Stop chasing the false gods of IoT metrics

Photo credit: Olabi Makerspace.

IoT (Internet of Things) is a buzzword today. Several studies have hyped up the potential of IoT. Some recent projections are humongous – 24 billion IoT devices by 2020 (growing at 41 percent CAGR), US$6 trillion investments in IoT solutions over the next five years. This will generate US$13 trillion of ROI by 2025, with governments and business being the primary driving force. Consumers are the third driving force in all respects – devices installed, money spent, and ROI achieved. These statistics have been borrowed from here.

Connectivity of devices is surely going to happen. Only time will tell in what form, how quickly and how large this proliferation of IoT devices indeed happens. Looking at the present, the real-time monitoring and control that can be enabled today are providing people with data never seen before and hence opening up many new market segments across different sectors (industrial, energy, healthcare, smart cities, and transportation, to name a few).

Will Voltas open up its API and allow any third party to connect to its smart air conditioner?

The big IoT players – the AWS, Microsoft, IBMs of the world – are focusing on a platform play that provides a vision to integrate all these diverse devices and gather intelligence from the collected data. Open devices and standardized communication are going to play a big role if such platforms are to see the light of day in a major way. Will AC manufacturer Voltas open up its API and allow any third party to connect to its smart air conditioner? Only then does a platform play indeed happen. My guess is that Voltas won’t, since they would also see a lot of value in the collected data and would like to keep it to themselves and monetize it in many ways.

While the big players fight it out for open standards (opening up opportunities for a platform play) and web-connected devices, the IoT of today – especially for startups – is about connecting existing infrastructure (using external gateways and devices) to the cloud, and delivering value that makes financial sense. In other words, the cost of connected devices should easily pay for the value delivered by such connectivity.

Cut the buzz. Photo credit: Gratisography.

On which metrics should a startup (or an investor – or maybe even a customer choosing between two different IoT vendors) focus?

Let me first discuss the oft-reported but not-so-important metrics in the IoT domain. These are equivalent of the Gross Merchandise Value (GMV) which all ecommerce companies used to chase until early this year (when funding became scarce and people started looking into true business metrics).

2016 has been the year in which many critics (including the e-commerce companies themselves) have been vocal about GMV not being the right metric to follow for ecommerce.

Buzzy metrics

So what are these often-reported, but with no real meaning, metrics in the IoT space?

And why don’t they make sense?

Number of data points collected (or GB/TB of collected data)

Simple metrics

Keep calm and invest right