Is the 2016 IoT map update singularity coming?

Is the Internet of Things the most confusing technology trend in the world? On the one hand, we understand that it will become an epic existence, and all prophecies say it will bring tens of billions of connected devices and create billions of dollars in economic value. However, on the other hand, the main feeling that end users present is “boring” – the current IoT feel is the rhetoric of new connected products, many of which seem to be used to solve the usual aristocratic problems: its expensive equipment makes it More inclined to the "best" type, rather than the "must have" type. Moreover, from all the speeches on technology trends, things seem to be developing at a very slow pace, and the progress is very small each year.

Part of this problem may be one of the semantics. Although its devices are indeed the "best available" type (there is a very large market in itself), the Internet of Things (defined as any interconnected hardware including desktops, laptops and smartphones) is one by one. Extensive and in-depth trends. It covers spaces such as consumers, businesses and industry. From a more fundamental perspective, the Internet of Things is a shift from any physical object to a digital data product. Once you put a sensor on it, a physical object (whether it's a small object like a pill that traverses your body, or a large object like a building or an airplane) starts to function like any other digital product—it Send data about usage, location, and status; it can be tracked, controlled, customized, and upgraded remotely; when combined with technologies such as big data/artificial intelligence, it can be intelligent, controllable, collaborative, and automated. A new way of interacting with the world is emerging. The importance of IoT may be more apparent when you consider it as the final chapter of the "software occupation of the world" after everything has been interconnected.

As in the big data world, the annual update of the IoT landscape is a great opportunity to observe the progress made by the industry in this regard. In 2013, we tried to explain the meaning of the Internet of Things; at the end of 2014, IoT seems to have reached the escape speed. In 2016, IoT promised to continue its rapid development, but it is expected that the Internet of Things still has a long way to go – perhaps for decades.

What does it take so long to remember the Internet of 1999? Or, if you are younger, remember the 2007 mobile phone? These are the development stages of the current Internet of Things. In 1999, the Internet has made great progress (Google and Amazon have become more and more popular), but still often makes users feel helpless (also need to dial?) or even fear (put the bank account information on the website, really? ?). In 2007, the phone has made several key advances (smaller form factor and support for connecting to the Internet via WAP sites). And the first iPhone has just been released, but it's still hard to imagine the revolutionary impact of smartphones in the future.

Today's IoT is more of a turning point - "the future is already visible, but the time nodes are not evenly distributed." From ingestible, wearable and AR/VR helmets to connected homes, factories, drones, unmanned vehicles and smart cities, a whole new world (and computing environment) is in front of us. However, it still does not provide good services at present. There are two main reasons for slowing down the process.

One is the immaturity of the ecosystem – many aspects need to be changed at the same time. A basic requirement of this scenario is that not only devices need to be connected to the Internet, but also devices need to be seamlessly interconnected. But now interoperability does not exist, and an obvious problem is: too many standards, and everyone has different views on standards. There are also many other technical challenges. For example, from a connectivity perspective, it is very difficult to connect devices, especially in industrial environments (hotspots without cellular or WiFi connections, and environments away from urban centers) to the Internet. Many big data-related issues also need to be addressed, including how to process data locally at the sensor or network layer to reduce the need to send large amounts of data to the cloud—whether the existing data framework can handle the large amounts of data generated by IoT. It is doubtful. Security and privacy issues are very important, and the company is just beginning to mean that many problems may arise – in the near future, the most common problem that many people need to solve is security and privacy issues. Laws and regulations also need to be revised: With the advent of drones, UAVs, and unmanned vehicles, existing regulations will encounter many new problems that require great attention. All of this can solve the problem, but it takes time to solve the problem.

The other category is related to a fact: unlike the Internet, IoT not only has to deal with digital signals, but also needs to deal with objects made up of actual atoms. Since everything on the Internet exists in digital form, it provides an excellent opportunity to create a new virtual world. In contrast, IoT is closely related to reality and needs to consider physical laws, distances, and times.

Before becoming a smart, collaborative product, the connected device is first and foremost a hardware product. Just as many new IoT companies and VCs have had to learn in the past 2-3 years, it takes a long time to create a great hardware product. And this is also a very painful process. Since we can't easily iterate like writing software, there is no minimum available product or basic usable product. Once the product starts to be produced, there is no turning back – any mistakes in the design need to go back the process, resulting in a delay in the product for several months. At least based on my conversations with many entrepreneurs and VCs, an IoT start-up requires an average of 18-24 months to produce the first product (a visual impression, not based on objective data). No matter how difficult the equipment process is, it is only part of it. The release comes closely – although online sales are very good, in order to actually start selling, the company needs to work with retailers. These retailers have their own priorities and time requirements. It may take another 1-2 years for start-ups to understand the entire process of product launch and start mass sales. All of this will affect product prices: the price of startups is hard to come down due to the cost of various hardware devices and the extra pressure of retailers. This further slows consumer acceptance (according to the 2016 survey, high prices are the first factor affecting the use of consumer IoT products). Every startup wants to enter the product as soon as the user experience is good and the company can profit from it. But the reality is that many of today's startups are still in the process of working with the production and sales processes.

In addition, in addition to new devices such as AR, VR and drones, many new products are replacements for existing analog products. As a result, the large-scale adoption of IoT will occur at the edge of the natural cycle where these analog products need to be replaced. Of course, technology enthusiasts and other tech fans won't wait, but most consumers and businesses can't replace all of their current devices overnight, especially if IoT devices are expensive. Consumers may change their phones every year or every two years, but locks, kitchen utensils, and cars are often used for more than a decade. Of course, many startups also think of designing their products based on existing hardware. Therefore, there are still shortcuts to using IoT devices. But unless the Internet is already embedded in the next generation of homes, cars and factories, a whole new IoT world will not be realized.

Some parts of the ecosystem may develop rapidly. For example, unmanned vehicles may enter the market earlier than expected - with observers predicting that after 12-18 months, unmanned vehicles will officially enter the road in the United States. If this happens, the process may accelerate, especially if the manufacturer can prove the safety of the unmanned vehicle. But even so, some of our infrastructure still needs to be changed for unmanned vehicles. This may take several years to complete.

Maintain the status of the "big bang" of start-ups

For the end user, IoT may be slow, but the IoT start-up ecosystem is rapidly emerging. This is a very broad market – there are many things that are the same, but there are some differences. However, we are seeing a lot of new companies emerging, and young start-ups are starting to rise.

In early 2016, startups in the IoT space have been active for 3-4 years. Incubators (including hardware-related and full-stack companies like Y Combinator and Techstars) have spawned many startups. Crowdfunding provides early funding. Many contract manufacturers in China have started to cooperate with and invest in startups. Service providers like Dragon InnovaTIon are also investing.

Although Silicon Valley is still cultivating many companies with ideas, IoT companies are a broader and more global phenomenon. Most of the top 100 in Mattermak's IoT rankings are outside the Bay Area. In the 2016 IoT map, more than 150 companies are located outside the United States. In the 2016 CES, 160 French startups participated. Of course, China has a production base for the entire hardware. In addition, many female CEOs have emerged in hardware companies.

Venture capital in the IoT sector continues to increase: according to CB Insights, $1.8 billion in 2013, $2.59 billion in 2014, and $3.44 billion in 2015. The number of contracts has decreased - 307 in 2013, 380 in 2014, and 322 in 2015. This shows that more and more money is flowing to more mature companies. A few of the companies were still in the B round of financing 18 months ago. But since we were in the last page, this has changed significantly. Examples include Sigfox (D1,115 million in February 2015), 3D RoboTIcs (50 million in February 2015), Peloton (30 million in April 2015), Canary (June 2015) Round 30 million), Netatmo (3 million in round B in November 2015), Athos (35 million in round C in November 2015), Greenwave (45 million in round C in January 2016), Jawbone (2015 1 Monthly E+ round 165 million), FreedomPop (10 million in January 2016), Razer (75 million in February 2016) and Ring (6.1 million in March 2015).

However, for most VCs, hardware is just an attempt. The 2015 Fitbit IPO effectively demonstrates that IoT startups can also be successful and provide good financial data. However, traditional venture capital still looks at hardware start-ups with suspicion, and IoT's investment is also an attempt. Today's hardware startups are no longer in desperate need of large amounts of money, but I have observed that a hardware startup in the US still needs $10 million in financing to get on track.

Fortunately, strategic investors and corporate investors have begun to enter on a large scale. According to CB Insights, the two most active corporate investors are Intel Capital and Qualcomm Ventures. Cisco also appears in the top 10 of traditional VC investments. Verizon Ventures, GE Ventures, Comcast Ventures and Samsung Ventures are also active. Netatmo's Series B financing was initiated by Legrand, while Sigfox's Series D financing was initiated by Telefonica and other communications companies. Asian investors are also starting to get active – for example, Foxconn and Singapore's EDBI are starting to invest.

If the US venture capital market continues to be sluggish, its impact on the IoT ecosystem will be significant. When the market is difficult, the emerging areas are most likely to be affected, and corporate and foreign investors will become less active during this time. But maybe start-ups won't encounter this situation.

Now, as the start-up phase has passed and the funds are sufficient, we cannot accept that all new IoT startups will appear on the market at the same time. Areas like the consumer IoT market have been overcrowded, increasing failures and restructuring. IoT's corporate and industrial sectors are becoming more open, but many of the existing ones have been in operation for decades.

Here is our 2016 map:
(Click for larger image)

See the link for a full-size layout and a complete list of companies.

As in the previous version, the chart was divided into different sections: horizontal and vertical. Every area can see a lot of activities, but it is worth mentioning that the content has not been well integrated, and some vertical applications are not based on the horizontal areas below. However, we have paid special attention to full-stack IoT startups—because there are no dominant horizontal platforms, mature/cheap/reliable components, startups tend to build a lot of things themselves: hardware, software, data/analytics, and more. In addition, because many consumers are still in the stage of understanding IoT, enterprise-class IoT companies such as Helium also have a professional service organization. This is a typical start-up company in the early market, and we expect many of these companies to slowly change and be able to completely abandon the hardware in their business in the future.

Dancing with giants

In order to better understand the IoT ecosystem, it is important to realize that large companies are everywhere. Just look at the 2016 IoT map and you'll see that big companies are almost in every category.

In the era of Internet development (90s and 00s), dynamics will also emerge, but simple and rude—on the one hand, there are saboteurs; on the other hand, there are saboteurs. In the era of IoT, things have become more complicated – some startups in the Internet age have grown into big companies, and it is hard to predict who will “tear”.

Big technology and communications companies have been involved in the IoT. They believe that the era of IoT will surely come in the coming years. In some cases, the declaration is likely to precede the reality, but the trend is already obvious. Chip makers such as Intel, Qualcomm and ARM are fiercely competing for the IoT chip market. Cisco also began to focus on IoT and spent $1.4 billion to acquire startup Jasper. IBM also announced an investment of 3 billion for the new IoT business unit. AT&T has entered into a partnership with eight of the top ten automakers in the United States. Many communication companies also regard 5G networks as the backbone of IoT. Apple, Microsoft and Samsung have been actively involved and offer platforms (Apple's Homekit, Samsung's SmartThings, Microsoft's Azure IoT) and end products (Apple Watch, Samsung's Gear VR and Microsoft's HoloLens AR helmet). Salesforce also released the IoT cloud a few months ago. This list is still growing.

Alphabet/Google and Amazon may need to be introduced separately, considering their potential impact. From Nets, SideWalk Lab, unmanned vehicles to Google Cloud, Alphabet covers many aspects of the ecosystem. Amazon's AWS continues to innovate, releasing many new products, including the new IoT platform, and its e-business model is also important for IoT product launches. In addition, Echo/Alexa has also had a big impact on the smart home industry. These two companies are growing at the speed of startups, with a large amount of user data and high-level talent.

Beyond the technical field, many traditional corporate giants have gained a lot from IoT and have many concerns. This may be an opportunity to rethink all the issues. IoT will shift big companies from a product-centric model to a service-centric model. In the world of IoT, large companies can intuitively understand how customers use their products; they will be able to customize products and services according to their needs; they will be able to predict when products will fail and need support; they also have the opportunity to use and develop Subscribe models and direct long-term relationships to control customers. The impact of these changes will be enormous. On the other hand, the threat is also great – for example, how will the auto industry change as unmanned vehicles become a reality? Will the old auto company be degraded as a parts supplier?

The opportunity for these companies to thrive in the IoT world lies in their ability to transform into a software company. Some traditional industrial companies already have their own software teams—for example, how Bosch Software InnovaTIon or General Electric recruited hundreds of software engineers in Silicon Valley. So this is not an impossible task - many companies will stick to it.

What does this mean for start-ups? Of course, interest from big companies has led to many acquisition opportunities. Big technology companies have already undergone a fierce acquisition process, and large traditional companies need to transform into software companies through acquisitions. On the other hand, for start-ups trying to stick to their own development, the road to development will become narrower and require flexible strategies. Big companies will certainly not build every single connected product, but they will also take the lead in occupying large market space. Or, they will be willing to hire top talent at high salaries – a few months ago, Uber hired 40 robotic developers from Carnegie Mellon to study driverlessness. For young start-ups, the road to success must be to avoid the big companies' markets and work with big companies to participate in their manufacturing and distribution processes.

in conclusion

The era of IoT is coming soon. Despite the many difficulties, as shown in our territory, startups and large companies around the world are actively working to make the world of IoT inevitable. The progress of IoT seems slow, but when a person stops to think about the changes needed in the connected world, IoT will develop very quickly. Many scenes that look like science fiction for 10 years are now a reality, and we are beginning to get closer to the scenes surrounded by connected objects, drones and unmanned vehicles. The bigger question is whether our society is ready for such a change.