DIY or Not DIY—How IoT Platform Suppliers Are Responding

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By Dan Shey | 2Q 2019 | IN-5460

Do-It-Yourself (DIY) is still a term describing competition not only for Internet of Things (IoT) platform suppliers but across the IoT value chain. The DIYer is an enterprise that is doing most of the work to build a connected product or service. Recent conversations on the topic prompted an update on how IoT platform suppliers are responding to DIY competition.

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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:

  • Belief that platforms will commoditize, thus limiting an enterprise’s ability to differentiate and customize.
  • Standardization in various parts of the IoT solution enablement process will effectively ease solution development and lower overall costs. An example is greater adoption of Lightweight Machine-to-Machine (LWM2M) by device OEMs. Enterprises can leverage the standardized components to build their own solutions.
  • Belief that many platform suppliers will be acquired or go out of business
  • Public Cloud Services—Availability of cheap data storage/integration services and data compute services for running the IoT application.

Trends driving choice to buy:

  • Competitive forces—the need to respond to the market quickly.
  • Lack of internal skillsets particularly at the device level and if cellular/wireless is required, the connectivity level.
  • If machine ownership is one level removed from the product or service being offered, and the service or operation uses multiple machine types, the enterprise will choose to buy IoT solution enablement services.  Enterprises under these conditions are factory owners, city governments for smart cities applications, and commercial buildings.
  • IoT solution enablement consolidating around the major cloud suppliers.

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:

  • Focus on Device and Connectivity—The cellular module suppliers have been making a pivot for the last several years from a focus on cellular module hardware sales to services sales. Sunsea IoT bought SIMCom and now has a relationship with Ayla for offering modules with built-in platform capabilities. Sierra Wireless has been acquiring assets to become an IoT Mobile Virtual Network Operator (MVNO). Combined with their cellular modules, Sierra Wireless helps companies build connected cellular products. Telit, which is a leading supplier of M2M modules, has been in the IoT platform business since acquiring ILS Technology in 2012, but also offers cellular connectivity and management services.  
  • Extend Services to Include System Integration—One of the challenges for IoT platform suppliers is maintaining their position as an IoT platform supplier rather than a system integrator. An IoT platform gets the machine data to the cloud, but it does not necessarily build the application and as importantly integrate data into other applications and systems. The IoT platform investor community does not want their investment moving from a highly efficient platform to becoming a job shop. However, some IoT platform suppliers are bucking the traditional platform approach to better serve customers. Leverege and Softweb Solutions are two companies that blend platform services with SI services.
  • Offer IoT-in-a-Box Solutions—IoT-in-a-Box is not a new concept. Solair started offering IoT-in-a-Box back in 2015 as part of its evolution from software supplier to IoT platform supplier to help companies more quickly see solution value. However, as the IoT market moves toward the mid to small business market, and as operators attempt to move up the stack to a greater IoT solution play, more companies are selling not only a vertically targeted IoT platform, but also a complete kit that includes a gateway, some sensors, and the application. Device.com has transitioned from an IoT platform offering to an IoT-in-a-Box offering with a major customer in Sprint.

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.

Services