Tag: IoT

Posted on

Small and Medium Businesses in Canada – Gap and Opportunity

As statistics show, from 2002 to 2011 small businesses generated a GDP of 25~30% per year in Canada. In 2008 for example, 46.3% of the total GDP in retail was generated by small businesses of less than 100 employees. This number is 61.5% for accommodation and food services. [i] More importantly, Small businesses provide employment to almost half of the population in Canada. Also statistics from the government of Canada reveal that:

  • 42% of SMBs introduced one or more type of innovation between 2012 and 2014.
    • 26% introduced a product innovation,
    • 20% had innovations in marketing,
    • 19% offered organizational innovation, and
    • Finally, 18% offered process innovation.[ii]

 

All these facts and numbers show that SMBs’ role in the everyday lives of Canadians, our industry, our economy and the future of the country cannot be overlooked.

In a report, CIBC focuses on the economical environment of small and medium businesses in Canada and counts their barriers to grow and compete. As this report claims, small businesses are more likely to survive and flourish if their model requires lower fixed assets and capital requirements, focuses on specialized products or services, leverages specific set of skills, or benefits from new technology to make economies of scale less relevant. The same report emphasizes that “to varying degrees, most small businesses face the following weaknesses: Unsound or insufficient analysis in choosing an initial field of business, Poor management skills, Lack of economies of scale, and Inadequate capitalization”[iii]

Interestingly but not surprisingly the above-mentioned four weaknesses are interlinked and can cause a vicious cycle. Lack of sound management skills may hinder the small business from taking advantage of new technologies to gain access to economies of scale and reduce capital requirements, and leverage the required skills to benefit from the emerging and specialized needs and trends in the market.

Solid business models that utilize and leverage the technological advancements and offer end-to-end Internet of Things solutions to empower micro businesses and SMBs, and enable them to compete on fair grounds would be very helpful. Such solutions could also help with further analysis of the market and customers’ behaviours and patterns of purchasing in local stores. This is extremely important for the small businesses especially due to the fact that according to another report published by the government of Canada the major part of small businesses’ sales is within their local neighbourhood. [iv]

Rewarding the end-consumers of the micro-businesses and empowering the SMBs through building a strong network of them with focus on local retailers will help them gain access to economies of scale, decrease their cost of marketing and increase customer loyalty. As data accumulates the marketing insight will be of high value to those businesses, and in general.

 

References: 

[i] https://www.ic.gc.ca/eic/site/061.nsf/eng/02812.html

[ii] https://www.ic.gc.ca/eic/site/061.nsf/eng/02998.html

[iii] https://www.cibc.com/ca/pdf/small-business/tal-canadian-small-business-economic-landscape-en.pdf

[iv] http://www.ic.gc.ca/eic/site/061.nsf/eng/02998.html

Posted on

IoT: Trend of Acquisitions and Insights into Google’s Strategy

IoT-related acquisitions are on the rise with no sign of slowing down. By June 2015, buyers had spent close to $15 billion to purchase almost 40 IoT companies. This number totaled $14.3 billion for 62 companies in all 2014. So, if the trend continues, the total dollar value spent on the acquisition of these companies will be twice as big this year compared to last year. It is also important to notice that in average, target companies have been valued at $375 million in 2015 compared to only $231 million in 2014. This means that they have been valued by almost 60% higher than a year earlier. (We will talk about different ways of valuation in a future blog post)
The following diagram shows the trend from 2008 to the end of 2014:

Screen Shot 2015-10-15 at 6.38.58 PM

Most (if not all) of these deals are strategic acquisitions, for quick access to a solution that is well-aligned with the strategy of the buyer. In almost all cases, the buyer itself funds the startup and invests heavily in it, and has a representative on the board to control or influence the decisions, without becoming distracted from its core activities.
Google’s acquisition of Lab Nests in January 2014 was a very good example of a big opportunity being seized in a strategic and well-thought move. Other such examples include the Samsung acquisition of SmartThings, Facebook acquisition of Oculus, and Intel buying Basis Science. Google’s acquisition of Lab Nests is very interesting for many reasons, including and specifically because of perfect alignment to Google’s strategy. Google is very well positioned to benefit from the two major perspectives of the IoT: selling the solution itself, as well as gathering the data and monetizing it in different ways, especially advertisements. In fact, the four main verticals that Google is targeting including connected (driverless) cars, robotics, smart homes, and wearable devices target a wide-enough market to gather information about people’s habits, their daily lives, products and services they use, and even products and services that they need, but do not know of yet! An automated home solution, for example, will gather data about the appliances being used at home, trend of usage, the conditions of the appliances (if they need to be serviced or replaced), therefore consumer’s behavior, interest and consumption patterns. Information will be highly valuable for accurately targeted advertising. Wearable devices, on the other hand, will collect data about your body and your health. Data may be used in many different ways. Systems could alarm you well in advance if you are developing unhealthy conditions, which might lead to a stroke or Alzheimer’s (let’s say if you are misplacing and searching for the connected things more often than before, or show signs of unintelligence as you work on the internet and with the “connected devices”). On the other hand, insurance companies might use the same data to raise your insurance premiums, or insure people based on their family health background or habits! Insurance companies may track your driving style and routes to adjust your car insurance rates too. Possibilities are endless; so are the opportunities for Google as the owner of all the collected data, as a search engine, as an advertising channel, and as a solution provider. Now Google is again addressing one of its major flaws: Google didn’t own data initially and was merely a search engine. Now it owns loads of valuable data. Interestingly but not surprisingly, different companies may have different strategic approaches to IoT acquisitions, depending on the industry, their products and services, and where they are in the value chain. Samsung, Intel and Facebook for example are all interested in the IoT, but their strategies and their target companies to acquire are not exactly the same as Google. We will explain more in future posts.

So, in short, the trend in the acquisition of the IoT-related startups and small companies have accelerated, and will not stop any time soon. Sensors and their algorithms, RFID, small-size chips (MCUs), security solutions, data management, data mining and power management are becoming more exciting and attractive than ever. The more defined and clearer the strategy of giant companies across all industries are, the better they can target the right startups to purchase, and vice versa; startups and small businesses that have a clear strategy and know their target purchaser, may align their targets with those of the prospect acquirer, which will increase their chance of being acquired and at a higher value. This is one of the reasons, why many of the most successful and backed-up small and startup businesses are in fact founded by the ex-managers of the big companies, which will end up purchasing them back again.
Again, we will elaborate more on this subject this in future posts.

Posted on

Internet of Things: Growth Outlook and Cyber Security

Over 50 billion devices is anticipated to be connected by the end of this decade. Consider that there are almost 7.5 billion people on Earth. 25% of this population is under the age of 15, which typically do not carry (their own) wireless device –in the sense of generating direct revenue for wireless providers-. Therefore, 50 billion of connected devices simply means 9 connected devices per adult. Again, this shows the benefit of the Internet of Things solutions to wireless service providers, which extends the usage of wireless and mobile connections beyond human subscribers. Wireless providers will receive revenue if the service requires connection, or otherwise, they may generate revenue by acquiring and selling the (developers’) solutions to their (already) high number of subscribers.

One of the biggest challenges to the implementation and wide commercialization of IoT solutions is mobile security, and data privacy. Data is collected from people and things, about people’s daily lives, habits, families, friends, patterns, private interactions, finances and much more. People and things may each have a unique identifier, through which they can be searched and located, and their information can be accessed and used in many different ways including to control and manage them. It is obvious that the opportunity is not such that hackers, cyber criminals, and of course terrorists can easily overlook. A Linux worm emerged as early as November 2013, which is believed to have targeted the Internet of Things, specifically. Rate of mobile malware infection was as high as 40% in countries like Russia and China in 2014. Therefore, educating the end-users as well as securing the infrastructure is becoming increasingly essential to the successful implementation and utilization of IoT services. This is why there are initiatives to standardize and implement mobile security, including an initiative at CTIA.

CTIA represents carriers and other players in wireless telecommunication, and has over 100 members, including carrier, supplier and associate members. CTIA advocates on behalf of them at all levels of government, and coordinates the industry efforts, guidelines and programs to promote mobile devices and is most active in North America. Similar to GSMA (discussed in my previous blog post), CTIA has IoT initiatives, with cyber security as one of the most important ones.

Security is required in different levels, including on the connected module itself, the application, the (wireless) connection, as well as the cloud of data itself. Cyber security initiative covers the end-to-end security of the infrastructure. In fact, many of the same practices that were initially developed for M2M and mobile security, have been used as the basis for the development of the cyber security solutions for the Internet of Things. Items such as security audits, VPN, encryption, multiple air interface security, enhanced security features, software update distributions and immutable root of trust are some of the security solutions and technologies to be leveraged and developed by CTIA cyber security working group.

In addition, governmental data security laws and policies have been in place and enforced for several years now. But now these policies and regulations need to be revisited to ensure they are applicable to and sufficient for M2M and IoT solutions and infrastructures. To name some of these policies and regulations, we can mention FCC’s Customer Proprietary Network Information (CPNI) Rules, Children’s Online Privacy Protection Act (COPPA), Federal Information Security Management Act (FISMA), Health Insurance Portability and Accountability Act (HIPAA), and the Patient Safety and Quality Improvement Act (PSQIA, Patient Safety Rule).

Conclusion:

The magnitude of impact on our daily lives and different industries have been obvious. So is the fact that without the right privacy and security regulations, standards and implementation, convenience and benefit come at the very high expense of security and safety, and will leave us extremely vulnerable to issues such as identity theft, financial fraud, attacks and a lot more. Therefore, there is opportunity for advanced cyber security solution providers and educators including wireless providers, network suppliers, infrastructure providers, wireless device and chip manufacturers in a rather complex and interconnected value chain.