Who will be the iOS and Android of IoT?

[Put together, the announcements at Google I/O and from Apple, Samsung, Nest, Quirky and others in the past weeks paint a crystal clear picture of where the future of the Internet of Things is heading. Our latest report on the topic gives you the right tools to separate winners from losers in the IoT race. In this post, we line up the candidates in smart homes, smart cars and health.]

IoT-Developers_FINAL

The blast of IoT-related announcements in the past days and weeks, including at Apple WWDC and Google I/O, are more than an indication that the Internet of Things is picking up pace. Put together, they also offer a crystal clear picture of where the Internet of Things is heading.

The major players have put their stake in the ground:

  • A lot of attention at Google’s I/O conference went to the Google Wear and Google Fit announcements. At the same time, Google-owned home automation company Nest – known from its thermostat, smoke detector and now security camera (Nest acquired Dropcam) – has opened up its API to developers.
  • With the “Works with Nest” program, the company is positioning itself as the central hub for connected devices in the home; and it is not alone. Crowdsourcing product development site Quirky announced Wink, a hub + app + cloud platform that together with Nest is going to provide some strong competition for that other hub-in-the-home startup: SmartThings. Quirky is an interesting player as its backed by GE, with whom they have been partnering on a range of smart home solutions.
  • Apple announced HomeKit and HealthKit at its WWDC developer conference, adding to its push into the car earlier this year with CarPlay.
  • Samsung, finally, announced its own health platform SAMI and sensor designs Simband last month.

The common theme is that [tweetable]all these recent IoT announcements focus on developers more than products. Why is that?[/tweetable]

All these companies have understood a fundamental truth about the Internet of Things. IoT is not about technology or features or devices or connectivity. We explain this idea in depth, and with many more examples, in our new report – IoT: Breaking Free of Internet and Things.

[tweetable]The biggest opportunity in IoT is in thousands of niches and use cases, just waiting to be discovered[/tweetable] by tweaking and experimenting with new ideas.

How do you deal as a company with such diversity and unpredictability? How do you design products for future unknown needs? Luckily we have some recent examples of companies that solved this conundrum. In the past 6 years, Apple and Google propelled themselves to top positions in mobile by fostering vibrant communities of innovators (app developers) that together unlocked countless new use cases and needs, from silly (Flappy Bird) to life saving (PocketCPR).

We’ll leave the full discussion of the exact mechanics for another time, but with the smartphone model in hand, it becomes clear what the companies above are trying to do. They want to achieve the same kind of dominant position as Apple and Google in mobile, using the same recipe. And some of them inevitably will.

The stakes are high. Successful community owners will gain immense competitive advantages, typically leading to winner-takes-all markets. The game is on: [tweetable]who will be the equivalents of iOS and Android in the Internet of Things?[/tweetable]

Who will be the kings of IoT?

Three areas in particular seem on the brink of seeing Android/iOS-like ecosystems of entrepreneurs gaining momentum: home, health and cars.

In the home, there are at least 4 serious ecosystem contenders.

  1. Apple signalled its intentions by releasing HomeKit, the developer API that enables discovery and control of third party connected devices. Some clever people (e.g. at Forbes and Macworld) have pointed out that the Apple TV might be the perfect substrate for a HomeKit-driven hub.
  2. Google has made a clear investment in the home with its $3.2B acquisition of Nest, as well as other initiatives like Android TV and ChromeCast.
  3. GE has been building momentum with its Quirky partnership and now the Wink platform.
  4. Meanwhile in startup land, SmartThings has been pursuing this ecosystem vision for almost 2 years since its headline-making Kickstarter campaign.

In health and wellness, things are heating up too. Fitness wearables like Pebble, Razer, Nike+ and Fitbit have successful SDKs with tens of thousands of registered developers. However, in our new report we explain that the bigger opportunity is in combining and mashing up data from different sources. That is the core functionality of the following candidates:

  1. Apple puts its stake in the ground with HealthKit.
  2. Samsung did the same with the SAMI platform. Samsung is in a unique position to bundle an IoT platform with hardware (components, not devices), for example the set of reference sensors (Simband) that they announced at the same time. This strategy is also the basis for the company’s success in smartphones. Samsung can also bring a large amount of Samsung device users into play; a strong carrot for ambitious IoT entrepreneurs.
  3. Google has been playing with wearables for a while (Android Wear, Google Glass). At Google I/O, the company announced Google Fit, a set of APIs that will “blend data from multiple apps and devices”.
  4. Again there are several startups on the scene – Human API and Validic come to mind.

In cars too, we find a mix of internet giants, car maker incumbents and startups that are building developer platforms. We discussed them in depth in our March report “Apps for Connected Cars? Your Mileage May Vary”.

  1. Apple took the lead earlier this year by announcing CarPlay.
  2. Google is following suit with Android Auto, backed by the Open Automotive Alliance with all the major car makers. The announcement mentioned that “Android developers will soon be able to create entirely new experiences for the car” – a clear hint at Google’s intentions to empower a community of entrepreneurs to discover unexpected user needs.
  3. Microsoft has Windows in the Car.
  4. The leading platform-oriented car makers are Ford with AppLink and GM.
  5. Interesting startups with an “over the dashboard” play include Dash and Carvoyant.

What about the sectors that have historically been the focus of the Internet of Things industry, like utilities (smart metering), industrial applications or smart cities? While they represent attractive business opportunities, these arenas focus mostly on solving well-understood needs for known customers. As such, they are not likely to sprout ecosystems that can spectacularly break open the IoT market.

On the other hand, we might see some unexpected platform players coming on the scene. One set of strong candidates focuses on a different part of the IoT challenge: selling and distributing the physical products. Amazon has made its opening in the Internet of Things with a dedicated online storefront and with back-end services (Kinetics), a simple expansion for its AWS infrastructure. We’ve written earlier this year about the plans of Chinese e-commerce company JD.com (together with Baidu) to set up a service line for IoT entrepreneurs.

The wheels are in motion

Time will tell who will take the top position, but the wheels are clearly in motion.

As time goes by, hardware becomes less and less a barrier to entry. Just look at Cruise, an 8-person startup that built a self-driving car in record time with low-cost sensors and components. Dedicated Internet of Things platforms are booming (we count 50+ so far). The cost of connectivity is dropping. This allows entrepreneurs to focus on making sense of data and drive meaningful action, more than on solving underlying technology problems.

As this trend continues, VisionMobile forecasts a fast growth of the IoT developer base in the next years, reaching well over 4 million innovators and entrepreneurs by the end of the decade. With every new use for Internet of Things technology that they discover, demand will grow and this market will become more attractive still. Exciting times!

How can you separate winners from losers in the Internet of Things? Whether you’re a developer, investor or platform company, our IoT report will allow you to make the right bets. Download your copy now.

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RIM: a leap ahead in user experience, but can it execute?

[RIM’s acquisition of UI firm TAT marked the largest mobile software M&A of 2010. Research Director Andreas Constantinou explains why the acquisition places RIM a leap ahead of the top-10 OEMs in terms of UI capabilities and asks – can RIM execute on the promise?]

RIM: a leap ahead in user experience, but can it execute?

In December, RIM surprised industry observers by buying TAT (The Astonishing Tribe), a 200-strong UI technology and design firm based out of Malmö, Sweden. At nearly $130 million, RIM’s move marked the largest mobile software M&A transaction of 2010 globally and an impressive 5.5x multiplier over TAT’s 2009 revenues of 170 million SEK. It follows a string of RIM acquisitions since 2009, namely QNX (operating system), Cellmania (content billing and distribution), Dash (two-way navigation), DataViz (document viewer), Torch Mobile (WebKit experts) and Viigo (software house).

More importantly, TAT’s acquisition places RIM a leap ahead in the league of top-10 handset manufacturers in terms of own UI capabilities. Here’s why.

A leap ahead of the competition
TAT was founded in 2002 by 6 games engineers and designers out of university (here’s their story) but has come a very long way. TAT is not just another technology company. It has seen its Kastor 2D/3D graphics framework deployed in over 500 million phones across 5 out of the top-7 OEMs. More important to the RIM story is TAT’s Cascades product, a UI framework that allows OEMs to design their phones not in terms of applications, but in terms of screens, allowing what can be termed ‘rapid variant management’ (more about that later).

TAT has also been clearly ahead of the UI technology vendor pack – vendors like Ikivo, Digital Aria, Acrodea, Bluestreak, YouILabs and Scalado – thanks to its design skills. When other vendors have banked on technology marketing, standards implementation or operator deals, TAT has used its design skills to get into the door of both OEMs and operators/carriers (check out this video on the ‘future of screens’). The marriage of design skills and technology licensing allowed TAT to build momentum and cash-flow when OEMs were cutting budgets post-2005. These same skills were what got TAT the deal to design Google’s Android 1.0 UI. TAT’s strength lies in the combination of UI framework technology and the first-class design skills – both of which are now with RIM.

So what does RIM get?

TAT’s acquisition is far more encompassing than many would have thought – it puts RIM a leap ahead of the pack in the league of top-10 handset manufacturers in six ways:

1. Match the iPhone
With the Cascades technology, RIM can now match and even exceed the sophistication of the iPhone UI (see this and this video demos). Long term this means RIM has a chance to contain the exodues of enterprise customers opting for replacing their RIM with iPhones due to the outdated UI and usability on the Blackberry OS 6. Heck, it would be even easy for RIM to offer ‘deep skins’ for BlackBerry handsets where the navigation and core apps closely resemble the iPhone apps.

 

2. Rapid variant management
TAT’s Cascades is a departure from how OEMs build handsets today, by allowing the UI to be designed in terms of screens and not applications.

The downside is that Cascades-enabling an existing software stack means that legacy ‘spaghetti’ applications have to be ported one by one on top of TAT’s framework, which takes 9-12 months for the complete UI (it’s 10s of millions of lines of code that have to be ported). This is what has historically limited Cascades to only tactical wins for specific applications on Motorola, Samsung and Asus handsets.

The upside is that with Cascades RIM gets rapid variant management; creating 100+ operator variants from a single vanilla UI is just a button (and an XML file) away. Designing in screens rather than apps means that RIM can keep its investment into messaging, graphics and enterprise middleware but radically change the UI look and feel. This allows RIM’s carrier customers more differentiation and exclusivity opportunities, all without delaying the time to market – and therefore securing the carrier multi-million subsidy and marketing carrier budgets.

Rapid variant management is today one of the few domains where Android suffers and Nokia’s Symbian still excels, so a very important differentiator for RIM once the integration work is out of the way.

3. Consumer and enterprise personas
We covered earlier how RIM needs to escape its dual personality disorder by designing separate consumer and enterprise product lines. However, designing a different set of apps for enterprise and consumers is complex – not to mention managing many more device models and variants in the field.  With TAT, RIM buys the ability to have enterprise AND consumer UI personas ship in the same phone – not only that, but in a way that can be easily switched by the user at the flick of a button. Switching between enterprise and consumer personas is also much cheaper to do at the UI level rather than the bare metal level with what’s called ‘mobile virtualization‘.

This implies that with TAT’s technology, RIM can allow users to switch between consumer and enterprise UI personas; a consumer UI when you want to browse on Facebook and check out Flickr and an enterprise UI when you want to check the email attachment for your next meeting. Note that Nokia and HTC Sense have also implemented basic switching between work and personal skins.

4. Enterprise UI customization
Besides the runtime technology, TAT develops Motion Lab, a tool that a designer can use to define UI screens and UI flows through a drag-n-drop environment. For RIM, this means that enterprises can customize the phone’s navigation to focus on the few key applications that are used most of the time. It also offers RIM a level of enterprise customization beyond what other OEMs can achieve out of the box.

5. UI personalities
With the erosion of the market of downloadable ringtones and wallpapers, the industry has turned to apps as the next premium content market. Yet, there are still new revenue opportunities in downloadable content. In Japan, DoCoMo has led the market of downloadable UIs in the form of “standby screens” (programmable home screens), and which Acrodea has extended to the dialer and menu apps.  This has created a small market of downloadable UIs for both DoCoMo and KDDI.

With TAT, RIM can extend that market to the world, and across more embedded applications – creating what can be called the market of downloadable UI personalities. Whether RIM can turn this capability into a new ‘market’ is questionable, but it certainly presents a unique point of differentiation and an opportunity for a new revenue stream for RIM.

6. Connected experiences
With the acquisition of Dash, a 2-way car navigation company, RIM has its sights set beyond phones and tablets into the automotive segment. To deliver a consistent UI across these varied form factors a new OS (QNX) is far from adequate. It needs a portable UI technology that allows RIM to reuse its UI assets with minimum maintenance overhead across different form factors, from phones to cars. TAT’s Cascades is exactly this technology and as TAT has shown, it can be extended to connected screens in the living room, in the street, in the car, and in the hands.

Filling in the gaps that TAT left
With TAT out of the picture, how can other OEMs catch up to the level of UI technology sophistication and design skills? There’s a variety of UI technology vendors out there (see below for an extract from our Mobile Industry Atlas), but none really combine the UI ‘screens’ framework or the design skills of TAT.

Many companies claim to have “UI frameworks”, but they all invariably mean a combination of SVG engines, 2D and 3D graphics toolkits or compositing engines – which address UI development as an application, not a screen paradigm. Historically there have only been three companies who have developed screen-based UI frameworks; TAT, Digital Airways and Next Device. Digital Airways was behind the UI of the Vodafone Simply series of five handsets launched between 2005 and 2007 and the Porsche P9522 handset introduced by Sagem in late 2008; the company has since transitioned into UI services in mobile, embedded, automotive and aerospace – however the company ceased trading sometime in 2010. Next Device was acquired by Mentor Graphics (makers of the Nucleus RTOS), who didn’t manage to leverage the technology asset as the licensing model was markedly different to Nucleus’ site-licensing. The gap that TAT left creates an opportunity for other UI middleware vendors (e.g. Ikivo, Acrodea, Digital Aria, Sasken,) to maneuver into this technology space.

Another way to deliver ‘screen-based’ phone design and variant management is via development tools; much like how OpenPlug (now Alcatel Lucent) uses the Adobe Flash IDE to create mobile apps. However this is still virgin territory and we ‘re not aware of any sufficiently advanced UI tools vendors in the mobile domain.

Can RIM execute?
All in all, TAT can deliver Apple-class user experience that offers RIM a strategic advantage compared to OEMs leveraging 3rd party Windows Phone and Android platforms.  This all sounds great on paper of course, but it’s all a question of execution.

Can RIM’s corporate monoculture adapt to the creative minds of TAT? Will the TATers get the mandate and budgets to innovate deep into RIM’s product lines? How long will RIM take to integrate the TAT technology on top of the QNX platform and where will the competition be at that point?

Ladies and gentlemen, place your bets.

– Andreas
you should following me on Twitter: @andreascon

[Andreas Constantinou is Research Director at VisionMobile, and oversees the research, strategy and industry mapping projects at VisionMobile. Andreas also served on TAT’s advisory board during 2008-9]