What is IoT?
IoT stands for the Internet of Things.
It refers to transforming the things around us to serve an automated purpose to enhance our personal, professional or collective lives. It is imperative to realise that a connected device is very distinct to an IoT device. A connected device has the first three layers of a product as in the graph below from Harvard Business Review, whereas an IoT device has all seven and is potentially fully automated.
Let’s look at the evolution of devices. They were first physical devices and tools designed and destined to perform a certain function. They required servicing or replacing from time to time in order to perform that function optimally. Then came the software embedded products. These products were an order of magnitude more useful and could perform many functions. They still needed to be serviced and replaced from time to time to fully restore their optimum function. This rounds up the product layers as shown in the graph below.
Then came the connectivity layer, which allowed the user to perform multiple functions with multiple devices at the same time. You can see that things start to get really interesting here. It is at this level where an exponential factor is introduced. No longer are you working on a linear module and possibilities are multiplied. This connectivity layer itself has undergone multiple iterations and was either delivered through wired or wireless networks. It was initially just the connectivity between a device and a server, then between many devices and a server and finally between many devices and many servers. The format and design form of this connectivity was also very important in its impact and reach. Computers and PCs gave way to laptops and more personal devices and then the mother of all personal computing, the smartphone, was born. It is not an understatement when Benedict Evans of Andreessen Horowitz calls the smartphone the sun in technology.
This takes us to the next layer. Why is the smartphone so powerful and successful? Because it can connect anyone, anywhere, anytime to the internet. You remember those days where we all had phones that could only be used to make phone calls, send text messages or maybe waste hours of classic snake on. Those feature phones are still around and still use amazing technology. However, they are giving way to smartphones very quickly. The new smartphone shipments in the country account for nearly 80% of the total phones sold. In a few quarters, those phones will be reduced to less than 5% of new shipments and nearly everyone will have a smartphone. Smartphone enabled connectivity to the cloud layer. It is this product cloud which opens another exponential growth opportunity. The next four layers consist of a database layer, where the data is generated, stored and used, an application layer, where the interactions happen, and two more layers where IoT really comes to life.
The final two layers, rules/analytics and applications layers, are where we believe majority of the next wave of innovation will come from. It is here where we expect to make the bulk of our investments and are watching trends very closely. It is in these two layers where we can identify patterns in data and in our interactions with connected devices; meaningfully combining all these layers to enhance our lives to deliver the best user experience by producing an autonomous and purposeful product.
This is a first in a series of posts about IoT and our investment criteria.
https://www.linkedin.com/pulse/what-iot-mohsen-m-khalkhali-acsi
