Some thoughts on the Internet of Things and M2M as innovation ecosystems
It’s exam time again, and among the tests I’ve been setting my students on the IE Business School International MBA over recent days has been a case study of SIGFOX that brings together the Internet of Things (IoT) and Machine-to-Machine communications (M2M).
SIGFOX is a French startup that has attracted major investors, who over the course of four rounds have pumped in more than $150 million. Among the companies taking a stake in SIGFOX are Spain’s Telefónica, Samsung, NTT, and DoCoMo. The company also has an alliance with Abertis, which manages Spain’s largest network of antennae after buying them from the country’s main operators.
SIGFOX’s technology is very simple: two bands of free use anywhere in the world that allow signals to be sent between devices, without any guarantee of reception, but that is persistent. A small device fed by AA batteries can last up to 10 years, and simply emits a signal that can be captured by receptors located in telephone antennae up to several tens of kilometers apart, offering very high levels of coverage. Each base station located in an antenna can manage up to a million objects with very small messages, but infinite possibilities. From there on, we can fit these types of device in just about anything: a burglar alarm, a bicycle, a pet, or anything that we want to monitor.
The technology can create a low-cost communications network from which can be developed an ecosystem with infinite possibilities: SIGFOX charges one euro per year per device to companies that have networks of more than 50,000 devices, registering and managing their signals. The average income from each users is around €2, but this has the potential to be a huge business as we connect more and more devices to the net: turnover generated by the IoT is around $650 billion, but estimates suggest it could well reach $1.7 trillion by 2020, based on annual growth rates of 16.9 percent.
Competitors looking for a bigger slice of that market are LoRa and Huawei’s Neul. Decisions will have to be made: who are the main players in this ebullient sector (and what is their potential importance), and the strategies a telecoms operator — in the case of my exam, Telefónica — should pursue if it wants to help develop these kinds of technologies.
The exercise lasts 90 minutes, uses an open computer and excluding diagrams, should fit onto two pages. Aside from publishing papers as part of showing the world what we do on my Innovation in a digital world, I think that this is a fascinating case, reveals an ecosystem that will see developing before our eyes at great speed.
(En español, aquí)
