If you’re a managed service provider or a value-added reseller, it’s time to start preparing for your business to be all about “things” in five years.
That was the prediction by Stephen DiFranco, principal of IoT Advisory Group, at the Channel Company’s IoT Nextgen Roadshow earlier this month outside of Washington, D.C. The topic was “Monetizing the Internet of Things,” and Arrow was a premier sponsor.
So why did DiFranco make such a declaration? There will be 20 billion more things connected to the internet in the next 3-5 years, growing the IoT market to $1.7 trillion by 2020. And tremendous opportunity is waiting for channel partners as long as they know how to navigate the opportunity.
“The entire network is going to double. What’s different is the things we connect run a lot of rich data,” he said. “It will create an opportunity to work with customers.”
What the opportunity looks like
DiFranco says services are going to be as big as hardware, and that’s where the profit margin will be. The five margin streams that will be the most critical are: connectivity, platform, security, analytics and control.
He also predicts that current technology partners are not going to be the ones that you’ll turn to in IoT. Channel partners will want to look for companies that can provide sensors and nodes that have the Wi-Fi and communications built in, so they’re ready to go. In about a year, companies like Azure and Amazon Web Services will be selling full IoT stacks.
“Get the gateway to plug into those stacks and full functional nodes, and then it’s going to start to resemble the industry you’re used to,” he says. “If we can replicate what we’re used to doing, it will accelerate what you can bring to market.”
6 steps to take now
DiFranco offered six steps for monetizing the IoT market:
- Choose only one or two IoT verticals to get started. “Choose a vertical where you have experience. Don’t try to become an IoT security company or an IoT platform company.”
- Pick your IoT platform partner. Ask yourself what software you want to use to drive the node. The cloud layer and the layer to control the nodes are critical. DiFranco says companies should plan to be in the service of controlling those layers and choosing the right platform partner will be key.
- Chose 1-2 nodes and gateways to work with. Choosing more than that will prevent you from becoming a useful expert to customers.
- Secure your cloud contract. Data from devices is sent to a cloud platform where it’s processed and combined with data from other devices.
- Hire field application engineers with Wi-Fi and gateway experience. This is a skill that doesn’t come naturally, which is why these experts need to be hired.
- Run proofs of concepts (POC) to verify your platform—customers will pay for your POC. “Don’t go from concept to deployment. It will kill you,” DiFranco adds.
For more information about how Arrow can help you monetize IoT, please contact your Arrow representative.