In recent years I have listened till the satiety about the importance of ecosystems to make the promises of the IoT come true and in some way for not to leave in bad position the analysts who have flooded us with their optimistic predictions.

All, or at least most of those who read my articles know that there is no company in the world, no matter how great it is, it can do everything in IoT. So, ecosystems are the key to successfully in this business.

The ecosystem allows to achieve a multiplier effect and a trusted environment.

Creating an IoT ecosystem either horizontal (technology) or vertical (industry) requires a lot of talent alliance managers able to maintain win-win transactions over the time.

Select an IoT ecosystem is not an easy task. In the IoT ecosystems there are fights between equals, also abuses usually produced from the big ones over the little ones. There are conflicts with companies that are in several ecosystems sometimes with contradictory interests. It is very usual how partners collide with the objectives of the ecosystem and you can imagine betrayals and back stabs.

For instance after IBM acquisition of Red Hat, will the IoT open source architecture designed by the ecosystem Red Hat , Eurotech and Cloudera be a good decision?

In my post “The value of partnership in Industrial Internet of Things”  and subsequent comments I presented several successful cases of collaboration among members of these ecosystems. But let's be honest, there are few references and examples after 4 years.

The fragility of Alliances in IoT is a challenge to accelerate adoption of IoT Ecosystem solutions.

IoT Ecosystems

In Harbor Research article “ Has Anyone Seen A Real Internet of Things Ecosystem?” ,dated November 2013, the analyst firm wrote that no really significant ecosystem or network of collaborators had emerged in the IoT arena in spite there was early and very interesting efforts being made by several players. We can thing that in 2013, these ecosystems were very emergent alliance developments and have had not attained the scale, scope and momentum we expect will be required to really drive this opportunity to its intended and expected scale.  Most of the attempts thus far to drive an ecosystem advantage have failed to scale and reach critical mass.  This just underscores how challenging building a high velocity network of partners can be.

In this article I will focus my analysis on 4 examples of IoT ecosystems that represent a big portion of the value chain in the multiple IoT submarkets: IoT Connectivity Provider, IoT Cloud Platform Vendor, IoT Professional Services and IoT Solution Aggregator.

Telefonica: IoT Connectivity Ecosystem - https://iot.telefonica.com/partners

One of my first attempts to monetize my IoT services was through the Telefonica IoT Solution Partners program. It was four years ago. At the beginning I received a couple of calls from the Operator to help me create my account and describe my services. We were many partners and although the Partners Search portal left a lot to be desired, I did not see much competition in my services and I thought that we would be the perfect accelerator for the ecosystem. I was wrong. Since I register, I have not received any invitation to participate in any event for partners, nor has anyone contacted me to request my services, nor have I needed the portal for contact any other partner (for that I already have my LinkedIn network).

How the hell are you going to find me as IoT Solution partner if Telefonica IoT web page does not offer a link to the partner search page ? and the use of this non update page is frustrating with duplicates names, closed companies, etc.

Telefonica identifies 3 types of Partners: Operators Alliances, Channel Partners and Solution Partners.

Operators Alliances: Telefonica is partnering with other Tier-1 telecom operators including the IoT World Alliance and other operators like China Unicom, Sunrise and Avea in order to provide IoT customers with the best, seamless services worldwide and lower costs.

Channel Partners: Telefonica enables partners to drive growth and differentiate their business by reselling their Global Managed IoT services. It helps to increase their capabilities, enabling deployment on a global scale, in particular in regions such as Europe and Latin America

Solution Partners: Telefonica Solution Partners ecosystem consists of a global network of IoT providers with functional or industrial expertise: IoT Device Providers, IoT System Integrators and IoT Industrial Experts.

I never liked the idea of Telefonica oriented to quantity (around 1000 partners including duplicate names and not updated list) instead of quality in Partners and I think the results have been and are very poor. Clearly a point to improve if they want the IoT to take off inside the Operator.

Talking with Telefonica IoT you quickly recognize that if you are not Microsoft, AWS, or similar unless you bring business to them you will never get business from them.

Telefonica does not lead any IoT ecosystem, neither geographically, nor industrially nor technologically. It is just one more logo (important of course) in many presentations of IoT vendors.

I can not understand of its win-win strategy and goto market regarding IoT platforms. In addition to its own platform, Telefonica appears as a partner of at least Microsoft Azure, PTC-Thingworx, SAG Cumulocity, AWS IoT, Cisco Jasper, Libelium, etc. Maybe they should select partners around ‘share of outcome’ rather than share of investment if they want to lead some ecosystem. Pecking is good for the birds.

Telefonica need an open-minded company culture to become comfortable with an ecosystem structure.

IoT Cloud Platform Vendor  -  Microsoft IoT Ecosystem

Having worked at Microsoft, I recognize that I have had the temptation to become an IoT partner. But also, because my business model is based on vendor independence my decision was to help other companies to enter in the MSFT IoT ecosystem

This year I was convinced that I needed to change my approach. But, instead of becoming a partner, I decided to convince other 2 Microsoft partners strong in complementary disciplines (Business Intelligence and Cloud) to create a specific area for IoT. I have not succeeded, which makes me think that despite the efforts and investment planned by Microsoft, Partners do not see IoT business clearly yet.

The list of Internet of Things Trusted Partners certified in Microsoft Azure Certified is impress and I recognize the effort of Microsoft building an IoT ecosystem that fuels business transformation. Without going further, the largest partnership with GE Predix and the partnership with PTC  will help industry customers accelerate their digital transformations by adopting IoT.

In this case, finding an partner de Microsoft Azure IoT is easier than in the previous case. The categories of IoT partners for Microsoft are: Devices, Gateways, security, isv, network and telecommunication and system integrators.

By the way, no partner in Spain according with this web. ☹. Maybe is the right time to invest.

 Microsoft is expert identifying, nurturing and managing partners and Azure IoT is a great opportunity to lead some IoT ecosystems.

IoT Professional Services - EY IoT Ecosystem

EY, otherwise known as Ernst and Young, is a leader in the IoT space. Not involved in the construction of devices themselves, EY is instead helping organisations navigate the largely unchartered waters of IoT.

While working in an engagement with EY IoT, I read a report developed by Forrester Research dated Oct/18, 2017 “Vendor Landscape: IoT Professional Services”. This report segments the landscape of IoT Professional Services firms, based on functional capabilities to help enterprises deploy IoT-enabled processes, vertical market focus, and geographic reach. Based on the service offerings, vertical capabilities, and characteristics of a broad array of professional services firms, Forrester has identified eight categories. The major players in the consulting firm segment include Deloitte, EY, KPMG, and PWC because these strategic consulting firms combine strong business strategy capabilities with the ability to execute on digital transformation initiatives. The report clearly showed EY strong IoT capabilities across the globe. EY was also recognized as Internet of Things services leader by HFS Research.

For EY, initiatives like launch a global IoT/OT Security Lab to help clients stay ahead of emerging threats or to launch EY wavespace™, a global network of growth and innovation centers to help clients achieve radical breakthroughs is a way to demonstrate its strategic alliances like SAP, GE Digital, Microsoft, IBM or Cisco how important is to create an ecosystem with the firm. These technology vendors rely on EY to implement IoT solutions in large customers with a business-driven approach.

Do not expect EY or any of the consulting firms to lead any IoT ecosystem. Their role is to leverage their business strengths and client relationship to empower the ecosystems to which they belong

IoT Solution Aggregator - Tech Data IoT Ecosystem

Perhaps the most complex task I have done regarding advising of IoT ecosystems was with one of the largest IT distributors in the world, Tech Data. The challenge of balancing players like Microsoft, Dell, Cisco, IBM, Schneider or Vodafone with innovative startups in several industry verticals and different use cases without anyone feeling careless was very exciting.

To find a right place for Tech Data in the IoT value proposition schema, , was another challenge. It was great helping the company defining its role as an IoT Solution Aggregator and define which partners should be included for Tech Data IoT repeatable solutions.

Tech Data has been able to demonstrate how to become useful for IT and OT vendors and how provide value to existing and new channel of IIOT system Integrators worldwide.

I always have believed this approach could make easy for their small and medium end clients to adopt IoT solutions quickly.

I did not have time during my engagement with Tech Data to analyse and support the launch on new business models, but I am sure they will leverage its position to offer new services based on data aggregation.

Education, the latest products, support services, and firm footing in the B2B world put IoT Solution Integrators  at the centre of the Internet of Things craze.

 Key Takeaway

The IoT market is still in its early stage. Enterprises face many different options for IoT partners and suppliers. Choosing the right ecosystem is critical not only for a successful IoT project implementation but for the journey in their Digital Transformation.

IoT ecosystems need to understand that most industries thrive on "coopetition," it’s important to become cognizant and respectful of competitors, as they may also be your potential partners.

Just like with people, when it comes to IoT business, no two ecosystems are alike. We have been helping different type of companies to build or enter in the most suitable ecosystem. I have no doubt only the best ecosystems will survive; the challenge is to rank among so many. It is really a nightmare.

Ecosystems is hardly new but as rapidly evolving and if they are able to leverage the shared data and information from intelligent sensors, machines and assets, radical new modes of value creation will emerge.

The Internet of Things (IoT) concept promises to improve our lives by embedding billions of cheap purpose-built sensors into devices, objects and structures that surround us (appliances, homes, clothing, wearables, vehicles, buildings, healthcare tech, industrial equipment, manufacturing, etc.).

IoT Market Map -- Goldman Sachs

What this means is that billions of sensors, machines and smart devices will simultaneously collect volumes of big data, while processing real-time fast data from almost everything and... almost everyone!!!

IoT vision is not net reality

Simply stated, the Internet of Things is all about the power of connections.

Consumers, for the moment anyway, seem satisfied to have access to gadgets, trendy devices and apps which they believe will make them more efficient (efficient doesn't necessarily mean productive), improve their lives and promote general well-being.

Corporations on the other hand, have a grand vision that convergence of cloud computing, mobility, low-cost sensors, smart devices, ubiquitous networks and fast-data will help them achieve competitive advantages, market dominance, unyielding brand power and shareholder riches.

Global Enterprises (and big venture capital firms) will spend billions on the race for IoT supremacy. These titans of business are chomping at the bit to develop IoT platforms, machine learning algorithms, AI software applications & advanced predictive analytics. The end-game of these initiatives is to deploy IoT platforms on a large scale for;

• real-time monitoring, control & tracking (retail, autonomous vehicles, digital health, industrial & manufacturing systems, etc.)
• assessment of consumers, their emotions & buying sentiment,
• managing smart systems and operational processes,
• reducing operating costs & increasing efficiencies,
• predicting outcomes, and equipment failures, and
• monetization of consumer & commercial big data, etc.

IoT reality is still just a vision

No technology vendor (hardware or software), service provider, consulting firm or self-proclaimed expert can fulfill the IoT vision alone.

Recent history with tech hype-cycles has proven time and again that 'industry experts' are not very accurate predicting the future... in life or in business!

Having said this, it only makes sense that fulfilling the promise of IoT demands close collaboration & communication among many stake-holders.

A tech ecosystem is born

IoT & Industrial IoT comprise a rapidly developing tech ecosystem. Momentum is building quickly and will drive sustainable future demand for;

• low-cost hardware platforms (sensors, smart devices, etc.),
• a stable base of suppliers, developers, vendors & distribution,
• interoperability & security (standards, encryption, API's, etc.),
• local to global telecom & wireless services,
• edge to cloud networks & data centers,
• professional services firms (and self-proclaimed experts),
• global strategic partnerships,
• education and STEM initiatives, and
• broad vertical market development.

I'll close with one final thought; "True IoT leaders and visionaries will first ask why, not how..!"

As the platform race continues to mature for the IoT, we found a great post by by Thierry Lillette that looks into the platforms, ecosystems and products. Good reading for any IoT and digital professional. Originally posted here.

These days it feels like any successful company, especially the so-called unicorns (aka private companies with over $1 billion valuation) are not selling a product but leverage a platform.  Beyond the Silicon Valley lingo, there is also a growing body of work in the literature dealing with platform businesses and business ecosystems.

The end of the sustainable competitive advantage

New digital technologies and the relentless focus on core competencies have pushed companies to outsource a lot of their activities, leading to commodization and increased competition. Barriers to entry for copycats are lower than ever, therefore maintaining differentiation over a long period of time is now virtually impossible, despite trademarks or patents. Note that this phenomenon goes beyond what happens online: it is not uncommon to find clothes inspired by the latest fashion week in Zara or H&M stores before the actual designers are able to sell their original products. 

Speed of execution is increasingly the only way to stay ahead of competition. This has some drawbacks, such as the focus on being first to market and getting scale over monetization or profitability (from Twitter to Xiaomi), and sometimes leaves the impression that you are offered a beta product that has been rushed to market. Digital products can improve daily from their Minimum Viable Productstatus,  but many Kickstarter or IndieGoGo supporters end up disappointed with what they get.

Today's unicorns are platforms, not products

To work around these limitation and remain competitive against low cost me-too products, companies of all sizes are all about platforms and no longer standalone products. Value gets now created through stickiness of a platform rather than differentiated products. The equity of a brand is increasingly equivalent to the value of its ecosystem.

What is a platform ? In a platform approach a company's  product operates as a facilitator and large part of the value is created by the participants instead of the company itself, which can be Facebook users, Uber drivers or makers of Apple-compatible accessories. 

Again, nothing really new here as Tupperware or Avon sales have been operating this way for decades, the PC industry has thrived around the Wintel ecosystem, and Android and iOS have won the mobile OS war with their ability to attract and keep developers on their platforms rather than BlackBerry or Windows Mobile.

What is new though is that the platform approach have become the standard  practice in the digital B2C space to compete for companies aiming to disrupt (another popular buzzword)  the market, or create a new one.

Some of the most famous examples can be found in eCommerce (Amazon, Flipkart or Alibaba) or in  messaging/social media (from Facebook to YouTube, Tencent or Snapchat). Online marketplaces such as Uber and AirBnB are currently some of the most prominent examples, getting as popular and powerful as Apple or Android.

Third party players: Ecosystems and Network Effects

•  A prerequisite for a successful platform is the ability for a company to build a value proposition around an ecosystem and not only its own products. This means convince 3rd party companies to join and share value with them. In software this is usually done by publishing public APIs. Arguably, the most successful ecosystem is the one orchestrated by Apple, where you don't only buy  an iPhone, you get into the Apple ecosystem of hardware, content and services.

In the mobile apps space, countless developers write apps for iOS and Android. Apple and Google provide the API, maintain the appstore and give back 70% of the revenue to the developers.  Hence a platform can benefit but also become highly dependant on innovations developed by other firms. 

"No single company can replicate all the innovative capabilities of the market."   
Annabelle Gawer

• Another  key component of platform is the ability to leverage network effects. For a thorough  introduction to network effects and asymetric business models, I highly recommend the comprehensive slidedeck by Anu Hariharan at Andreesen Horowitz.   In short, network effects happen is product or a service value increase exponentially as the number of users goes up. Long time ago it was the telephone line, then the fax machine and more recently Facebook

The key challenge of course is that in order to enter the virtuous circle of Metcalfe's law, a classic 'chicken and egg' problem must be solved first. Why should you install a telephone line if nobody you know has one ?  In addition building a desirable product, "Growth hacking" is therefore a key activity for start ups: reaching critical mass is the necessary extension to first mover advantage and is usually seen as more important than effective monetization. That approach is sustainable in the digital domain as cloud services make it easy to scale to impressive level on the cheap: Whatsapp was able to serve 450 million customers with only 32 engineers, and Groupon or Living Social operating cost issues are only due to their huge needs for sales reps.  

Only for digital start ups ? 

 However the trend towards platform also affects hardware companies. A vast majority on the start ups in the chart below from 2014 were pitching a platform, especially the most valued ones. A notable exception in the list is GoPro, and it currently pays the price of being a one-trick pony with slowing sales and lack of stickiness despite a powerful brand.  

Literally everyone in the consumer electronics space is trying to replicate the successful model developed by Apple. For example Samsung acquired the smart home platform SmartThings and is developing services like Samsung Pay and LG recently introduced the G5 modular phone. Obviously investments are much higher than for a digital start up, and efforts can take years to materialize.

 Platform 101

In Platform Revolution: How Networked Markets are Transforming the Economy and How to Make Them Work for You, Geoffrey Parker, Marshall Van Alstyne, and Sangeet Choudary explain that moving from a traditional 'pipeline' model  to a platform involves three key shifts, which are quite suitable for agile start ups.

1. Main activity moves from the control of limited resources (raw materials, equipments...) to an orchestration of intellectual property and  interactions of the community of users and partners
2. Efficiency does not come from optimization of internal processes (e.g. production yield) but through the ability to increase (external) network effects via the ecosystem.
3. Value is contained by the whole ecosystem rather than individual products

More than a buzzword, the new normal for products

Platforms are not only the latest Silicon Valley fad for building unicorns, but they have become the new normal to build and sustain a strategic advantage. In markets where it is increasingly fast and easy for competitors to duplicate innovative products, often at lower cost, building and maintaining platform is arguable the best way to fend off competition. Like it or not, it is time to adjust to this new paradigm where even a great product cannot be successful for very long in isolation.., 

Note: views expressed here are those of the author, Thierry Little.

About the Author

Thierry Lillette has over 15 years of experience across wireless technologies and Consumer Electronics devices with a unique blend of business acumen and technical savvy and a passion for breakthrough products that will ship in millions and delight customers. Defined and launched multiple high-volume and award-winning portable devices, including mobile phones, GPS navigation devices (PND),clean energy and now focussing on the connectivity chips that make all these products smart and useful. Experience in managing all steps of product life cycle and handling multiple branding / route to market combinations to deliver strong business results while delighting users on a global scale.  Thriving in multicultural / international environments and interested in global opportunities in upstream product management & business development in the high-tech / consumer electronics or telecoms sector.