There are growing numbers of announced partnerships between IoT platform providers. For example, in December 2019 Ericsson and Microsoft announced a partnership based on Ericsson’s Connected Vehicle Cloud and Microsoft’s Connected Vehicle Platform.
These partnerships are usually meant to reduce complexity in developing and deploying an IoT application. Complexity manifests in technology development (e.g. choosing standards, managing devices over complex networks), ecosystem development (e.g. choosing suppliers, distributors), and determining ROI. Complexity increases the risks to IoT application developers and corporate adopters of IoT technology: risks of increased time to market (or development failure), increased costs, increased security threats, unrealized benefits, or failure to achieve a satisfactory ROI.
These risks have a negative impact on IoT market development. Microsoft has published original survey research indicating that 30% of IoT projects fail in the proof-of-concept phase. Cisco has published similar research findings.
A common characteristic among these partnerships is that one of the partners usually is also a cloud infrastructure vendor. This makes sense as cloud infrastructure vendors like Microsoft (Azure) and Amazon (AWS) become key suppliers in most enterprise IT environments.
The other partner tends to be one of four types of companies that offer a service that complements the cloud infrastructure vendor’s offering:
Vertical specialist: a platform vendor that targets a specific vertical or market, such as connected cars, and develops industry-specific expertise in understanding the needs of that vertical or market. The Ericsson example above is representative of this type of partnership.
Connectivity service provider: a platform vendor that provides connectivity as a service over a public network, these include mobile operators and satellite operators. For example, for IoT applications Microsoft is working with satellite operator Inmarsat while AWS is working with satellite operator Iridium.
Data exchange market maker: a platform vendor that focuses on enabling third-party organizations to expose, discover, share, and (potentially) monetize IoT data with each other. For example, data exchange platform vendor has partnered with Microsoft to build services on top of Microsoft Azure and the Microsoft Connected Vehicle Platform.
Component vendor: a platform vendor that focuses on offering key hardware components (typically connectivity modules and modems) and has developed a strategy of providing a “turnkey” device-to-cloud capability particularly aimed at SMB developers and adopters. For example, Sierra Wireless has announced a partnership with Microsoft to connect Sierra Wireless’ Octave platform with Microsoft’s Azure IoT Central platform.
Clearly, such partnerships resolve some of the ecosystem development challenges addressed above. Partnerships can also help reduce technology risk through pre-integration and certification of each partner’s respective technology with that of the other partner. Such partnerships also have the effect of reducing the need/demand for broadly applicable IoT standards. (Such standards development, for example oneM2M, have faced challenges of their own.) It is also important to note that these partnerships usually are not exclusive. Customers of one partner still could select other, non-partnered suppliers if they so choose.
Ultimately, these types of partnerships likely will become more common as platform vendors seek to reduce complexity and resulting risk for customers. IoT application developers and corporate adopters should consider:
If there is a realizable source of technical differentiation by sourcing different platform components individually, or, if,
They should rely on pre-integrated, partnered solutions and focus their differentiation strategy on business attributes.
As the IoT platform market continues to mature as underlying infrastructure for various IoT applications, the benefit to developers and adopters of selecting each supplier individually, rather than leveraging pre-partnered ecosystems where available, will decrease. Omdia recommends that most developers and adopters leverage the benefits of these pre-partnered solutions where available, absent a compelling reason to attempt a selection of “best in class” suppliers.