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November 17, 2014updated 21 Oct 2016 4:17pm

Five must do things for Internet of Things business success

IOT attracted $1bn in VC investment last year in the US. There will be even more money sloshing about this year and next but don’t quit the day job before you read this

By Sam

1) Understand the value chain
Understanding your place in the Ecosystem and building that ecosystem:
In order to build an internet of things business you must first understand the IOT value chain. One company describes it thus:
"The chain begins with components, starting with ingredients, such as processors, modules, operating systems, and security software. Original design manufacturers (ODMs) use these to build boards that end up in things delivered by original equipment manufacturers (OEMS). (Source: Intel)

2) Understand licensing
You must understand the licensing implications of everything you do:
We are seeing new licence models in IOT and are defining new licence models – digital add ons, reloadable digital products moving up the stack to sensor as a service. For example the MRI machine is shipped as an initial product and is then upgraded with a new algorithm. The software give better imaging, better calibration – this is a digital add on – and for the customer this keeps it state of the art.
Another example is a sensor in a parking garage – is there a car space available here or not? It makes the space available to a navigation application in the car and it finds you driving parking and guides you to the spot. It is the infrastructure that makes it available as a service but a parking garage owner won’t understand the licensing implications.
Manufacturers find this model development difficult because of the potential number of models.
We’re seeing common models with differentiation based on application. It has to be understood by manufacturer and consumer. There are a core set of license models applicable across various verticles with differentiation and variation in adoption. (Source: Flexera)

3) Understand communications
Understand communication protocols, networking layers, stacks and standards, topology and the transport of data
Just as you must understand the component ecosystem so you must understand the communication systems.
The layers involved are the application, transport, network and Link layers.
Texas Instrument’s Gil Reiter has written an excellent white paper called Wireless Connectivity for the Internet of Things – One size does not fit all.

4) Join an alliance
Join something like the Digital Living Network Alliance.
The Digital Living Network Alliance is a nonprofit collaborative trade organization established by Sony in June 2003, that is responsible for defining interoperability guidelines to enable sharing of digital media between multimedia devices.
The IPSO Alliance has served as a resource center and thought leader seeking to establish the Internet Protocol as the basis for the connection of Smart Objects. The IPSO Alliance provides a foundation for industry growth by fostering awareness, providing education, promoting the industry, generating research, and creating a better understanding of IP and its role in the Internet of Things.

Intel also has its own alliance.

5) Find well established investors
According to one source, IOT attracted $1bn in US VC investment in 2013. That sounds like a big number but it also points to a huge amount of competition.
Any web search will throw up some interesting players such as Amadeus Capital or YMF Equity Partners.

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