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Exploring the Idea Challenge Topics: The Internet of Things

Exploring the Idea Challenge Topics: The Internet of Things

Eight cities, eight topics. The Idea Challenge is a truly European competition for entrepreneurs and people with big ideas. But why these topics? What is it about these areas of technology that the organisers, EIT ICT Labs, find interesting? What trends and challenges do these topics contain?

We’re taking a closer look at each of the eight topics, which themselves are split into two batches. The second batch of the competition is taking place this autumn, with finals in Trento, London, Berlin and Stockholm. You still have time to enter – with prizes of up to €40,000 (as well as coaching, mentoring and office space) up for grabs, applications are open till September 30. You can find more information here.

Today we’ll be considering the Internet of Things (IoT), which will reach a climax in the Swedish capital on November 13. A look at the current state of the IoT and the challenges which lie ahead, the text has been written by Magnus Melander, project leader for the IoT Idea Challenge as well as CEO of Wbird and founder of the Swedish M2M Service Enabler (SMSE) alliance with 33 Swedish IoT entrepreneurs.

About a year ago some of the key IT players stepped forward and joined the creation of the Internet of Everything (IoE). I am especially impressed by Cisco, Apple, Google and Microsoft, who all have made significant investments into their IoE efforts, including on the regional and local level, while many others are still primarily showing corporate slides and white papers. Earlier this year, both Cisco and Microsoft became sponsors of SMSE – our alliance of 28 Swedish IoE entrepreneurs – which speaks to their seriousness and capabilities in this field. Another sign of strength is Apple’s announcement that 29 car makers support their Carplay solution and that they have paid over $20 billion (€15.63bn) to developers, more than half of that in the past year.

Over the last few years we have seen some M&A transactions, but they have primarily been in the connectivity sector. The module market is now consolidated to a couple of strong players (Sierra Wireless, Gemalto and Telit) as an example. But late last year, the M&A market took off when Google acquired Nest for $3.2bn. This surprising move has been followed by a number of significant acquisitions: Google bought Dropcam ($555m), PTC became an IoT powerhouse by acquiring Thingworx ($112m) and Axeda ($170m) and Samsung bought SmartThings (≈$200m) to name just a few. And there have been many smaller transactions as well. M&A activity always catches the attention of investors as one of the key indicators that a market is about to take off, and accordingly we have started to see significantly more IoE activity in the VC community – the $30m Series B round raised by IoT platform company IFTTT is a good example of that.

Many enterprises have been looking at connecting their things for years and some, especially in the trucking industry, have been doing this for a while. But there are very few who went all in like GE did. GE made their analysis and published their paper on the Industrial Internet a couple of years ago. They decided to invest $2-3bn in two years and created a new company in the group to help exploit the opportunity across their different businesses. Their effort and determination is impressive and I am sure it will pay off very well.

Understanding IoT Opportunities

Policymakers have pushed utilities and vehicle companies to move which is great but hard to analyse and forecast since they are markets ‘doped’ by governments. Still, players in these markets are quite active and involved which is good. Consumer companies like Nike, Withings and Fitbit have been selling connected devices for a while and the medtech field is vibrant. Based on my own consulting and relationships with decision makers at large enterprises, I see many organisations who by now have identified the importance of understanding and using the new opportunities enabled by the Internet of Everything and have moved into trials and pilots.

And industry alliances like AllSeen, which white goods giant Electrolux has recently joined, is a clear sign of this. After nine moths, the AllSeen Alliance – which promotes open source solutions for IoE using AllJoyn software framework – has 63 members including Hier, LG, Microsoft, Panasonic, Qualcomm Connected Experiences Inc. and Sharp. Many executives remember how they were late to understand and benefit from the Internet and will make sure not to repeat that mistake this time around. Vodafone predicts that half of companies in the Americas will implement M2M by 2016, a good example of external predictions supporting my view.

An Agile Approach is Vital

Finally, better tools for rapid prototyping of IoT solutions are coming forward. It is almost impossible to figure out what will happen when connecting things in a company. It’s quite easy to see the immediate operational value from connecting something, normally a combination of gains in efficiency, security and sustainability. But the strategic value based on the data collected is far more difficult to see beforehand. This is why an agile approach based on prototyping and real-life testing is vital to enterprises. And the tools for that must enable a working prototype to be developed in days, maybe weeks, rather than months. I invested in Evothings this summer since I consider their open source tool for rapid prototyping and testing of mobile IoT apps a great answer to these needs.

So what are the key challenges which lay ahead?

I think the single biggest challenge to building the Internet of Everything is that any IoT application includes components from at least three industries:

  • Sensors, actuators and connectivity to collect data and take action.
  • IT systems to verify, analyse, merge and manage the data.
  • Integration into or development of applications for users to take advantage of the information.

On top of that everything is going mobile which is a challenge to enterprises by itself. It is quite complex to develop and take into production a solution in this environment, with industries and vendors having their own standards, libraries and APIs, talking different languages and having different cultures. Good working partnerships needs to be developed, often with several companies involved, and agreements, policies and standards need to be agreed upon.

Here is a typical example: companies bringing connected products to market need to recruit developers for their libraries and APIs in order to make their products become part of complete solutions and services. Recruiting your own developers will not be a great approach in most cases – who would like to be a Volvo, Nike or Philips Nue developer? Making the connected products available to developers through generic tools is a better approach if you want a lot of developers to add value to the connected products, and to include them in many solutions.

A Much Bigger Scale

Another set of challenges are related to security, integrity and safety; nothing really new, but on a much bigger scale. Internet security 2.0 is a good way to look at this challenge because it is primarily data-related but the points of potential failure are more numerous and the scale bigger.

Entrepreneurs will be the ones bringing most of the innovation to the table and we need to find ways for them to work closer with larger organisations. That’s why the Idea Challenge is important – and the winners will receive up to €40,000 and a lot of support from EIT ICT Labs.

We need to bring in enterprises, provide prototyping and development tools for the Internet developer community and keep an eye at the security issues. The train is running quickly. Decision makers must try understand what the Internet of Everything means to their industries and organisations. It’s similar to when we connected people and businesses to the Internet, but this time ignorance will not be an acceptable excuse.

About Silicon Allee

Silicon Allee
Silicon Allee is an independent English-language news website which has been covering the startup scene in Berlin and across Germany since June 2011. It is foremost international news source for the exploding startup scene in the German capital.

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