Internet of Things: How Big Is the Channel Opportunity?

See if you agree with these five top questions and answers on the IoT's revenue potential.

Channel Partners

June 28, 2016

5 Min Read

Dan ShaperoBy Dan Shapero

Last month I was privileged to join a UK Channel Community meeting held by CompTIA. The 100-plus attendees selected Internet of Things as a hot topic to be explored by the community, and a roundtable workshop of like-minded channel partners convened to ponder a range of questions about the IoT opportunity.

Read on to find the questions and answers the group came up with, and see if you agree.

Q: What do we know about the Internet of Things?

A: Internet-enabling a range of consumer-based and business-oriented inanimate objects will create a lot of data. According to CompTIA and Frost & Sullivan, the number of “things” connected to the Internet will reach 50.1 billion by 2020. In many cases, these “things” will become “autonomated” and robotic. Tea kettles will boil when your alarm clock tells them to. Your computer may switch on and off, depending on how close it is to your employee badge. Milk will tell your refrigerator to re-order when it gets close to expiration or when the carton is near empty. Consider tracking all of these transactions. How much data will it create? Multiply these transactions by the number of locations, types, sizes and status, and the magnitude of data is almost unimaginable.

What we know for sure is that the IoT will drive a big-data phenomenon. In turn, this will drive requirements for infrastructure to store and archive all that data. Networks will need to be improved to transmit it. Network security will need to be enhanced to protect data, and to protect all those “things” from threats and intrusion. Manufacturers and distributors will “thingify” their stock levels. Hospitality firms, retailers and offices will have supplies that automatically re-order when they get low. Planners will track this activity to optimize workflows, supply chains and more.

Q: What don’t we know about the Internet of Things?

A: A research report from CompTIA, “Sizing up the Internet of Things,” identified several consortiums working on IoT platforms, standards and protocols. They include Allseen, Open Interconnect Consortium, Thread, Industrial Internet Consortium and Wireless IOT Forum. Each of these consortiums is backed by a range of industry-leading companies. Some have a history of consumer-oriented technology (Apple, GE, Samsung), while others traditionally provide technology solutions to small business and large enterprise (Cisco, Dell, Microsoft, IBM). A common quality for an IoT consortium to succeed may ultimately be access to hyper-scale data centers. Apple, Google, Microsoft and Facebook are leading the way in this area, so watch this space. As standards emerge, channel partners will need to stay agile.

Q: How big is the opportunity for the Internet of Things?

A: Will the Internet of Things drive opportunity for channel partners? You betcha! Think “10 times the Internet” big. Consumerization has created the mindset in most businesses that IT just works. Gmail always gets delivered. No one thinks twice. When “thingification” becomes the norm, business owners’ costs to deploy will drop, and businesses of all sizes will thingify. Gartner predicts there is $1.9 trillion dollars worth of economic value related to the sale and usage of IoT technology. IDC predicts this will reach over $7 trillion by 2020. This is approximately double the size of the entire IT industry during 2014. In the same manner as mobile devices, the pattern of adoption for IoT will be exponential, with ease of use a commonplace touchpoint. Data usage and security concerns will accordingly increase, and therein lie the margins for channel partners.

Q: How will channel partners make money with the Internet of Things?

A: A few years ago, partners were concerned about how they would make money in the cloud. But they were even more concerned over being disintermediated. Won’t all cloud vendors go direct? Won’t all customers prefer to buy via self-service web access? Instead, channel partners are making money migrating email, files and applications to the cloud. Profitability in the cloud is augmented by cloud monitoring, application integration and other services. The need to ensure reliable, secure network access also fuels channel profits.

At one time, profits from mobility seemed mystical, too. Subsequently, a range of mobile-device management tools brought down the costs of management and service delivery, consequently increasing channel partner margins. Channel partners eventually took advantage of a thunderstorm of opportunity, deploying affordable Wi-Fi access and software-defined networks to keep connectivity constant and secure.

Similar to the lucrative margins from cloud and mobility, channel partners will profit from preventing breaches — with so many things connected to the Internet, these connected devices will surely become targets for attackers. Connected wearables will bring concerns over bring your own device (BYOD) to a whole new level. What’s more, without management, these connected devices may chew up bandwidth and bring your or your customer’s network down. Channel partners, sharpen your knives to get your share of the pie. Of course, that pie pan will likely be connected to the Internet.

Q: What do channel partners need from the industry to be successful?

A: Referring back to the biggest unknown regarding emerging standards and who will win, channel partners need cooperation and support from the vendor community. Keeping standards open and accessible will help partners participate in the Category 5 hurricane named IoT.

In conjunction with standards, channel partners will need training and certifications (think IoT+) to ready their workforces for the task at hand.

There is strong evidence that the Internet of Things will be seismic in nature. As standards emerge and vendors dance, channel partners should watch closely and cautiously to be well positioned to take advantage of the IoT channel opportunity.

Dan Shapero, founder of ClikCloud, is a highly skilled, results-driven technology marketing and business development executive. He has a track record of driving revenue growth and positioning companies for public offerings or acquisition. Shapero is a member of the CompTIA board of directors and held executive positions at Ingram Micro Cloud, Kaseya, Avamar (EMC), Vicinity (Microsoft), State of the Art (Sage) and Platinum Software Corporation (Epicor). He is a frequent speaker on topics including digital marketing, business transformation, managed services, cloud computing, cybersecurity and mobile computing.

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