Consumer IoT vs Enterprise / Industrial IoT : Defining Attributes

Internet of Things (IoT) offers a large spectrum of solutions from Consumer IoT to various verticals in Enterprise/Industrial IoT. Both sides of the spectrum can learn & benefit from each other to have IoT deliver a resounding impact to the end goal.

Enterprise/Industrial IoT is a categorization across many verticals from Manufacturing, Utilities, Oil & Gas, Enterprise Buildings, Public Sector : Lighting, Waste Management, Government Buildings, Transportation etc. The difference between Consumer and Enterprise/Industrial IoT is based on who the end buyer is. As the name suggests, consumer IoT is people like you and me, leveraging IoT for the betterment of our daily lives. Enterprise/Industrial IoT is where employees are leveraging IoT for the benefit of the company/business they work for.

I will pick 5 areas from my experience which I think will do a good job of comparing the 2 sides of IoT market spectrum.

Value Chain

Value chain is by far the most important attribute to understand since it has implications on all the other aspects of IoT. A picture speaks a thousand words, the below illustration should provide a good explanation of the value chain on both the consumer and industrial facets of IoT.

An apt word to describe the enterprise/industrial side is “Complex”. Given the number of players on the industrial IoT front, and how each of them try to influence the end customer, IoT projects end up being a circus and customers are often confused on how the various acts come together or it’s like trying to build a lego puzzle with no instructions. In addition, it’s not like the customer’s house is clean by any means, the enterprise/industrial customers have many organizations with conflicting priorities and guidelines, like the CDO (Chief Data Officer) office overseeing data governance to CIO (Chief Information Officer) office worrying about networking/connectivity to line of business/COO (Chief Operating Officer) office wanting business outcomes to CTO (Chief Technology Officer) office always experimenting on what’s next. The end result from the amalgamation of a complex customer’s organization to a super complex value chain is a hyped up IoT that rarely derives the value it deserves. 

This is where the consumer side triumphs. Customers are average consumers, who don’t necessarily chase technology but want outcomes. The technology players in this market cannot pounce on consumers, they have to solve the problem and provide a solution to be relevant to the consumer. The end result is a much simpler value chain.

Technology

This is one area where I think there is a mis-conception in the market. I can say with reasonable confidence that the technology for realizing an IoT solution is very similar. There are some nuances in terms of the end protocol that the IoT devices use that is specific to the industry/ vertical, which I would not characterize as a big difference. There is enough fragmentation in the consumer space on the device protocol aspect as much as there is on the enterprise/industrial side. 

The technology stack for the enterprise/industrial segment does look complicated from the outside and that is mainly due to the complex value chain we discussed above. But in reality, if you peel the layers and functions, the solution comprises of the same components on either front, that range from end IoT devices to edge computing to edge & cloud native IoT stack (persistent connection, pub/sub, time series storage, rule/automation engine, device shadow, device twin, streaming analytics, visualization, data exchange etc) to end-clients/ apps that help consume and provide outcome using the IoT data.

Experience

It’s probably the worst kept secret that user experience in the enterprise/ industrial world has lagged consumer world but eventually caught up. If usage of mobile phone/apps and BYOD in the enterprise is any indication of user experience catching up, it’s just a question of time.

I have seen the consumer IoT world rigorously innovate to drive user experience towards simplicity. They make the most complex of tasks seem as simple as a push of a button. Every aspect, from intuitive device on-boarding in a matter of minutes to time for first gratification to user intuitive features for control/automate to detailed attention on things like how battery is operational in a device without ever opening a battery case to how support is handled when there is a problem across the complex IoT stack, has been cracked in Consumer IoT. And this needs serious work on the enterprise/industrial side.

This is again a problem more so on the enterprise/industrial front not because it cannot be solved but because of the complexity in the value chain and the number of players involved. 

Pace of Adoption

We all like Christmas gifts. Don’t we ?? Consumers like new and shiny toys and are just by nature more open to changes than businesses are. This makes the consumer IoT world run fast - actually quite a bit faster.

The Consumer IoT world is ahead in terms of technology & the experience it provides for this very reason. 

Let’s look at a few examples on why this is the case. It’s a practical problem to begin with. Imagine a sensor and roadways sign informing people about weather and traffic conditions. It’s not easy for a transportation department to install sensors in the middle of the freeway in weeks or even months. It takes years, probably multiple years to get an approval, open a tender, get through the red tape and finally have someone implement the solution. Imagine a sensor in the middle of a mining field that measures calibrations, this is a once in a decade change at the very least. There is a big impact to business to even make the change. Imagine a robot used to manufacture a car, these robots costs $XX Mils and replacing it with a newer, IoT version of the robot can be costly and unthinkable in most cases. But it is not like the existing robots are not generating data - getting access to this data and making it remotely consumable is the trick. This makes most IoT projects a brownfield implementation vs a greenfield implementation. End result is what it looks like to the outside world as a long drawn out project that questions the value of IoT.

Monetization & Willingness to Pay

Last but probably ‘the most important’ aspect is that of monetization, this is where Enterprise/Industrial IoT triumphs Consumer IoT.  

Even after the complexity in value chain and it’s indirect impact on innovation in technology and experience & the slow adoption rate, the business/monetary impact of IoT in Industrial/Enterprise segment is HUGE. Most people who understand this still continue to believe in IoT & realize the benefit in spite of all the complexities it poses. 

Things get tricky on this aspect for Consumer IoT. The problems we solve for consumers are not necessarily tier 1 problems and this makes a consumers’ willingness to pay questionable. Consumers have a certain wallet share and it isn’t growing a whole lot. So although the average consumer is ready to pay a small premium for an IoT device vs a non IoT device, it does not map to business’ cost structure, that have constant ongoing expenses in order to manage and maintain an IoT device/solution. Most consumer IoT companies are getting consolidated with the help of big brothers who have deep pockets. The only people who are able to sustain, albeit bleeding money, are companies who have a theory to monetize their investment indirectly from the consumer. I would say this is a question of time and they are running out of time. 

Conclusion

To reiterate, there are areas where consumer IoT triumphs but there is one area and probably the most important one where enterprise/industrial IoT comes ahead. 

Now, if magically someone on the Enterprise/Industrial IoT side could solve the challenges it faces or if magically someone on the Consumer IoT side found a business model that makes it profitable, wouldn’t it be awesome? Well, it’s not impossible. 

I have seen companies who have cracked it on both sides. If you think about what a company like Samsara has done on the Enterprise/Industrial IoT side, it’s literally blasted the maze of the value chain I showed above. And as soon as it did that, other things fell in place, including embracing the innovations in technology, solving the much needed experience and that has resulted in many ways increasing the pace of adoption to end customers. When things become easy, businesses are ready to embrace faster. 

On the consumer side, similarly, I have been in a company that has flipped the IoT business model on his head and quickly ramped to be a $X B business (with majority in recurring revenue) all along leveraging the goodness that comes in Consumer IoT described above.

So on both sides, leveraging the goodness and solving the challenges is doable and there are proof points.

I can confidently say, IoT is here to stay on both sides and will have a resounding impact in the years to come. IoT triumphs !!

Author

Anoop Mohan

[email protected]

Note: Cover image courtesy – IBM; This article represents thoughts and opinion of the author only.