Download Internet of Things: Ecosystem viewpoint What is the Internet-of

Internet of Things: Ecosystem viewpoint
TIES410 Future Internet
January 17, 2012
Oleksiy Mazhelis Software Industry Research Team, Dept. CS & IS
University of Jyväskylä, Finland
What is the Internet-of-Things?
1
What is the Internet-of-Things

The term of IoT was initially introduced by Kevin Ashton in 1999, in relation to the networked radio‐frequency identification (RFID) technologies developed at MIT Auto‐ID Center

The basic idea of the IoT is that virtually every physical thing in this world can also become a computer that is connected to the Internet (Fleisch 2010)

IoT is thus connecting the physical world with the digital world
Evolution towards “connecting things”
THINGS
50 B
PEOPLE
5.0 B
PLACES
~0.5 B
Digital Society Sustainable World
Personal Mobile
Inflection
points
Global Connectivity
1875 1900 1925 1950 1975 2000 2025
Source: Ericsson
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Internet-of-Things: Definition

A global network infrastructure, linking physical and virtual objects
through the exploitation of data capture and communication capabilities.
This infrastructure includes existing and evolving Internet and network
developments. It will offer specific object‐identification, sensor (and
actuation?) and connection capability as the basis for the development of
independent cooperative services and applications (Casagras 2009).

Is an integrated part of Future Internet and could be defined as a dynamic
global network infrastructure with self configuring capabilities based on
standard and interoperable communication protocols where physical and
virtual “things” have identities,
identities physical attributes,
attributes and virtual
personalities and use intelligent interfaces, and are seamlessly integrated
into the information network (CERP‐IoT 2009).
IoT "Worlds"

Tagging world. It is about Identifying things. Identifiers such as
RFIDs are attached to things, e.g. packages, to enable their
automatic identification and tracking. Based on ID, the
information about things can be accessed from a database or
from the Web.

Sensors world. It is about Sensing things, that is “second‐hand”
access to properties of things, that can be perceived from the
outside using a variety of available sensors.

Embedded systems world.
world It is about Reading things,
things that is
“first hand” access to data possesses by things, e.g. industrial
machines or home electronics, already embedded with some
processing and data storage capabilities.
Source: IoT SRA 3
IoT current adoption

Tagging world: Largest RFID deployments are in US DoD (active) and retail
(passive)

Sensing world: The most progressive field is M2M, with MNO extending
their business to connect sensors, meters, etc.

Embedded systems world: Solutions are vertical specific (for example,
transportation sector uses CAN bus interface; in healthcare different
interfaces are used to connect equipment)

These three worlds still have little in common
Market opportunities: M2M
http://m2m.com/docs/DOC‐1221

IoT solutions are already found in a number of segments. The number of
potential applications is huge
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Growth forecast: M2M

M2M is expected to account for the largest proportion of Connected Life
revenue ‐ €714 billion ($950 billion) in 2020.
Growth forecast: RFID

The overall RFID market is expected to exceed $8.25 billion in 2014, up
from $4.47 billion (without automobile immobilization) in 2010

14% compound annual growth rate (CAGR) over the next five years
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Challenges

Fragmented solutions specific to vertical industry applications, with little
or no interoperability resulting in a lock‐in for the customers

Scattered standardization efforts and the general lack of standardized
infrastructure/middleware, making the costs of IoT solutions high

Sound business models are still missing
IoT Standards

RFID
–
–
–


EPCglobal (AutoID Labs, GS1) – unique
identifiers, Electronic Product Code
(EPC)
CEN (with GS1 & ETSI; GRIFS project) –
tags, readers, spectrum, privacy, security
ISO – frequencies, modulation, anti‐
collision protocol
–
–
–
M2M
–
–
–
ETSI M2M TC (along with CEN,
CENELEC)
Goal – e2e M2M architecture, sensor
network
integration,
naming,
addressing, location, QoS, security,
charging, management, application
and HW interfaces
Still in early phase (Smart metering
use case only)
IETF WGs

IPv6 for Low Power Wireless Personal
Area Networks (6LoWPAN)
Routing Over Low power and Lossy
networks (ROLL) WG – Routing
Protocol for Low Power and Lossy
Networks (RPL)
Constrained RESTful Environments
(CORE) – Constrained Application
Protocol (CoAP)
Other
–
–
–
–
–
IEEE 802.15.4 and ZigBee
NFC Forum
W3C
3GPP
ITU: IoT Global Standards Initiative
(IoT‐GSI) and Joint Coordination
Activity on IoT (JCA‐IoT)
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Early vs. Late Standard Emergence

Standard emergence – the earlier the better
– Competing standards paralyze markets – everyone waits for a dominant to
appear
– Incomplete or poorly specified standards may result in incompatible solutions
to which customers will be locked in

Premature standard adoption is dangerous
– Time is needed for the dominant technology to emerge
– Let technology evolve before implementing stringent standards
– ISO‐IP was declared a standard, but is only used in optical equipment
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What is a (business) ecosystem?
Natural vs. Business Ecosystem

A natural life ecosystem is defined as a biological community of interacting organisms
plus their physical environment. According to Moore (1996), the actors “co‐evolve their
capabilities and roles
roles”..

In the same way, a business ecosystem is "the network of buyers, suppliers and makers of
related products or services” plus the socio‐economic environment, including the
institutional and regulatory framework.
–

“An economic community supported by a foundation of interacting organizations
and individuals—the ‘organisms of the business world’. This economic community
produces goods and services of value to customers, who themselves are members of the
ecosystem”. (Moore, 1996)
Biological ecosystem is a useful metaphor for understanding a business network, since
both the species
p
in a bio ecosystem
y
and firms in a bus ecosystem
y
have to interact and co‐
evolve: the survival of each is related to the survival of others thus supporting a balance of
both cooperation and competition (Corallo and Protopapa 2011).
–
–
In Moore’s BE, firm's capabilities co‐evolve around innovations (compared to species'
evolutionary paths)
Evolution of organizations occurs through natural selection (fittest survive; routines as
genes) and niche construction (through their actions, species modify each other's niches)
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Business ecosystem

Organizations form an ecosystem around a core (Talvitie 2011)
– A business ecosystem is a collection of businesses and companies collaborating
or competing by utilizing a common and shared set of assets
– Is founded on an ecosystem core – platforms, technologies, processes,
standards or other assets common to and used by members of the ecosystem
in their businesses

Ecosystem is an abstraction; either a whole industry or a small consortium
of companies could be seen as an ecosystem (Nachira 2007). Two models:
– Keystone model implied by Moore (1996), elaborated by Iansiti and Levien
(2004) with the ecosystem dominated by a large firm interacting with a large
number of small suppliers. The health of the ecosystem depends on the health
of the keystone firm. Matches the typical structures in the US.
– Flat model more typical for Europe – composed of mainly small and medium
firms, accommodating also large ones. More dynamic, well‐adapted for the
service and the knowledge industries (Corallo, 2007).
Example of keystone ecosystem: Apple

Source: http://obamapacman.com/2011/09/time‐
magazine‐apple‐ecosystem‐infographic/
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Example of flat ecosystem: M2M ecosystem
Source: Harbor Research, Inc.
Ecosystem: Level of analysis

Industry vs. Ecosystem vs. Firm level
–
–
–

value network
value network
Example:
–
–

Industry/market – verticals, customer needs evolution phase
needs, evolution phase
Ecosystem – players and roles, core and auxiliary products
Firm – business model, role in ecosystem(s)
PC Industry: Microsoft vs Apple
Smartphone industry: Apple vs Android
Ecosystem vs. Value network vs. Core business
–
–
Value network: Includes partners providing complementary products needed to deliver the "whole product"
Ecosystem adds to the value network the stakeholders, government agencies, and competitors
http://www.provenmodels.com
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Why shall IoT Ecosystems be studied?
Example: sensor-based system

Consider a sensor‐based system for controlling the climate inside a
garden/green‐house (e.g. Viherlandia)

Challenge: Reading temperature, humidity, lighting, etc. from an array of
sensors
– A few hundred sensors
– Automatically querying
– Aggregating and processing
http://fi.wikipedia.org/wiki/Viherlandia
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Example: Alternative solutions

1. Using external proprietary end‐to‐end solutions and/or services e.g. Vaisala
weather stations
–
–
–

2. Using external M2M services with standard protocols/interfaces,
e.g. Temperature@lert
–
–
–
–

Connects
C
t over open (license‐free)
(li
f ) IETF interfaces
i t f
(802 11b Ethernet
(802.11b
Eth
t or USB)
May need customization, tailoring, configuration, specific infrastructure
Maintenance and support is needed; requires vendor‐specific knowledge
Connects over GSM/3G/LTE
Operators’ equipment for connecting is needed
Aggregation and processing may need to be developed
Subscription required
3. In‐house solution
–
–
–
Acquiring COTS sensors from e.g. IndustrialEthernet and potentially computing
infrastructure unless Pachube or another platform is used
Implementing communication, aggregation and processing
Maintenance with in‐house resources
Example: Shortcomings of solutions

All three alternatives may have problems:

Lock‐in into a single‐provider's solution is likely, especially if the
components are incompatible with future de‐facto standards

Solutions are expensive

Solutions are not future‐proof, since it is unknown whether
– i) the vendor becomes a dominant market leader
– ii) the interfaces used become de‐facto standards enabling compatibility and
simplifying maintenance and future development
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Customers’ and vendors’ possible decisions

Customer side: Waiting for the dominant design to appear
– May take too long
– Business suffers, esp. if betting late on a wrong candidate

Vendor side: Embrace some of the standards as a basis
– Immature technology that is not adopted later (ISO IP) may be selected
– Resistance from stakeholders may result in non‐adoption (WiMax)
– Incompatible technology may still result
Importance of looking at the ecosystem

Being a customer, When selecting the alternative and vendor, one needs to
– Predict, where the market (of M2M solutions) will go in future ‐ vertical silos vs.
open horizontal layers
– Predict, which of the solutions will be either dominant, or relatively compatible
with the dominant – i.e. which ecosystems will emerge
– Predict, which companies are likely to be the leaders

Being a vendor, When deciding on the alternative architecture and
interfaces, one needs to
– Predict, where the market (of M2M solutions) will go in future ‐ vertical silos vs.
open horizontal
h i t l layers
l
– Predict, which solutions will be dominant, i.e. which ecosystems will emerge
– Devise and implement the architecture compatible with future state of the art

In essence, it is important to predict the likely ecosystem development, and
act accordingly
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Example: Utility company using Smart meters
Current: Smart meter with integrated GSM/GPRS modem Future: Gateway‐mediated communication with service providers
How to communicate with the gateway?
ZigBee, BT, WiFi, MBus?
Source: NXP
IoT Ecosystems
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New IoT Ecosystems

The “things” in IoT expand existing Internet applications and services and
enable new ones. This new functionality creates and requires new
technical components and roles and enables the configuration of new
business models in ecosystems.
New roles
Source: SENSEI Deliverable D1.4 Business Models and Value Creation
Main concerns

How is the IoT field (market, ecosystems) going to develop?

How shall a company act to adopt to the expected developments?
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Role of studying IoT ecosystem

Realizing where IoT is going to
– What technology is going to get the dominance
– Considering core, value chain/network, ecosystem
– Considering time frame, customer base, resulting cost structure

Realizing how the companies should act, e.g. for vendors
–
–
–
–
In early market – focus on the business customers with critical needs
In bowling alley – focus on the niches with unserved demand
In tornado – focus on the whole market
After tornado – serve yyour existingg customer base
– Taking into account time, expected dominating technology, expected customer
base and cost structure
IoT field development: Core

Core of the IoT ecosystems
– Formed around an innovation: innovative ways of connecting physical
world to the virtual world
– Involves common platforms, technologies, processes, standards or
other common assets

Examples of a core:
– Tagging, sensing, communications technologies (RFID databases)
– Mediating platform (Pachube/LogMeIn)
– Supporting systems and services
https://pachube.com/
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IoT field development: Core (ctd)

Current IoT market is fragmented: different verticals may have different
ecosystems (and hence cores) with little overlap.

Therefore, we shall consider different verticals and their specific needs:
– Transportation (logistics, ticketing), healthcare (patient monitoring): often mobility,
often real‐time, reliability
– Building/home automation (lighting, heating, cooling, security): often real‐time,
reliability
– Energy (smart meters): reliability
– Retail (smart tags): real‐time, low cost, energy‐efficiency, scalability

Match the above against the characteristics of available technical alternatives:
– ETSI – M2M/3G: mobility, reliability, low energy efficiency, high cost, relatively bad
scalability
– IETF – roll, 6loWPAN, core: low cost, no mobility, scalability
– EPCglobal – RFID: low cost, real‐time; identification only, sensing capabilities are not
standardized yet
IoT field development: Value networks

In addition to core, a VN includes partners providing complementary
products needed to deliver the "whole product“, as well as relevant
standard bodies
Source: SENSEI Deliverable D1.4 Business Models and Value Creation
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IoT field development: Value networks (ctd)


Example: On‐Star provides "subscription‐based communications, in‐vehicle
security, hands‐free calling, turn‐by‐turn navigation, and remote
diagnostics systems throughout the United States, Canada and China"
Partners:
–
–
–
–
–
–
–

GM (vehicle, distribution)
EDC (sys development)
HW manufacturers (Hughes, now LG)
MNO (Verizon Wireless)
Emergency Call Centers
Roadside assistance: dealerships, towing service, gas stations
Insurance companies
Standard bodies:
– Society of Automotive Engineers, ISO ‐ CAN bus
– CDMA 2000 ‐ Wireless link (CDMA)
– GPS positioning
http://www.onstar.com
IoT field development: Ecosystems

Different verticals/segments may host different ecosystems. In addition to value network ingredients, these include:

Government agencies – FP7 IoT European Research Cluster (IERC)
– Artemis JU
– IPSO Alliance
– ZigBee Alliance

Stakeholders
– Investors – Trade unions

Competing organizations with shared products and service attributes, business processes, organizational arrangements.
For the case of OnStar example, competing organizations include
–
–
–
–
–
–
–
Ford (Sync)
Volvo (OnCall)
BMW (Assist)
Mercedes‐Benz (mbrace)
Toyota (G‐book)
Honda (Internavi)
Nissan (CarWings)
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Research questions

Industry:
– Are there possibilities for horizontalization in IoT field through standards and
open interfaces?
– What is the cost structure of possible IoT applications using the technology and
methods available today?
– Where can the biggest impact on price be made with common platforms,
standardized building blocks, self‐configuration, optimized communication, etc.?
– How to describe and quantify the forces affecting the adoption of new
IoT applications, services and protocols?

Ecosystem/value network:
– What is an IoT ecosystem, who are the relevant players in it, and what are roles
of the players in the IoT ecosystems?
– How to identify, describe and evaluate the alternative technical architectures and
corresponding value networks of the IoT services?
– What is the role of platforms, standards, open interfaces in an IoT ecosystem?
– How will an IoT ecosystem emerge, and what may hamper this process?
How shall a company act to adopt to the expected
developments?

A business model defines how the organization operates in the market and
the basis of its value creation, delivery, and capture.
– Business models are evolving as the organizations and their ecosystem(s)
evolve.
– The analysis of business model and its development needs can be made with
the help of a reference framework, such as business model canvas.
http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf
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Research questions

What business models are suitable for IoT ecosystem firms?

How to design and/or re‐align business models for an IoT ecosystem?

How will business model change and evolve in an IoT ecosystem?

What are business model development needs for different roles?
SIRT – Software Industry Research Team
Web:
www.jyu.fi/it/laitokset/cs/en/research/sirt/
/ /
/ / /
/ /
Prof. Pasi Tyrväinen +358 14 260 3093
[email protected]
Oleksiy Mazhelis
+358 40 515 0641
mazhelis@jyu fi
[email protected]
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Thank you!
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