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Skate to where IoT is going to be, not where it has been
[First published in Mobilbusiness, a Swedish online news and analysis publication that uncovers the latest and most relevant news on mobile innovation, market trends and enterprise mobilization.]
IoT companies that focus on wrong types of innovation will be left behind. Wayne Gretzky, a legendary athlete, explained why he was so good at the fast-paced game of hockey:
I skate to where the puck is going to be, not where it has been.
The mobile market is a powerful example: Nokia, BlackBerry, Microsoft, Palm and many others missed the market shift and were left behind. The same will be true for the Internet of Things (IOT): five years from now the IOT market will be very different from what it is today. [tweetable]The future IOT winners skate to where IOT is going to be, not where it is today[/tweetable].
IOT: create a market or vanish
Harvard Professor Clayton Christensen explains in “The Capitalist Dilemma” that innovation, comes in three varieties: one is performance-improving (sustaining), another efficiency and a third one market-creating.
The history of the mobile handset market is an excellent illustration of how market-creating innovation drives growth and reshapes huge markets in the matter of a few short years.
Before 2010 both Nokia and Research in Motion (RIM), the maker of popular BlackBerry devices, were at the top of their game. Nokia owned then 40% of the global handset market, netting $2.6 billion in Q4 2007. Fortune named RIM the world’s fastest-growing company in 2009. But then the tide turned: Market-creating innovations by Apple and Google completely reshaped the industry, wiping out once all-powerful companies.
Instead of competing with Nokia and RIM on sustaining and efficiency innovations, Apple and Google created a new market for mobile computers. In this new market demand is driven by apps catering to all possible needs and use cases. More precisely, the demand for mobile computers was (and is) driven by app entrepreneurs who work to discover and address unimaginable variety of user needs and use cases. The entrepreneur-driven demand has created huge new markets that are several times bigger than the existing mobile handset market could ever become.
3 million IOT innovators today
The data from VisionMobile’s Q1 2015 Developer Economics survey of over 4,000 IOT developers reveals that the forces of the market creating innovation are already in full swing. Already, more than half of mobile developers (53%) are involved in IOT development. We estimate that this amounts to over three million developers innovating in IOT today.
The evolution in the mobile industry holds a clear lesson for companies eyeing the IOT opportunity. Much like in mobile, market-creating innovations will define where the IOT market will be in the future. And just like in mobile, companies that focus solely on sustaining and efficiency innovations will be left behind destined to skate where the market has been.
Today analysts forecast billions of connected devices in the market by the end of the decade. But is the number of devices even the right metric? Just like smartphones, the amount of IOT devices shipped is the end-result, not the driving force of the market. Just like in mobile, the demand for IOT products will come from an army of IOT developers/entrepreneurs discovering and addressing thousands of needs and opportunities for consumers and enterprises alike. Just like in mobile, developers/entrepreneurs will decide who will be the winners and losers in the emerging IOT market.
The same companies that took the lead in the mobile market now reuse the playbook of market-creating innovation building developer ecosystems on top of their IOT platforms. VisionMobile’s IoT Developer and Platform Landscape 2015 report shows that Apple, Google, and Samsung (who also acquired SmartThings) are the clear leaders attracting most developers across Smart Home, Wearables, Health and Wellness and Connected Cars verticals.
[tweetable]The future IOT market will not be the larger version of today’s market[/tweetable]. It will be dominated by developer-centric platforms, operate based on new business models, address needs that we cannot foresee today and serve new categories of customers. To win, skate to where the IoT is going to be: work with developers, play in the consumer market and try new business models.