Artificial Scale

There is growing developer interest in what is popularly called the Internet of Things (IoT) – in essence, anything connected to the Internet that’s not a laptop, tablet or smartphone.  As the price of microcontrollers, CPUs and networking chips continue to fall, it becomes easier to incorporate them in just about any type of product.  3-D printing has made it possible to easily construct physical assemblies and Kickstarter has helped fire the imaginations of entrepreneurs everywhere.  And since all these connected devices are useless without related applications and services, the developers of the world are taking notice of the opportunities.

But the simple-to-understand “Internet of Things” phrase, which seems to imply a huge new world to explore, belies a major obstacle to its success — scale.  Regardless of what you read in the media – billions, trillions of connected devices! – there are currently few, if any, markets ready-made to buy millions of new devices, let alone applications that could run on them.  As a result, large scale IoT installations that would be of interest to independent developers do not exist.

Unlike the desktop and smartphone markets which are comprised of millions of users all working on similar hardware/software platforms (think WinTel and iOS), the IoT markets are extraordinarily fragmented.  Not only are there dozens of verticals – health, retail, energy, home, etc. – each one is a collection of dozens more.  For example, health can be further broken down into fitness/wellness, drug compliance, disease management, telemedicine, remote monitoring, and many more.  The result is a huge conglomeration of highly specialized markets needing equally customized technology and applications to support them.  There are currently no large IoT markets.  There is no scale.

The absence of scale obstructs the most critical building block for attracting world-class developers — a clear path to revenue.  Today, if I write an application for iOS, I know that, if I’m successful, I could potentially sell it millions of times.  It’s simple arithmetic to figure out how to get rich in this world.  But absent that large installed base of users to sell to, developers are unlikely to devote the resources necessary to build, deploy and support the killer apps needed to drive adoption.  There’s a reason Angry Birds came out on iOS first.

One way to solve this problem is via something I call “artificial scale”.  Network technologies, by their very nature, provide a layer of abstraction that helps smooth communication between nodes.  For example, when I use my iPhone to call my friend in London, there is no need for it to know that it is traversing two carrier networks and establishing a connection with a Nokia Lumia running Windows Mobile.  The network handles all the details.  Likewise, when I point my browser at a website, it does not care whether the web server is running Linux, Windows or OSX.  The network handles all the interfacing.  So, networks are good at hiding hardware heterogeneity.

Let’s apply this idea to a typical IoT market vertical – say telematics.  There are currently over 250 million cars on the road in the US.  That’s a lot of vehicles.  As a developer, if I could sell my $0.99 app to some percentage of that population I could make a good living.  But the problem is all those vehicles are divided up by manufacturer, model, year, etc.  It’s fragmented.  But if I could somehow get all those automobiles on a network, I could use that abstraction to make them all “look” the same to an application running elsewhere on the network (e.g. the cloud).  If I could make all the Ford Fiestas, Chevy Impalas, Toyota Camrys and Nissan Sentras all look like one type of car then I could potentially lure the developers of the world to pay attention.  This trick – using a network API as a way to combine and aggregate fragments of an IoT vertical market – is what I’m referring to when I say “artificial scale”.  Applications running in the cloud can now access potentially huge bases of heterogeneous hardware platforms using networking technologies to handle the abstraction.  The market now has scale, albeit at the network level.

This approach is possible today and represents a potentially disruptive new way to approach IoT markets.  The alternative is what we’ve been seeing now for many years –proprietary, vertically integrated, winner-takes-all, solutions.  For example, Nest may win the war for the home.   Maybe Nike+ will dominate the world of connected footwear.   But their market strategies are old.  I’m suggesting there are new ways to achieve similar market success using more open, community-based approaches to innovation.   The concept of “artificial scale” may be one such opportunity.

Bug Labs develops a cloud-based IoT application platform called Swarm that helps enable artificial scale and companies are using it to build developer ecosystems that will provide a single API set for collections of heterogeneous connected hardware types.  Click on the link to learn more and stay tuned for some exciting news coming soon!

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