The Internet of Things (IoT) has been hyped for several years as the 4th Industrial Revolution and the next tidal wave of the economy. In large part, this excitement is driven by the understanding that IoT data is so massive, it allows industries to stop being reactive to the market and instead be predictive — and therefore, much more profitable.
In the early half of the 20th century, to be a new technology company required massive financial investment.
But with the Information Age’s low-cost internet connectivity, a software industry was born — dominated by information technology and social networks. Much of the innovation occurred in Silicon Valley, and as a result, massive wealth and capital has grown there.
Advances in semiconductor scalability and wireless technologies have brought the next wave — IoT — that allows any entrepreneur to build a data company. Sensors can be deployed everywhere and collect real-world data in real-time.
The question is, where will the IoT innovation occur?
Silicon Valley remains a “safe bet” for IoT innovation, but there are significant signs of resistance to change. After being spoiled by the low capital cost and quick returns of the software-as-a-service business model, West Coast investors regularly push IoT startups to divest hardware from their business. They push startups to become AI companies, earning revenue purely off of data analytics.
This strategy can be short-sighted. In the same way that oil companies never gave up the expensive component of exploration and drilling, sustainable IoT companies will be those that create data.
Sensors in edge devices are the oil rigs of the new economy. Those that create data sit atop the value chain, with all other value deriving downstream from data generation.
Automotive companies did not realize the value of a car’s location. Uber and Lyft used the position of a driver’s phone as a surrogate for car location and launched a large and growing ridesharing market.
As cars become autonomous, however, drivers’ phones are no longer a surrogate for car position, and Uber and Lyft are at risk of no longer having the key data that drives their business. This is the weakness of SaaS businesses in the IoT age.
An opening for the Southeast
There is a huge opportunity for the Southeast to be a center of excellence for IoT. East Coast investors are proving more willing to invest in hardware paired with software. Hardware requires more upfront capital, but sensor technology tends to translate horizontally across market sectors. And, data sets tend to have value for solving more than one market-driven problem.
Key universities in the region have strong cultures of hardware and wireless in their engineering schools. There are excellent computer science and analytics programs too, but core values are still around making real things.
North Carolina State’s motto is “Think and Do.” NC State and Clemson still run textiles programs, while NC State and UGA are incredibly strong in agriculture. Georgia Tech has one of the best wireless programs in the world, and significant IoT research efforts.
Industrial use cases are where the bulk of early IoT market value has been created. This is quickly expanding into agriculture, smart cities, textiles, and other spaces. The Southeast has key strengths in these high-growth industries that can help grow locally-based solutions.
Analytics remain important too. Two of the three biggest analytics companies in the world headquartered their global IoT efforts in North Carolina’s Research Triangle Park. This provides closer proximity to a greater diversity of markets and customers than would be possible from New York, Austin, or many other “tech hubs” in the U.S.
Over the past five years, our IoT-focused organization, RIoT, has convened 85 corporate, university and municipal government partners regularly in the IoT conversation. Representatives from more than 1,200 companies have attended RIoT events and shared how emerging technologies are impacting their businesses.
Southeast-based startups that RIoT has worked with have attracted over $300M in equity investment and created hundreds of jobs.
It is clear that this region has the skills and businesses to lead. It has diversity to leverage in a way that other regions of the U.S. cannot match. The question is which companies will rise to the occasion.
This week, RIoT is excited to bring a second event to Atlanta to dive into how IoT is shaping the world of sports and entertainment. Verizon will present how they manage connectivity in the extremely challenging environment brought on by the Super Bowl. A pair of innovative startups will present advances in crowd business intelligence, from complex processes like venue access control to as simple as how to make sure the beer doesn’t stop flowing during a big game.
RIoT events are free and inclusive — and encourage those who want to share their own IoT stories.
Tom Snyder is Executive Director of RIoT, supporting Internet of Things and disruptive technology industry growth. In his spare time, Tom co-instructs Product Innovation Lab, a Forbes award winning multi-disciplinary course in Innovation and Entrepreneurship at NC State.