IoT Value Chain : 2017 - A battle of Titans

Back from the Consumer Electronics Show (CES) for the 4th time, I will summarize the changes that have taken place over the last few years as follows:

Three years ago, component manufacturers displayed chips they used to make objects communicate.

Two years ago, we witnessed a surge of connected objects for all kinds of uses but often without links between them.

One year ago, numerous service platforms began appearing, promising to federate the use of these multiple connected objects.

This year, the prime mover was the "service operator," widely present at the show, promising to globalize the service offer throughout the value chain, either by being fully integrated or by surrounding themselves with partners. They thus positioned themselves as the sole interlocutor of the user, the true, trusted third party. This was notably the case of actors such as La Poste, Bosch, IBM, Engie, EdF, Leroy Merlin, Samsung, LG, Changhong, Toyota, and even Schneider Electric, Legrand, Somfy and Amazon, which was omnipresent with Alexa, but did not have stand in the same way as Apple or Google. Of course, beyond CES you can add thousands of other 1st rank players who are targeting to play this role.

This evolution foreshadows a battle of the titans in the coming years or even the coming months: the challenge is take leadership along the entire value chain. With digital, the boundaries between the different trades have suddenly faded and any actor that is predominant in his field can claim to play a leading role on the chessboard as long as he has direct access to the user and a major customer base of more than a million users.

In this context, it is a good bet that the CES 2018 will see the advent of the first winners or potential leaders. Many actors are now on the starting line but unfortunately few will be able to really position themselves permanently. Indeed, being a world leader in one’s field today does not automatically carry with it the claim to multi-service operator status. Mastery of the laws of the Internet is fundamental, along with adopting innovative business models that quite often run up against the models in place. One of the keys to success will undoubtedly be sharing. It is not enough to federate partners in a global service offer; it is also necessary to ensure them a decent income while respecting their position in the value chain. History is being written now, and in this respect, 2017 will be very interesting with regard to the digital mutation we are experiencing. At this stage, it is important to ask the right questions. What is my place in the value chain? What is my legitimacy? What are my real areas of expertise? We must not hesitate to measure ourselves against actors that few have even thought about yet. I’m thinking in particular of the players in healthcare and well-being, mobility and the environment, which represent key challenges for our society and occupy a prominent position in the CES, and of course those involved in finance and insurance, where there are opportunities to seize in the short term. Who will take the lead? That is the question. In the meantime, wisdom may inspire some to choose humility and position themselves as tier 2 or tier 3 players by perfectly mastering their trade. Artificial Intelligence, which is increasingly becoming the key element in almost every field of activity, is in fact accelerating this mutation through rapid transfer of expertise and value that is challenging the positioning and even leadership of some players. But it will not always be painless, because in many cases part of the value linked to the intelligence will have been outsourced or pooled, resulting in a loss or a sharing of this value. The challenge lies in business models and value-sharing. To be continued... Rendezvous at the next CES 2018 and in the meantime, I wish you to make the good choice in 2017.

Emmanuel FRANCOIS

@ EM_Francois1