Early Returns Suggest Being First to Market Determines Success for IOT

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An estimated 34 BILLION devices will be connected to the internet by 2020, according to a July, 2016 Business Insider article, up from the 10 billion connected in 2015. A vast majority of that growth (24 Billion units) will come from outside the traditional computing devices (smartphones, tablets, smartwatches), requiring Telecommunication providers to be highly flexible in network and business management. The IoT market will be littered with applications and devices meant to simplify the consumers’ lives, but will undoubtedly strain the supporting network infrastructures. Early indications suggest that the fragmentation is only beginning.

According to a report published by ShareTracker (Booth 313), traditional internet connected devices like PCs, routers and printers have a brand leader that carry 25% or more of the device market share, while emerging segments including home automation, security, wearables, and smart TVs, were dominated by brands that were first to market within the segments. Additionally, traditional connected devices (routers, PCs, tablets, cellular phones) had 2 to 3 times more device suppliers than emerging device families.

The quarterly research project, designed to track IoT emergence and market share trends, was conducted in Q416 (prior to the holiday shopping season), and encompassed over 5,000 residential drive test miles and identified over 2 million unique MAC addresses across 1,300 separate device brands. The study found that traditionally internet connected devices including PCs, laptops, and cell phones account for 56% residential IoT (Internet of Things) devices, once the most common connected devices (routers/access points) are removed from the calculation. Printers and Smart TVs follow, both accounting for 14% of the device family share.

Security promises to be one of the more interesting battleground areas in IoT, as the mixture of network based services like ADT and Comcast will challenge the homegrown “device focused” applications like Vivint, Google and Amazon. This is also the device family that appears to present the most geographical fragmentation across the 11 markets measured. This geographic fragmentation offers some clear growth opportunities for ambitiously growing security services with markets like Los Angeles and St. Louis, where no clear market share leader for security services exists.

The research also identified demographic and connectivity trends within the device families. For example, the study found, unsurprisingly, that customers utilizing telco operators for internet connectivity accounted for 65% of the Smart TV and Streaming connected devices, presumably to satisfy content needs that cable operators inherently provide. Interestingly, cable providers were more likely to have gaming connected devices, accounting for 54% of those devices. Preliminary findings suggest interesting differences among Hispanic connected device trends including a higher percentage utilizing streaming connected devices, which will be a key data point to follow quarterly.

The rapidly growing IoT market will require device manufacturers and carriers to be agile and flexible with business plan and distribution model, as the number of devices triple in the next 3 years. The chaotic evolution of connected devices/IoT will hinge largely on protocol standardization, similar to the early technology debates like GSM/CDMA and Beta/VCR. Although considering there are 11 different protocols in the mix, it might look more like the cellular debates around LTE banding, which is a terrifying prospect, although the $6 trillion market opportunity over the next 5 years, per Business Insider, will make navigating the chaos worth the headache.