WILL IoT BE A MONEYSPINNER TOO?

 As the buzz around IoT continues to gather momentum, not too many are looking at the most basic query of all: How is money going to be made from the IoT?

The Internet of Things is about connecting different devices. Inherent in that viewpoint is the assumption someone is going to be willing to actually pay for the connectivity between devices — because it isn’t all free. Yes, there will be plenty of essentially “free” Wi-Fi and Bluetooth connections between nearby devices but there are also going to be a lot of cellular and other wide-area connections that are not free. Different business models are being developed to justify why one side or the other in a physical connection should be burdened with the costs. Essentially, the thought is one side will provide “value” to the other, and that will validate the charges one side places on the other.

In certain instances, this will definitely be true, but in many cases it will not. There will be many situations in which value is a very gray area, and either party could reasonably argue the value of the service or data they are providing.

For example, when it comes to the tracking of personal information via wearables, the companies collecting the data could (and have) argued that the collection and analysis of the data is worth something to the consumer. At the same time, there’s a growing movement that argues that if personal data is being collected, the person providing it should be compensated.

The monetization challenges in IoT extend well beyond this simple example, however. Another key application that’s been discussed is the widespread use of very low-cost, sensor-equipped end-point devices that will generate enormous amounts of data, which in turn will be analyzed to generate meaningful insights.

Creating an enormous number of low-cost end points doesn’t sound like a very attractive business for either device or component makers, however. As a result, it’s going to be very difficult for those of companies to make long-term ongoing investments into this area when there’s little chance for meaningful profitability.

Very few companies such as the global giants and a few start-ups like XVidia Technologies really have all the capabilities to put together a complete solution in-house and then turn it into a profit-generating business. XVIDIA provides solutions across Digital Signage, Video Security Surveillance, Video Analytics, Smart Home Solutions, Vehicle Mobile Surveillance and Wearable Surveillance. Yes, there are many companies that can offer a piece to the IoT puzzle, but only those companies that can offer a complete end-to-end IoT solution will be able to profitably benefit from it. The truth is, there are only a handful of those companies, at best.

IoT has the potential for enabling some amazing new products and services. But before we all get caught up in the hype about its potential market size, it’s important to take a realistic look at the financial potential.