IoT Platform Shakedown

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By: Isaac Brown, Landmark Ventures

We are most of the way through 2019 – and are we still talking about IoT platforms? Yes, we are. Despite how poorly defined this term still is, and how much investor money has been thrown away, the platforms are here to stay and constitute the core of most IoT projects. Analyst firms and hype-mongers have often counted how many IoT platforms are available on the market (an exercise only slightly less frivolous than counting all the sensors or connected devices in the world). These estimates routinely exceed 500 available platforms, though that number has decreased in recent years with myriad failed businesses and M&A events.

IoT platforms are tools for connecting products and operations to the internet in valuable ways (for new business models and operational performance improvements). These platforms provide capabilities across key functional areas such as device management, connectivity, data routing/storage, application development, and analytics. Let’s discuss who is selling these things and where we see success – notes below based on thousands of conversations with executives at enterprises around the globe over the past five years, as well as dialogs with IoT solution vendors.

I would be extremely surprised if anyone were making more money selling IoT products than Microsoft and Amazon – we talk to a ton of large enterprise deploying Azure IoT and AWS IoT solutions at scale. Google is creeping up and certainly winning a lot of enterprise IoT cloud deals. Generally speaking, Microsoft, Amazon, and Google are considered to be the three main IoT cloud products winning in the market.

SAP and Oracle should be in good position to capitalize, since the ERP is either the “source of truth” or “last mile” (or both) for many IoT projects, but they continue to struggle to see traction with their IoT products. IBM makes a lot of noise, but we see very few enterprises buying their IoT products; meanwhile Salesforce and Cisco pop up here and there. The telcos were probably better poised than any other category to capitalize on the platform space, but they so woefully missed the boat – they let companies like Jasper, KORE, and Aeris eat their lunch.

Four years ago, GE was the top dog in terms of brand recognition and thought leadership. Today, GE is a case study in how to fail at digital transformation – the Predix platform never made the money it was supposed to and ultimately they tried to try to sell off the GE Digital business. Siemens has been a bit slower and quieter, but does seem to have moderate traction with its MindSphere IoT platform. We hear a lot of good things about Rockwell Automation from industrial operators. Rockwell has been innovative in partnership with Microsoft & Azure IoT, and Rockwell made big waves with a $1B investment in PTC in summer 2018.

PTC is a unique case – PTC historically was a CAD and PLM software provider, based in Boston with ~$1B in revenue. When IoT started to bubble, PTC started buying up startups – relevant acquisitions included Axeda, Kepware, Coldlight, Vuforia, and ThingWorx (ThingWorx eventually became the name of PTC’s IoT product suite). Three years ago, PTC was perhaps the IoT vendor with the most overall IoT projects (although many were small pilots). PTC has cooled off a bit but still remains one of the essential players in the space, and PTC is a good case study on build vs. buy – PTC gained a relevant product portfolio almost entirely through startup acquisitions, and was successful in doing so.

There are some good startups out there, too. People talk a lot about C3.ai and Uptake – these two companies have each raised roughly $300M, with valuations over $2B, and winning big logos to boot. It helps to have founding CEOs who are hyper-connected billionaires (Tom Siebel and Brad Keywell). Relayr has a great story, and the best business model in the industry – relayr was acquired by Munich Re / HSB last year, and the company has a unique model that combines IoT technology, business outcome insurance, and financing (this case study here outlines the premise in more detail). If you’re a startup trying to win at the platform game, you need a special differentiator like relayr, Uptake, and C3.ai – or you’re going bite the dust.

We hear rumblings from time to time about contract manufacturers providing platforms, largely to their machine manufacturing customers (think Foxconn, Flex, Jabil). Semiconductor manufacturers are all trying to sell something, but we rarely hear about people using them (think Qualcomm, Intel, Samsung). Accenture, PwC, Deloitte, and the likes are all selling something (and definitely making money doing so), but they are largely just repackaging Azure/AWS/Google products. And of course, plenty of big companies are still trying (and failing) to build their own platforms internally.

The IoT platform space is not much less confusing than it was five years ago. Consolidation has helped reduce the complexity, but only slightly. Frontrunners have emerged – Microsoft and Amazon are doing very well, and there are some awesome startups out there. But overall investors are disappointed, and it’s still the Wild West out there. Give us a call if you want some platform counselling, we’re here to help.

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Technology innovation and process automation. Smart industry 4.0
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