The Five Phases of IoT

The growth of IoT can only be unlocked if businesses can actually create real IoT product solutions and get them to market in a timely fashion. If they can’t, the market never reaches the heights that industry analysts keep predicting. Exosite’s view is that the IoT groundswell unfolds in five sequential phases of maturity, each building on the one before it — and that no business can skip ahead to a later phase without the earlier ones being in place across the industry.

Point solutions
Generalized data platform products
Vertical industry solutions
Inherently connected building blocks
Standardized access

1. Point solutions

In the earliest phase, as the industry began to see the value of machine-to-machine (M2M) communication, custom M2M/IoT products were built one at a time. With each new product, developers designed hardware, invented networking protocols, wrote server applications, and customized nearly everything from scratch — reuse of concepts and technology was minimal. Building customized products this way was effective, but expensive and hard to reuse across adjacent industries.

That gap gave rise to what’s sometimes called the micro-vertical challenge: IoT products break down along two dimensions, volume and degree of specialty. High-volume products — phones, wearables, tablets — sit at the “head” of that distribution and get built at mass-production scale. Everything else — industrial sensors, factory equipment, medical devices, pumps, motors, generators — sits in the long “tail,” produced in lower volumes for a narrower audience. For IoT’s growth to reach its potential, it can’t depend only on mass-produced consumer devices; OEMs need a way to build connected products that ship in low volumes with low engineering investment, which is exactly what point solutions, one at a time, can’t deliver economically.

2. Generalized data platform products

The industry’s answer to the micro-vertical challenge was to stop reinventing the wheel for every product and instead build generalized platforms that could be leveraged across the entire long tail of niche connected products. Why build a one-off system to receive and store data and send alerts, when a centralized software platform could handle device provisioning, time-series data storage, stream processing, visualization and reporting, and event/alerting logic for any product built on top of it? This phase is what let forward-thinking companies — including Exosite — start building platforms that handled the functions common to nearly every industry vertical, rather than functions specific to just one product.

3. Vertical industry solutions

Once a generalized platform exists, the next phase is packaging vertical-specific industry solutions on top of it — fleet tracking is one of the clearest early success stories here, and the same pattern has since spread to things like generator monitoring, while staying flexible enough to serve almost any company that makes or monitors a given class of equipment.

A useful analogy for this phase is drilling oil wells: the players who can drill (build full vertical solutions) quickly and with high quality extract the most value. A successful vertical solution has to be quickly deployable and pull together the full range of IoT technologies needed for that market segment — sensors, devices, gateways, short- and long-range RF networks, network aggregators, software platforms, web and mobile interfaces, and integration with existing business systems.

4. Inherently connected building blocks

One of the biggest obstacles to building a connected product is simply the number and variety of technologies that have to come together — spanning IT, web development, and embedded engineering, a range of skills rarely found in one company or one person. A significant share of development time and money ends up going toward integrating pieces (sensors, devices, gateways, networks, servers, interfaces, business systems) rather than building the actual product.

For the industry to mature past vertical solutions, inherently connected building blocks need to exist: cloud-connected integrated circuits, cloud-aware modems, standardized device communication protocols, IPv6 support for resource-constrained devices, mesh networking, cloud-aware gateways and network aggregators, low-bandwidth long-range transport protocols, and interoperability standards for federating clouds together. Each part of the value chain has to be easy, secure, cost-effective, and reliable to connect — and the industry needs enough shared consensus for these building blocks to interoperate reliably with each other, not just within one vendor’s ecosystem.

5. Standardized access

Only once the first four phases are genuinely in place across the industry can the fifth phase — standardized access — be realized. In this phase, market-segment-based data standards mature to the point where customers and businesses get standardized access to devices and device data, regardless of vendor. The emphasis shifts away from the physical device itself and toward common device registries, interchangeable data-processing algorithms, and the alignment of artificial and business intelligence across the industry. IoT standards today remain fragmented — that’s exactly why phase five is the last to arrive, and why it depends on real industry-wide coordination rather than any single company’s roadmap.

Where this leaves you

It’s clear that IoT is positioned to keep growing at a massive pace, and not in just one industry but in many. For that growth to actually materialize, the industry has to progress through these maturity phases in order — they produce a new world of connected products and data that makes businesses more effective, creates new economies, and enables better lives. Understanding which phase your own market is in — and which building blocks are (and aren’t) yet available to you — is one of the most useful diagnostic questions you can ask before committing to an IoT strategy.