We hosted our Europe Mobile Breakfast Series in London last month in partnership with Telefonica and they have been gracious host for the series. The topic of discussion was “Internet of Things: Exploring the next big thing in mobile.” Regular readers will notice that it is the same topic we covered in our Seattle breakfast event in March. IoT is gaining lot of share of the news cycle and investments from big companies like GE and Caterpillar to startups like Fitbit and Smart Things. Many traditional computing and communications players like Telefonica, AT&T, Intel, Qualcomm, Microsoft, Google and others are also plunging full-steam ahead into the segment.

I have written about the notion of the coming “Golden Age of Mobile” and IoT, IMHO fits right into that growth strategy. In previous notes, I suggested that:

It is very clear to us that we are entering the ‘Connected Intelligence’ era. These two operative words are going to define the next phase of human evolution and are going to dramatically change every industry vertical from the ground up.

We are starting to see the signs in all directions. We had assembled a great panel to delve into some of the early opportunities, solutions to problems, and the traction areas. Executives from BMW, Intel, Telefonica, and Worldsensing were at hand to share their opinions and experiences in the space.

Dominik Fromm is responsible for expanding BMW Group’s Mobility Services in the United Kingdom under the BMW, MINI and BMW i brands. Strategy, Mobility and Financial Services have been his professional focus in recent years. The current work builds on this wealth of experience, gained whilst working in the United Kingdom and in BMW’s global headquarters in Munich.

Raine Bergstrom is a vice president in the Software and Services Group at Intel Corporation and general manager of API Services. He takes the lead on market and product definition, as well as the execution of API management. He also defines the IoT Services Platform strategy, helping deliver a true end-to-end IoT solution for some of Intel’s largest customers.

Carlos de otto Morera is an economist educated in the United Kingdom. He has now 15 years of international experience including entrepreneurial experience in mobile, hardware and Internet startups. Created the largest online music platform in Spain from 2008 till 2012. Deeply passionate about his job designing and manufacturing connected products. Currently running Thinking Things, connected Hardware initiative from Telefónica.

Mischa Dohler is Chair Professor in Wireless Communications at King’s College London, UK. He is Distinguished Lecturer of IEEE ComSoc, Senior Member of the IEEE, and Editor-in-Chief of ETT. He frequently features as keynote speaker and had press coverage by BBC and Wall Street Journal. He is a tech company investor and also entrepreneur, being the cofounder, former CTO and now with the Board of Directors of Worldsensing.

So, as you can see, we had quite an eclectic group of individuals with diverse backgrounds and perspectives.

To recap, as we stand today, here are some of the forecasts:

In 2011, Ericsson forecasted 50 Billion Connected Devices by 2020

In 2012, Cisco agreed with the forecast and said they too expect the same number of connected devices and in 2013 came out with a paper talking about a $14.4 Trillion economy powered by IoE

In 2013, GE came out with their research and paper on the Industrial Internet powered by sensors and calculated that we could see $10-15 trillion dollar impact on the GDP in the next 20 years.

The salient points of the discussions were:

• IoT has been around for a long time, it just existed in different form factors and was called something different. for e.g. Telemetry has been used for many decades in the transportation and utility space. IoT started with some of the first DARPA projects and then moved into the academia, however commercial interest into the space started around 5 years ago and we are seeing the confluence of many trends in the current incarnation of IoT.
• Sensors and IoT could fundamentally change how people live, how cities are organized, how people commute, and how we as consumers interact with objects, things, and people around us.
• Dominik had interesting perspectives around what type of an auto company might BMW become in the future and they are experimenting with different business models and technologies to see how best to serve the customer and adjust to changing dynamics. BMW becoming an MVNO and offer an Uber like service for BMW customers in an autonomous fashion is within the realm of possibilities.
• Carlos talked about the need for modular design and talked about how Thinking Things is solving that problem for various enterprise customers. He gave examples of medical analysis companies, logistics, and transportation and by using componentized sensors, they have been able to operationalize into their work flow and reduce costs.
• The medical analysis company carries a large number of fridges from one lab to another (around the continent). It is very important for them to ensure the quality of samples contained. Thanks to sensors they can track temperature around the clock of all fridges and samples around Europe.
• Similarly a logistics companies needed help with tracking expensive items being deliver around the world. Sometimes these items, especially expensive ones get stolen. Sensors can be inside these packages and inform whenever these packages have been open, so central systems are aware in real time of any wrong doing.
• There was a consensus that the money in IoT is right now in the enterprise where companies are willing to pay top dollars to reduce costs and gather better insights into their supply chain, partners, and customers. Consumer IoT is largely limited to wellness devices which have limited appeal and home security services which are still a bit expensive for mass consumption. However, this is likely to change as there is more streamlining, commoditization, and interest from the developer community.
• Mischa talked about some of the work his company Worldsensing is doing in the smart cities space with parking, car counting, journey estimation, and in general getting a better grip of the city.
• There was a consensus that the eventual value is going to be in the “data” and not really in the hardware or the basic services both of which will be gradually commoditized. Data will enable companies to figure out better ways to monetize as well as kick off new services.
• A new opportunity for data brokers is on the horizon where data is treated like currency in transactions and the marketplace could enable many participants to bring their value-add to the table.
• Raine talked about the concept of data segmentation e.g. red data, proprietary data not for sharing; yellow data – you pay for use, and green data that is available for everyone to use. This is what might drive some of the data brokerage economy.
• Intel has bet heavily on IoT to the point that it gets its own line item on the financials. The company reported that its 2013 revenue from IoT was $1.8 billion with an operating income of $550 million.
• IoT data could allow companies to completely change their business model for e.g. GE now rents its engines vs. selling them and makes more money doing that.
• There was some debate about the role of the operator in the IoT value chain beyond connectivity and whether they can manage to move beyond their traditional core business or not. Initiatives like Thinking Things at Telefonica or Digital services at AT&T are indicative of a strong interest from the operators to move beyond connectivity. It is still early in the game.
• With IoT there is a discussion around the fragmentation with no set of common standards that can help bind various IoT hardware components together. AllJoyn is there. Android is taking a shot at it and numerous proposals in the burner but it will take some work to harmonize the standards that makes the IoT platform attractive to the developers without whom the IoT traction will suffer.
• APIs are one way to bring things together on a platform and that’s Intel’s approach to provide value and attract developers.
• Regulatory support is critical for the segment as it starts touching various vertical industries like automotive, retail, energy, etc. and also in the context of personal data. Europe is obviously much more stricter on the consumer privacy issues than rest of the world and it seems the regulators are trying to get ahead of the problem by at least starting to talk about them.
• IoT can also help auto manufacturers in managing liability which is a big cost center for OEMs in addition to providing more relevant and real-time data useful for car bookings and navigation.
• GE is a great microcosm of IoT as they are across almost all verticals and are using data capabilities to build service solutions for different industries.
• How should startups think about IoT? well, for one, don’t get too excited about the technology was the informed opinion of the panel. Rather, focus on the business problem and really understand how this helps the specific buyer who is writing the checks.

Overall, it was a great discussion on the practical aspects of IoT and the audience was great in keeping us honest. I always enjoy interacting with the London mobile crowd and this time was no different. My thanks to the attendees, the partners, the speakers, and to Telefonica for making this event possible.

Given the importance of the topic, we will be dealing with it again at our annual summit Mobile Future Forward on Sept 24th in Seattle and will have more speakers talking about their perspectives and experiences on IoT including GE.