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For IoT Partners, Smart Homes Are an Underrated Opportunity

It's boom times for Internet of Things (IoT) spending and, by extension, for the partners that are able to develop strong IoT practices.

Recent data from IDC estimates that global IoT spending will top $800 billion by the end of 2017 and reach $1.4 trillion by 2021. Not surprisingly, the primary driver of all that spending will be hardware -- the ever-expanding constellation of Internet-connected "things."

Of bigger note to partners, however, is the fact that software and services are accounting for a growing proportion of total IoT spending, and are even poised to overtake hardware spending by the end of 2021, according to IDC. Spending on horizontal, analytics and security software is particularly fast-growing, with each of these categories boasting compound annual growth rates (CAGRs) in the double-digits.

"The discussion about IoT has shifted away from the number of devices connected. The true value of IoT is being realized when the software and services come together to enable the capture, interpretation and action on data produced by IoT endpoints," said Carrie MacGillivray, head of IoT and Mobility at IDC.

Also good news for partners is the fact that the list of markets that are considered the most lucrative for IoT seems to be getting less monolithic, opening the door for more business opportunities. Often, IoT platform providers, including Microsoft, give the manufacturing, transportation and utilities industries the lion's share of the spotlight in their IoT pitches, and for good reason: These industries are the biggest IoT spenders. According to IDC, the manufacturing industry is on track to spend $183 billion on IoT initiatives and technologies this year, the transportation industry $85 billion, and the utilities industry $66 billion. However, spending on IoT solutions that can span multiple industries -- for example, those related to facilities management -- is expected to hit a not-insignificant $86 billion this year, growing at a CAGR of nearly 18 percent.

Spending on consumer-focused IoT solutions is also on an upswing, hitting $62 billion by year's end and achieving a CAGR of 19 percent. By 2021, IDC expects the consumer IoT segment to surpass the utilities industry to become the third-largest IoT market.

With demand for consumer-oriented solutions on the rise, partners would do well to remember that there's more to IoT than the usual industrial use cases. That's the view of Kurt Steckling, co-founder and co-CEO of Vectorform LLC, a longtime Microsoft partner based in Detroit, Mich. In an e-book released last month (available here with registration), Steckling noted that circumstances are ripe for consumer-oriented IoT -- particularly IoT solutions for the home -- given the growing population of tech-savvy millennials, technology advances that make it possible to Internet-enable nearly every home appliance, and the increasing affordability of such devices.

"Industrial IoT is probably 'better' in the sense that there are more quick wins and there's also probably more savings to be realized," Steckling said in a recent interview when asked why industrial use cases tend to overshadow consumer-focused IoT. "I think you find that in a lot of manufacturing solutions, if you have an industrial IoT solution that can shave seconds off of the assembly of each unit...the savings over any time period is just unbelievable."

That's not to say that IoT solutions for so-called "smart homes" wouldn't be lucrative for partners. "I've seen the numbers on the home," Steckling said. "It's huge."

Citing industry studies, Steckling noted in the e-book that the number of smart devices per household is projected to top 500 by 2022, and that in three years the worldwide market for smart homes will be worth $43 billion.

Founded in 1999 as a Web application development firm, Vectorform began building its IoT practice in the late 2000s; an early project involved working with Chrysler to develop software that let car owners control their cars' features via their iPhones. More recently, Vectorform worked with utility company DTE Energy on a hardware/software solution called Energy Bridge that lets homeowners manage their energy consumption over their mobile devices.

"The hardware connects to your smart meter and lets you see in real-time, using your smartphone, your energy consumption," Steckling explained. "So you could go around your house and turn appliances on and off and immediately see the dollars and kilowatts change on your phone."

The project was successful enough that Vectorform spun off a new company, Powerley, to let other utility providers sell Energy Bridge to their customers.

Vectorform has built IoT solutions using technologies from both Microsoft and Amazon Web Services (AWS), though the company takes a vendor-agnostic approach overall. "We have expertise with all the major platforms," Steckling said. "We will often help our clients navigate pricing and options and, ultimately, our clients will pick the platform, and we'll build accordingly."

He described Vectorform's IoT practice as industry-agnostic, too (and to that end, the Energy Bridge project does straddle the line between home and utility, in terms of the IoT market that it serves). Though he touted the partner opportunity in smart-home IoT solutions, Steckling said that Vectorform hasn't ruled out pursuing more typical IoT opportunities -- for instance, in manufacturing.

"We're interested in it, and we'll probably get more into it as time goes on," he said. "But everybody knows [the smart-home IoT market] is going to hockey-stick in terms of growth and a lot of us want to be there in the forefront when it does."

About the Author

Gladys Rama is the senior site producer for Redmondmag.com, RCPmag.com and MCPmag.com.