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From Connected Things to Connected Marketplaces By @MetraTech | @ThingsExpo [#IoT]

As more things get connected, analyst projections forecast a global market of 50 billion connected devices by 2020

The Internet of Things Moves from Connected Things to Connected Marketplaces

At first glance, the idea of more connected things suggests simply that there will be more devices around and, as such, more products for manufacturers to make and sell. Of course that's true, but increasingly the industry is realizing that there is actually more value in the services related to connected things than the things themselves.

As more things get connected, analyst projections forecast a global market of 50 billion connected devices by 2020, the range of service opportunities is expanding at an exponential rate. And as those services are presented online, they become available for use, re-use and re-purposing. It's easy to imagine the rich service possibilities when sensors have the ability to report on their status and environment and tell us what they are doing and plan to do. And when things become interconnected as part of a broader ecosystem, this broadens the service possibilities even further. Connected things, systems and people can provide information to other things, systems and people and initiate actions for each other. In this month's #IoTuesday twitter chat we will take a look at the impact on industry and society as the Internet of Things (IoT) transitions to a highly connected service marketplace.

First, we can all agree that the IoT will expand to reach billions of devices around the globe, with some industries needing thousands or maybe millions of devices sensing data around the planet. But that means a big investment, and some businesses will want to pay for the data rather than having to purchase, install and maintain large numbers of sensors. There will be pressure from potential customers for vendors to embed their products in service offerings themselves or with service provider partners.

Second, because "things" will be manufactured in very large numbers, a trend toward commoditization seems almost inevitable, with the potential for heavy competition, price wars, fragmented markets or expensive patent disputes, and possibly all of the above. Early movers in the product field are vulnerable; even if they reach a point of some dominance, it may still be relatively easy for an aggressive competitor to enter the product market. On the other hand, a service provider that secures an early large market share in a services market, attracting customers with great service and binding them in to long-term contract, has made life just a bit more difficult for potential new market entrants. Such a service provider becomes an "incumbent," which is somewhat more secure than being a "preferred product supplier."

Third, these products don't work alone. All those sensors and reporting devices need each other and also somewhere to send their data where it can be aggregated, stored and analyzed. The aggregation of data (think Big Data) is fundamental to this concept. While some devices will act semi-autonomously based on purely local data, this will at least require those actions to be shaped by policies from somewhere, which will in turn be based on analysis of aggregated data from a multitude of sources. The Internet of Things demands an information architecture in which the product is really a method of gathering information, which is intrinsically more like a service than a simple product.

Fourth, Data-as-a-Service (DaaS) gives a service provider the opportunity to gather each nugget of data once and sell it multiple times. Or sell it just once, but only at a premium.

We know we will see the emergence of some services based simply on gathering data and dumping it into a repository to then be mined. But the greater value will be in near real-time data that can be gathered, assessed and distributed to customers' systems while it is still fresh and meaningful. Then those systems in turn will reprocess the information to deliver other services, repackage it for other types of users, or even act autonomously on the data to devise and deliver new services. The responsibility for the Internet of Things ecosystem could end up being with a large number of small and large data-as-a-service vendors who will feed the users with the information they need, either in choice morsels or as daily feasts.

All of this is most exciting because we will see the emergence of layers of service offerings that could not have been conceived if we were not moving in the Internet of Things direction.

Want to join April's #IoTuesday Twitter chat?
Follow @MetraTech on Twitter and join our chat on Tuesday, April 21, 2014 at 1:00 p.m. ET/10:00 a.m. PT using the #IoTuesday hashtag.

Help spread the word!
Invite your IoT-enthused colleagues and contacts to the conversation by tweeting, "Discuss the #IoT move from connected things to connected marketplaces during @MetraTech's #IoTuesday chat at 1 pm ET on Apr 21."

More Stories By Esmeralda Swartz

Esmeralda Swartz is VP, Marketing Enterprise and Cloud, BUSS. She has spent 15 years as a marketing, product management, and business development technology executive bringing disruptive technologies and companies to market. Esmeralda was CMO of MetraTech, now part of Ericsson. At MetraTech, Esmeralda was responsible for go-to-market strategy and execution for enterprise and SaaS products, product management, business development and partner programs. Prior to MetraTech, Esmeralda was co-founder, Vice President of Marketing and Business Development at Lightwolf Technologies, a big data management startup. She was previously co-founder and Senior Vice President of Marketing and Business Development of Soapstone Networks, a developer of resource and service control software, now part of Extreme Networks.

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