the long tail of the Internet of things

The Internet of Things – a loose term that describes a combination of connected people, places and objects – dominated the proceedings at this year’s Le Web internet conference in Paris. While there were many demonstrations of hare-brained connected devices that will never see a full production run, one thing I did learn was that the IoT will be dominated by consumer devices, and don’t ask me about a killer app because success will lie in the niches.

I’ve been reporting on machine-to-machine (M2M) communications for 10 years. Each year, there have been predictions that we are on the cusp of billions of networked objects outnumbering smartphones (and people on earth) by orders of magnitude. But it’s been hard to see where these billions of objects will come from and who will want them.

a proven business case

M2M technology has been maturing over the past decade and many companies are demonstrating how it can cut costs and open up new revenue opportunities. In some sectors – transport, logistics, security, manufacturing – they are on a second and third generation of M2M technology. RFID, telemetry, telematics and remote healthcare have some pretty established practices.

But the number of “traditional” M2M connections is around 100 million, not billions.  And I cannot see how billions of industrial devices will be connected any time soon, because the business case needs to be proven in each example (businesses are sensible in that way).

step forward consumerisation of M2M

We have some early examples in the form of e-readers. If M2M loosely means a device that communicates without human intervention, then an e-reader is not one. But we could consider Whispernet, Amazon’s e-reader 3G download service, as M2M because the subscriber is not dialing a number, is not mailing an address and is not paying for the data consumed.

In the UK, it is estimated that 10% of adults own an e-reader with 40% claiming they read more since they bought it. But there are signs that many early e-reader owners have ditched their black & white Kindle for a Kindle Fire HD which firmly puts the device into the category of tablet, and if you want connectivity on the go, you pay for it.

You may also find 3G connectivity within in-car satnavs, and again, your connectivity to travel updates will be based on a subscripton to content not data.

So beyond satnavs and e-readers, are there other examples of consumer M2M? There will be.

What we can learn from black & white e-readers and satnavs is that some people prefer single function machines rather a do-it-all device (e.g tablet or iphone). They may want:

• weighing scales that connect to the Internet so you can embarrass yourself into sticking to that diet
• a wireless sensor that tells you when you need to water your potplants
• a home weather station which crowdsources data from all other owners of home weather stations to provide a accurate picture of the current weather in your region
• a light bulb that changes color which you can control from your smartphone
• a brain reader which puts meaning into your typing

All these ideas and more were on show at Le Web. Some were inspired, others seemed trivial. But there seemed to be a common thread between the connected devices on show and among the people I spoke to. 

nine rules for consumer M2M success

Ok, maybe not rules but these seem to be underlying qualities for growing the germ of an IoT idea into a sustainable business:

• consumer devices: most are under $200 for the hardware.
• crowd-funded: woo the public with your bright idea on funding sites Kickstarter and Indiegogo and you could raise enough for a prototype. The Interaxon Muse brain-wave reader raised much of its funding this way.
• single-function: target the niches with a unique idea and don’t encroach on do-it-all devices.
• low-cost manufacturing: start with China today and then insource manufacturing tomorrow with your own 3D printers.
• low-cost distribution: utilizing your own site and marketplaces like Amazon means you don’t need a lot of inventory.
• low-cost brand building: why pay for advertising when you don’t know where your audience is? Use social media to get others to promote your brand for you.
• very app-centric: most devices can be read, monitored or controlled from a smartphone app.
• very health-, wellbeing- or child-focused: because that’s what we care about most.
• minority appeal: interest in $100 plant sensors is probably limited to the green fingered but they attracted (and addicted too) the recommendations from Koubachi about how to make your plant thrive

This last point is worth considering: I wrote about the Long Tail of mobile applications two years ago, and it’s worth reading the post. It’s about the 80:20 rule being turned on its head. Rather than a few popular items dominating revenues and profits, as in Amazon’s online store where there is (virtually) no limit on storage space, you can stock virtually anything. And it’s that “virtually anything” which delivers the most bucks.

This long tail may also drive the Internet of Things (connected objects) to billions of unit sales. Not in the handful of staggering successes like the iPhone, but in the brain-readers, robot toys and weather stations that capture the imagination of an affluent minority.

All of the Le Web keynotes and many of the start-ups can be watched on Le Web's YouTube channel. 

Stewart

top image © Albert Lozano-Nieto - Fotolia.com
bottom image courtesy of interaxon.ca