Part two of an interview with Tom Casaer, the CEO of IoT company AllThingsTalk, with a focus on the market, the makers and the reasons why getting started with IoT matters.
In case you haven’t read it: in the first part of our interview with Tom we, among others, covered the go-to-market approach of the firm with its IoT middleware and solutions for channel partners, as well as the challenges various IoT ecosystem players encounter.
In this second part of the interview Tom Casaer shares his views on the evolutions in the IoT market, low power wide area networks (LPWAN), the need to iterate fast on many IoT projects, the role of governments and, last but not least, the importance of the maker movement that is key in the vision of Casaer and in the future of IoT.
Update June 2019: AllThingsTalk is acquired by leading distribution group ALSO Holding. More: AllThingsTalk and Also.
The importance and evolutions of LPWAN
Tom, you started early on with the proprietary standards and now also work with cellular IoT networks in the sphere of low power wide area networks or LPWAN. For many LPWAN is still relatively new as some of the main non-cellular players started in Europe. What is your view on the evolutions in the LPWAN market and the various actors?
Tom Casaer: For many the importance of LPWAN overall might indeed not be so clear yet today but that will change rapidly.
The reason is that the number of use cases grows exponentially if the lifetime of a battery goes up. If, for example, I can make a sensor that is small enough and a battery that lasts long enough to put it in a simple window glass then that sensor can tell me whether the glass is broken or not. At the moment the cost to achieve this is low enough companies will start doing this because they can make money on an event-based business model where people would be willing to buy notifications from windows that are broken.
It’s perhaps an extreme example and not the best possible but it illustrates my point. The ROI of an IoT use case mainly depends on the service cost, not on the hardware or connectivity cost. The cost to service a solution means man hours, the rest doesn’t.
Let’s take an existing example. If you create a trap for rats like people are doing in the Netherlands to protect the dykes, the main cost is replacing elements of the hardware and especially the battery. If the battery can last a few years longer the ROI of the whole business case changes dramatically and that’s what LPWAN does. It dramatically reduces the lifetime of the battery making much more use cases ROI-positive.
Analysts, who are looking at this from all angles, predict that around 40 to 50% of all IoT sensors in the world in five to ten years will be powered by LPWAN technologies. Many sensors will be wired, many sensors will be LPWAN and the remaining part will probably be energy-harvesting and hopefully this part grows quickly as well.
Now what’s the difference between the standards in the public licensed spectrum and those in the unlicensed spectrum? The unlicensed spectrum for the moment is nice to have in public networks. However, soon as more and more gateways will appear, the noise levels will rise in those frequency bands and the public networks will have to start transmitting more and more power with the result that the battery life will go down. Especially Sigfox has a very big challenge there.
I have to say I personally don’t believe that much in public networks using unlicensed spectrum. However, I do believe a lot in private networks using unlicensed spectrum. Any organization with a big footprint – whether it’s a big plant, a factory or an organization which has many different buildings in a country such as elderly care organizations or municipalities – can easily set up their own antennas. It’s quite cheap for them to create their own – private – LoRa network and they don’t have to pay the public operators. So, in those scenarios, we see LoRa being very successful today and Sigfox as well because, although positioned as a public network, you could say that Sigfox is in fact one big private network.
Another area where I see many opportunities are the community-based networks where people set up very cheap base stations themselves, a bit like Fon did in the WiFi landscape. The growth of The Things Network is amazing with already over 7,000 base stations put up by people. It only costs a few hundred euros to put one up and you can take advantage of the global TTN network or the community network which is very powerful. Especially in cities like Amsterdam and Berlin, to name a few, it’s really mind-blowing how many base stations have already been set up by the community.
We love what they do, they love what we do and we’re quite complementary in our vision, even if of course we all need to build our own business.
The ‘real’ IoT – where are we?
Where would you say we are now with IoT? Early days and only really starting?
Tom Casaer: Yes and no. It is definitely starting. I would call the phase we’re in now the ‘smart products’ phase. It’s not really IoT products yet but the predecessor of IoT products. Smart products in my terminology are rather close and monolithic. Of course, they use cloud services and maybe sensors and mobile apps and we all believe it’s IoT but they are in fact monolithic solutions.
The real IoT products will only come gradually when a certain product will be open enough for others to connect with it and create compound applications across verticals and segments. We probably won’t notice when we enter this new face.
Certain areas are already further developed. I strongly believe in IoT infrastructure-as-a-service and once the private market has the capability to put IoT infrastructure in, for example a smart city, and make it possible for the market to develop applications on top of it, then the real power of IoT will come into play. It really doesn’t help if every city builds their own monolithic small solutions.
We need that infrastructure, just like we have fiber, water, gas and electricity: an infrastructure backbone for IoT, preferably not owned by governments and open enough for the market to build applications upon.
We’re still a few years away from that although we do see the first signs of private consortia starting to build this infrastructure. One of the first areas probably is city lightning which can help provide a backbone for IoT.
Why getting started and iterating on small budgets matters
Although your focus is on SMEs, makers, integrators and communities, on top of operators and some larger channel partners, a lot of what you’re saying goes for larger enterprises too. Test, try, learn, do a pilot, discover by doing, launch, iterate, work in an incremental way, etc. What’s your take on those larger organizations where now and then projects also start in a rather small way or even with some people simply trying things out as customers tell us?
Tom Casaer: Here as well I indeed think it’s important to start. If you wait until someone comes with the perfect use case, it’s as if you’re waiting for the chicken with the golden eggs.
It will probably never come. A reason why it matters to get started is that companies which are using IoT technology in their product development, iterate at a pace six to seven times faster than companies that don’t.
After one, two, three years you are literally dozens of iterations behind. It might not seem long – one or two years – but in today’s world it’s extremely long and the number of iterations count more than the time. If your competitor is five or six product iterations further than you or can iterate much faster than you, you will probably go out of the market.
I believe that’s also the advice McKinsey gives: rather than pulling open big investment budgets in big cycles it’s best to iterate fast on smaller budgets and many projects, and then see what works.
Only increase the investment level once you figure out something that really works. I think that every company needs to have a way to iterate fast on new technologies today, especially in IoT.
The importance of the maker movement: Bring Your Own Device – including sensors
The importance of ecosystems is well-known. We talked about it, we see larger organizations building out their own or collaborating with small startups etc. Then there is also the so-called maker community that started quite some time ago, is very active and even has changed a bit with large organizations of course also looking at that ‘movement’. Why is this maker movement or community so important for you?
Tom Casaer: There are two reasons why we focus so much on the maker. One is because a lot of innovation is expected to come out of this long tail of makers and developers.
Many analysts also predict that a lot of new IoT solutions in five years from now will come from companies that don’t even exist yet.
The second reason is that the whole maker movement is growing rapidly worldwide. This isn’t a consumer phenomenon but a mix of professionals who like to play in their spare time and that has an impact on the businesses where they work.
In fact, many of our enterprise customers started on our Maker platform using their Gmail or Hotmail account. They played around, they bought one of our kits when they downloaded the software development kit, they liked what they saw, and they’ve brought this technology to their company.
And do they start from wanting to solve a problem or is it more playing around for other reasons?
Tom Casaer: It’s a mix. It can start from a problem, it can also start from curiosity and just playing around, and then seeing the possibilities of the technology, realizing that they can bring this technology to work.
After ‘Bring Your Own Device’ as we know it, we are now giving a new meaning to BYOD. It’s no longer about the mobile phone, it’s also going to be about the sensor.
People who are 15 and older today are very technology-savvy, and a growing number of them just wants to build things themselves. It’s not just on the developer side: there’s a lot more happening in the DIY and maker space, including on the hardware side, which basically didn’t exist a few years ago. Who was active in building their own electronics before? Today, however, this is a fast-moving community, and we strongly believe in helping that community realize what they want to achieve.
The IoT market from a geographical perspective
You’re doing business in different countries, had the T-Mobile and SODAQ NB-IoT project at Mobile World Congress 2017, stay updated on global IoT evolutions and travel around to attend other events and speak with colleagues. What’s your take on IoT in different countries, perhaps starting with Europe?
Tom Casaer: Recently I was in Berlin for a week, meeting people from the local IoT ecosystem, along with other Belgian IoT companies.
I was really impressed by how far the industrial IoT ecosystem has evolved in the city. There are close to 6,000 startups in Berlin, many of them focusing on industrial IoT. The whole ecosystem around it, the capital system around it and the way they match the startups with the industry is very, very impressive.
My personal impression is that the industrial IoT headquarters will be in Germany for the next few years, in Berlin. On the front of IoT applications and analytics, I think there is still a very strong ecosystem in France and Belgium. Regarding the UK, it’s a bit harder to see but they are financially very strong so they can basically catch up quickly on whatever happens in the world.
The Netherlands and the Nordics are quite pragmatic and that’s where we see most adoption, especially in the non-industrial IoT. In Belgium we probably do things a little bit slower but more thought through, with a longer term-vision, and with less focus on the short-term profitability as really is always the case.
We’ve been speaking about those smart waste bins for the last ten years but I still don’t see them, until recently, I believe it was Telenor, who announced that they’re rolling out smart waste bins on narrowband-IoT across the major cities.
We’re starting to get there but, yes, for me Norway, Finland, Sweden and, next, The Netherlands are probably the most advanced markets in terms of adoption in that non-industrial area and I will be very surprised if the world center of IIoT will not become Berlin – or at least Germany, they’ve put big bets on it.
Globally, I believe that there are three main centers with the hardware center being Shenzhen, the Industrial IoT center being Berlin/Germany and the West Coast of the US having the strongest consumer IoT ecosystem.
Yet, IoT is big enough to have smaller ecosystems be very successful as well. I don’t think Belgium has a problem: just as we have done with biotechnology and nanotechnology I feel focusing and clustering will definitely help us in finding our own niche and claim world leadership in that niche in IoT.
Governments, local, national and supra-national play a role in IoT and other technologies. It can be projects, regulations, programs in the scope of some digital agenda etc. What is the role of governments in your view?
Tom Casaer: For me, the government’s role ideally is to accelerate the growth of the ecosystem, but preferentially not trying to be a cornerstone in the ecosystem.
They need to enable the ecosystem instead of trying to control it. That seems to work well in most European countries. Let’s be honest: there are many smart city deployments that are just temporary solutions. Cities throw money at them but in a few years nothing will be left since in reality a monolithic closed system has been built.
It’s fine to support a local ecosystem for now but the government needs to focus on IoT as an infrastructure and enable that. That’s my conviction, and luckily the first signs of that can be seen already today as well.
What IoT and cloud have in common: incremental patterns
You’ve touched upon the state and changes ahead in the market before but what do you see for the future, as evolutions and as triggers that will drive the market and adoption of IoT?
Tom Casaer: The IoT market was pretty much in a standstill phase until 2017. In 2018, we’ve seen quite a change whereby the market is starting to realize that they need to get their hands on IoT and get started doing something. That’s a big change.
We didn’t lose any proposals in the past or almost none. They were just often stalled, and people were waiting, waiting, waiting. This is changing now, and I think the big change will come when, of course, we’re crossing the chasm. The question is when that will happen and, probably, it’s when the first real use cases start to be visible for the mass market. If governments successfully roll out some of those smart city solutions, people will start thinking, “Hey, what does this mean for me and my business?”
The general adoption of sensor technology is also changing. Probably there needs to be some kind of a GDPR for sensors, which might be a breakthrough moment in the market. But just as was the case with cloud, it’s hard to predict.
I mean: when did cloud start breaking through? I am working on it since 1998, the term cloud was invented somewhere around 2005 and after that it gradually became more or less understandable for the mass market what the concept of cloud was all about. However, even today, only about 40% of computers is in the cloud so there’s still a long way to go.
With IoT, we will have similar – incremental – patterns although we’ll probably not call it IoT anymore in five years from now. I prefer the systems terminology because IoT is a system.
It’s a system that talks to other systems, and probably the naming will go into that direction with a word that everybody will understand. It resembles a honeybee structure kind of network to some extent. That new term doesn’t exist yet unless someone coined it by chance, it could be anything.
It’s going to be the moment that everybody realizes that, yes, through sensors you can create a live connection to a product, and it can be very beneficial to all of us. Maybe it’s going to be something very ordinary like cloud; live products, or living products, it’s hard to say.
The future will tell. Tom, thanks a lot for your time and all the best!
All images courtesy of their respective owners.