Does the Internet of Things make sense for manufacturers?

May 09, 2016 // By David Moss
The Internet of Things is the next phase of computing, and the market is poised for explosive growth. Some would argue it’s the equivalent of a modern day gold rush, and innovative manufacturers are lining up to sell the shovels and pick axes – the ‘things’ – that promise to unlock a wave of big data and insights that will transform the lives of billions of people.

There’s just one problem: all these ‘things’ require cloud connectivity. Cloud connectivity requires a data center somewhere on the Internet. It also requires a team of software experts to scale and maintain the cloud. As a manufacturer, if you sell thousands of cloud-enabled products for a one-time fee this year, are you willing to continue paying for the data centers and software maintenance to keep those products online 5 years from now? The math doesn’t add up, and many manufacturers are thinking twice about taking products directly to market.

There are some tough choices a product manager faces when designing a strategy to take on the Internet of Things. One option is to avoid the costs of maintaining a cloud by creating products that only work locally, but customers demand more. Another option is to build a custom cloud, but at the expense of months or years of development, the cost of hiring software experts, the fees of maintaining data centers every month, and the risk of quickly falling behind the technology curve.

Yet another option is to charge customers for hosting services, which transforms the relationship between customers and manufacturers. Hosting fees aren’t friendly to consumers, and it’s simply not competitive. Interview any of your friends and family, and you’ll quickly discover people don’t want to pay for a monthly fee for basic connectivity, but they would be willing to pay for powerful services delivered by having access to connected devices.

Fortunately, manufacturers don’t have to do everything themselves. Many IoT clouds already exist today, ready for manufacturers to snap their products into and go to market. Cloud services are separated from the physical protocols used in products, so the product’s physical protocol usually doesn’t matter. ZigBee, Bluetooth, WiFi, Z-Wave, and other protocols ultimately converge to one protocol:  the Internet Protocol. Of course, some protocols require an extra gateway, and others do not. Some protocols are more conducive to battery-operated devices, and others are designed for high power. The best option for a manufacturer is to simply choose a common, reliable protocol that will plug into a wider ecosystem and provide the best out-of-box experience for consumers.