When capital markets start paying attention to revenue enabled by IoT, shareholders will pay attention. When shareholders care about how much investment is being made in IoT, business leaders will have the board support they need to transform the business and be measured not by how many things are connected, but how much value are they creating by connecting them.
For example, since the early 2000’s, analysts have been predicting how many devices will be connected by year 20xx. Has anyone taken the time to go back and check their accuracy? Don’t waste your time, the exact number doesn’t matter.
I completely understand the value of the “network affect” and I’m not writing that the number of connected “things” isn’t important. I just believe that it is the wrong metric for industrialists to focus on.
To illustrate my point, let’s say Keurig and Apple got together and had a really good year. If they did, then analysts would predict that by the year 2030, there will be one bazillion coffee makers connected to iPhones (who uses alarm clocks anymore, anyway?).
Who cares? Where is the value in that?
Here is another example. The NEST thermostat. What a wonderful invention. Forecasters are predicting that smart thermostats will dominate residential living in the coming years and at some point a vast majority of dwellings will have them.
Here is an interesting fact. This year, NEST expects revenue from selling the thermostat usage data back to the utility companies will exceed revenue from selling us a $250 thermostat.
THIS metric – data vs. product sales – is the type of metric we should be measuring. To me, the most exciting thing about IoT is that we don’t really need to be hyping-up predictions and telling ourselves, “it’s coming, it’s really coming, just hang in there a little longer!” We can see the creation of value within the industry markets right now.
Have you taken a look at GE’s 10-K for 2015? GE Digital, a company GE created in 2015 to leverage the business value of machine data, showed $5B in revenue and 200k connected devices. “We plan to grow GE Digital from $5B revenues in 2015 to ~$15B revenues by 2020” said Jeff Immelt, Chairman and CEO of GE. That is impressive.
I petition that our industry analysts should be maintaining and tracking an, “IoT Value Index”. The index would track how much value is currently being created across industry segments. The index is real. It is right now.
Business leaders are not motivated by soothsayer predictions. No offense to all my analyst friends but some of these wildly optimistic predictions are turning the analyst industry into the king’s jester.
Revenue from data collected and sold is where the real insight into the value of IoT begins.