Internet of Things or Internet of Thingies?

The Internet of Things is getting more and more press these days, so before matters get too far out of hand, we need to make a clarification. There are actually two categories promoting themselves under the same name, each of which will sell to very different customers under a very different business model and recruit a very different ecosystem.

Let’s call the first category Internet of Things, by which we mean connected assets. This includes jet engines, trucks, refrigerators, bridges and highways, and the like. The customer here is the asset owner, and the primary value proposition is predictive maintenance leading to longer useful life of the asset. Over time enough historical data may accumulate such that there will be a secondary “smart assets” value proposition that emerges, but that requires a lot of water to flow under the bridge first. In the meantime, this is a B2B sale where the business model is likely to be a subscription service, and the ecosystem a set of industrial product and service suppliers who will monitor and respond to signals from the asset as is performs.

Contrast this with a second IoT category which we will call the Internet of Thingies. It is unified by a collective commitment to deliver differentiated consumer experiences. This includes FitBit, AppleWatch, Google Nest, along with various garage door openers, hot-tub remotes, nanny-cams, and the like. The customer here is a consumer, and the primary value proposition is engagement or convenience. Here historical data builds up very rapidly, so the “smart thingie” comes into play much sooner—something that will prove of interest to utility providers and others downstream. At the outset, however, the market is characterized by a B2C sales where the business model is still a bit in flux, combining freemium, product sales, and subscription services, and the ecosystem includes an Internet carrier, a retail distribution arm, and a media-like experience deliverer.

Now if you go deep enough into these two architectures you can find points of intersection. Both will create Big Data repositories and use machine learning to scour log files to extract insights that will deepen value creation over time. But you have to go pretty darn deep to get this level of abstraction, and anyone who is not a technologist is much more likely to find themselves on one side of this divide or the other.

For example, it will be interesting to watch Tesla and Apple evolve their two approaches to the automobile market. At present, Tesla still treats the car as an asset—Its owners love the experience, but it is largely confined to making the car itself run better. It is hard to imagine Apple making that their primary focus. Instead, they are much more likely to see the car as a commodity hardware platform that can run Apple software. We’ll have to see how this plays out, of course. The point is, for the time being and the foreseeable future, there is an inherent bifurcation in the Internet of Things category that bears watching.

That’s what I think. What do you think?

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Geoffrey Moore | Zone to Win | Geoffrey Moore Twitter | Geoffrey Moore YouTube