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IoT fragmentation will aid fast-moving companies

Posted: 09 Mar 2015 ?? ?Print Version ?Bookmark and Share

Keywords:packaging? FD-SOI? battery life? smartwatch?

In the third and final part of the series on the IoT market, Handel H. Jones, founder and CEO of IBS, talks about what semiconductor vendors need to do to be successful in this market.

To be successful in IoT devices, semiconductor and sensor vendors will need to migrate upward into the application environment and build an understanding of customer needs as well as the ability to provide both the supporting software and hardware functionality. Companies that only focus on hardware components will have low revenue growth as well as low profits.

A characteristic of IoT devices is the high level of customisation by customer category and geographic specialisation. The high levels of market specialisation can mean that companies can focus on local markets as well as on global markets, but with the need for business models to be consistent with the revenue levels that can be generated. Consequently, there are many opportunities for entrepreneurs with creative ideas to establish the financial disciplines that can generate good financial returns from niche markets.

Handel Jones

Jones: IoT devices markets will be highly fragmented, which is a positive for fast-moving companies that are able to use speciality areas of technology.

On the other hand, there will also be applications that are global, where large expenditures will be needed for developing and verifying the viability of solutions and where larger financial resources will be required to gain high market share. An example is the smartwatch market, which is being addressed by Apple, Samsung, Sony and others.

There is the need for ultra-small packaging technology, which is historically an area of expertise of Japanese companies. While it is not appropriate to provide modules for devices such as smartwatches, it is critical to provide the software and services that provide real value to the consumers of end products. Ultra-small form factor packages can be used as competitive advantages at the device level.

Process tech helps battery life

There is also the need for long battery lifetime, which can be one year in some devices. The long battery lifetime will require ultra-low power process technology, with FD SOI being a good option. There is also the need for low cost because most consumer-centric applications will be very price sensitive.

New battery technology and remote charging will be key parts of the IoT ecosystem. There are excellent opportunities in this arena for companies that have the appropriate technology for batteries and battery chargers.

There are multiple levels of revenue growth opportunities within the IoT ecosystem. IoT will be a key growth segment of the electronics industry over the next five to ten years. While many innovative concepts are in the U.S. at companies such as Google, it is expected that Asia, including China, will have very large market opportunities. Japan and South Korea have many areas of strength in technology, but it is important to provide full application solutions that include software, hardware and services rather than being hardware-centric.

IoT devices markets will be highly fragmented, which is a positive for fast-moving companies that are able to use specialty areas of technology to establish defensible, competitive barriers. There will also be the need for highly efficient distribution channels and strong branding capabilities.

- Handel H. Jones
??Founder and CEO
??International Business Strategies Inc.

About the author

Handel Jones (Ph.D.) has over 40 years of experience in the electronics industry. He has held senior management positions at ITT and other companies. At Rockwell International, he was VP of Strategic Planning, Acquisitions, International Marketing and Engineering of the Commercial Electronics Group. He also authored the Chinamerica (McGraw-Hill 2010) and co-authored China's Globalisation: How China Can Become No. 1 (China Machine Press 2014) with Philipp Zhang (Ph.D.).


Why is IoT important for the electronics industry?
In the first part of the series, Handel Jones looks at what characterises the IoT market and in which application segments lies the growth.

Sensors hold key to IoT competitive advantage
In the second of this series, Handel Jones discusses how the Internet of Things is driving the semiconductor sensor market.

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