In 2013, investors said we were crazy for creating a business around a smart doorbell. The Internet of Things (IoT) was still nascent and only a few startups (Nest, Dropcam and SmartThings) were starting to create real traction. Yet we believed in the dream of the "smart home" and continued creating the future we wanted to see.
Fast forward five years and IoT is now mainstream. Nest's smart thermostat put IoT on the map and Amazon's Echo product and Alexa voice assistant accelerated the industry forward by giving consumers a new user interface (voice) and endless user experiences. Google Home's entrance and the addition of hundreds of major brands and corporations have propelled the industry up the adoption curve, heading into the "early majority."
2019 should see continued expansion as the IoT industry pushes from the smart home into smart everything. Diversification across industries and increasingly intelligent applications will lead to deeper and wider penetration.
Here's a look at what you can expect in 2019 in the Internet of Things industry.
1. From "Smart Home" to "Smart Life"
Most people associate IoT with "Smart Home." It's understandable, as much of the early internet-enabled hardware technology was used inside and outside a home. That's no longer the case.
Expect to see many more "smart" things in 2019, including smart city, smart cars, smart offices, smart buildings and industrial IoT. I anticipate that enterprise applications for IoT will increase significantly, presenting companies and entrepreneurs with even more opportunities to bring IoT to existing verticals, or create new markets and services.
Most importantly, all these different verticals will start to integrate with one another, creating a seamless user experience that we'll one day simply call "life." The industry will take big steps in that direction this year.
2. Smart investors will still find great opportunities
While it seems like the space is crowded, especially in hardware, industry growth and penetration is providing smart investors with opportunities to invest in startups that are evolving with the industry. Angel and institutional investors will still make bets on startups with a vision and an ability to execute.
Nate Williams, Kleiner Perkins Entrepreneur-in-Residence (EIR) and seasoned angel investor, believes that plenty of opportunity still exists in IoT. "The IoT industry is still growing exponentially and there are a diverse set of industry verticals where investors and entrepreneurs can find success," said Williams. "I see lots of room for value-driven, industry focused startups leveraging connectivity, analytics and autonomy to solve hard problems."
3. Artificial Intelligence and Machine Learning
Now that hardware is ubiquitous, the focus is shifting to what one can do with these devices. The businesses that focus on software, data and services will see the next wave of success. The two software segments that have the most potential, and will have the biggest impact, are artificial intelligence (AI) and machine learning (ML).
Both technologies are integral to achieving the smart life that the industry has promised. AI and ML will use data and context to anticipate our needs and reduce the potential errors of automation that comes with only basing action on pattern recognition. Context is everything, and AI and ML will help create and utilize context. Outside the home, AI and ML can be the bridge between smart home, smart car, smart cities - ultimately achieving the dream of a "smart life."
4. Startups can still carve niches despite a crowded hardware segment
As noted above, the hardware opportunities in the smart home are diminishing, as consolidation and existing intellectual property make it harder for new entrants to compete. Yet, smart entrepreneurs will still find ways to innovate on user experience and technology.
One example that demonstrates how to take an innovative approach to an existing hardware segment is Deako. While smart lighting solutions exist in the market, Deako improved upon the user experience by utilizing a modular design, and is finding success with home builders.
While the industry shifts to data, software and services, hardware entrepreneurs can continue to focus on the customer experience and find new opportunities for success.
5. Blockchain and IoT
Data is being generated at remarkable levels across all verticals in IoT. Therefore, security and privacy around that data is a hot topic.
Blockchain technologies appear to be a viable solution for securing and utilizing that data for a multitude of purposes. Blockchain will help companies create better solutions for storing, monetizing and transferring large amounts of data in secure and anonymous ways.
Blockchain startups, like IOTA and IoTeX, have already raised money and published white-papers around their solutions for IoT. Time will tell if they can create a foothold in the space, or if businesses will look to enterprise solutions for established technology providers, like IBM Blockchain.
The world of smart technology will continue to be exciting. You should expect to see countless opportunities as the industry shifts from the home and expands into all areas of our lives: work, medicine, cities, transportation, cars, industrial applications and enterprise. While the five years since I've been involved has included considerable innovation, we're early in what I still believe is a material evolution of the internet.