more IoT solution enablement to partners include healthcare (device OEMs), oil and gas, rail, buildings, and logistics. Product OEMs still tend to want to do most of the work themselves with the help of SIs.
General Trends Driving Build versus Buy in IoT Solution Enablement |
IMPACT |
As noted above, DIY IoT solution enablement happens on a spectrum, with very few IoT use cases completely bought or built. Regardless, the factors and trends that are driving the build versus buy decision, particularly for IoT services and which greatly affect the IoT platform market, are shown below.
Trends driving choice to build:
Trends driving choice to buy:
IoT Platform Supplier Activities to Compete against DIY |
RECOMMENDATIONS |
The IoT platform supplier market has been adjusting to address the enterprise DIYer. However, the more apt way to describe the competitive response to DIY competition is a fragmentation in the Go-to-Market (GTM) strategy of the IoT platform supplier community, many times becoming more targeted around certain IoT value chain components and/or specific markets. Listed are three top strategies by the IoT platform suppliers to address the DIY competitive threat:
These IoT platform strategies, while viable today for addressing the DIY environment, will have to keep two trends in mind to maintain relevancy. The first is that public cloud services will continue to evolve, adding services where it makes the most sense. Any IoT platform supplier needs to stay vigilant about new IoT services offered by the public cloud suppliers and adjust their offerings and go-to-market strategies. The second is that companies’ needs will evolve as their IoT maturity improves. The parts of the IoT solution value chain that are affected will vary by company. However, change will come about more quickly in new application and analytics needs that favors IoT platforms that closely collaborate with the SI community.