Platforms for the Internet of Things: Opportunities and Risks

I was chairing a panel at the Internet of Things Expo in London today. One of the points for discussion was the rise of platforms related to the internet of things. As, by some estimates, the number of connected devices is predicted to exceed 50bn by 2020 so there is considerable desire to control the internet based platforms upon which these devices will rely. Before we think specifically about platforms for the Internet of Things it is worth pausing to think about platforms in general.

The idea of platforms is pretty simple – they are something flat we can build upon. In computing terms they are an evolving system of software which provides generativity [1]: the potential to innovate by capitalising on the features of the platform service to provide something more than the sum of its parts. They exhibit the economic concept of network effects [2] – that is their value increases as the number of users increases. The telephone, for example, was useless when only one person had one, but as the number of users increased so its value increased (owners could call more people). This in turn leads to lock-in effects and potential monopolisation: once a standard emerged there was considerable disincentive for existing users to switch, and, faced with competing standards, users will wisely choose a widely adopted incumbent standard (unless the new standard is considerably better or there is other incentives to switch). These network effects also influence suppliers – App developers focus on developing for the standard Android/iPhone platforms so increasing their value and creating a complex ecosystem of value.

Let’s now move to think further about this concept for the Internet of Things.  I worry somewhat about the emergence of strong commercial platforms for Internet of Things devices. IoT concerns things, whose value is derived from both their materiality and their internet-capability. When we purchase an “IoT” enabled street-light (for example) we are making a significant investment in the material streetlight as well as its Internetness. If IoT evolves like mobile phones this could lock us into the platform, and changing to an alternative platform would thus include high material cost (assuming , like mobiles, we are unable to alter software) as, unlike phones these devices are not regularly upgraded. This demonstrates platforms concern the distribution of control, and the platform provider has a strong incentive to seek to control the owners of the devices, and though this derive value from their platform over the long term. Also for many IoT devices (and particularly relevant for critical national infrastructure) this distribution of control does not correspond to distribution of risk, security and liability which many be significant for IoT devices.

There is also considerable incentive for platform creators to innovate their platform – developing new features and options to increase their value and so increase the scale and scope of their platform. This however creates potential instability in the platform – making evaluation of risk, security and liability over the long term exceedingly difficult. Further there is an incentive on platform owners to demand evolution from platform users (to drive greater value) potentially making older devices quickly redundant.

For important IoT devices (such as those used by government bodies), we might suggest that they seek to avoid these effects by harnessing open platforms based on collectively shared standards rather than singular controlled software platforms.  Open platforms are “freely available, standard definitions of service outcomes, processes, or technology that encourage multiple users to converge on utility consumption of services based on definitions – which in turn encourage suppliers to innovate around these commodities.”[3, 4]. In contrast to Open Source, Open platforms are not about the software – but about a collective standards agreement process in which standards are freely shared allowing the collective innovation around that standard. For example the 230v power-supply is a standard around which electricity generators, device manufacturers and consumers coalesce.

What are the lessons here?

(1) Wherever possible we should seek open platforms and promote the development of standards.

(2)  We must demand democratic accountability, and seek to exploit levers which ensure control over our infrastructure is reflective of need.

(3) We should seek to understand platforms as dynamic, evolving self-organising infrastructures not as static entities

References

  1. Zittrain, J.L., The Generative Internet. Harvard Law Review, 2006. 119(7): p. 1974-2040.
  2. Gawer, A. and M. Cusumano, Platform Leadership. 2002, Boston,MA: Harvard Business School Press.
  3. Brown, A., J. Fishenden, and M. Thompson, Digitizing Government. 2015.
  4. Fishenden, J. and M. Thompson, Digital Government, Open Architecture, and Innovation: Why Public Sector IT Will Never Be The Same Again. Journal of Public Administration, Research, and Theory, 2013.

Rise of the Platform Enterprise

It was great to be at the Shard earlier this week to hear Peter Evans and Annabelle Gawer talk about their new report “The Rise of the Platform Enterprise”.

The overarching theme of the morning was (albeit not explicitly stated in the programme) “European Platform Anxiety” – that is, that the digital infrastructure central to our economic commerce will become increasingly dominated by a handful of American internet companies.  While China is proving capable of competing (e.g Alibaba, Baidu, Tencent etc.) Europe and Africa/L.America are far behind. This is shown in a stark graph which shows that while N.America platform companies are worth around $3Tn, and Asia’s around $1Tn, Europe’s are only worth about $0.2Tn.

Whether Europe can or should respond was debated. This led to questions such as:

  1. Lack of transparency?
  2. Liability for content on Platforms?
  3. Enforcement of existing legislation within this digital space?
  4. Legal uncertainties and trust,
  5. Possibilities to aid switching between platforms (avoiding lock-in)

Each of these looks like a great MSc dissertation project or PhD research project opportunity.

Anyway I urge you to look at the report, and I thank Prof Alan Brown of CoDE @ Surrey University for the kind invitation to attend the event.

Heating buildings using computers within the cloud.

“It sells computing capacity to corporate clients, generates heat with the computers… and then finds ways of channelling off the heat to use as central heating…His ingenious software ensures that when users turn up the thermostat, enough extra computation is rustled up from corporate clients to increase the emitted heat.

via BBC News – Heating buildings using computers.

Aleksi Aaltonen – a friend involved in the “Moves App” recently sold to Facebook gives tips for entrepreneurs

A friend and colleague of mine, Aleksi Aaltonen, talks about how he and his friends created the “Moves” app recently acquired by Facebook…

Tips for LSE entrepreneurs – 2014 – Around LSE archives – Around LSE – News and media – Home.

Cloud World Forum in June – Book Now

I am booked to speak at the Cloud World Forum in June. The registration pages are now open so please do book and I will catch you there…  It’s an impressive lineup:

2014 Speakers | Cloud World Forum.

I’m presenting at “The Exchange 2013 – Knowledge Peers”

TheExchange_NOVEMBER

I’m excited to be presenting at “The Exchange 2013 – Knowledge Peers” on the 28th November. Not only is it at the Kia Oval (which I drive past regularly so am looking forward to getting the tour inside), but also because their focus is on networking with smaller and medium sized organisations. I am of the opinion that cloud computing will offer more valuable and exciting opportunities for SMEs than large organisations so I am looking forward to connecting with many more small organisations at the event.

I hope you can join me there!

Will.

Latest article published: Strategic Outsourcing: An International Journal | Cloud Sourcing and Innovation: Slow Train Coming? A Composite Research Study

The latest article from our long-running Cloud Computing research stream has just been published…

Leslie Willcocks, Will Venters, Edgar A. Whitley, (2013) “ Cloud Sourcing and Innovation: Slow Train Coming? A Composite Research Study“, Strategic Outsourcing: An International Journal, Vol. 6 Iss: 2

ABSTRACT:

Purpose – Although cloud computing has been heralded as driving the innovation agenda, there is growing evidence that cloud is actually a “slow train coming”. The purpose of this paper is to seek to understand the factors that drive and inhibit the adoption of cloud particularly in relation to its use for innovative practices.

Design/methodology/approach – The paper draws on a composite research base including two detailed surveys and interviews with 56 participants in the cloud supply chain undertaken between 2010 and 2013. The insights from this data are presented in relation to set of antecedents to innovation and a cloud sourcing model of collaborative innovation.

Findings – The paper finds that while some features of cloud computing will hasten the adoption of cloud and its use for innovative purposes by the enterprise, there are also clear challenges that need to be addressed before cloud can be successfully adopted. Interestingly, our analysis highlights that many of these challenges arise from the technological nature of cloud computing itself.

Research limitations/implications – The research highlights a series of factors that need to be better understood for the maximum benefit from cloud computing to be achieved. Further research is needed to assess the best responses to these challenges.

Practical implications – The research suggests that enterprises need to undertake a number of steps for the full benefits of cloud computing to be achieved. It suggests that collaborative innovation is not necessarily an immediate consequence of adopting cloud computing.

Originality/value – The paper draws on an extensive research base to provide empirically informed analysis of the complexities of adopting cloud computing for innovation.