Markets: Winners, Sinners, & Losers – Smart Systems Competitive Dynamics

Who will be the winners and losers as the Smart Systems opportunity develops?  In the evolving complex world of machine-to-machine (M2M) and machine to people connected solutions, there are no vendors that have the clear leadership position that a player like Apple has in consumer Smart Systems applications.


Evolving Smart Systems Ecosystems

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While the “Internet of Things and People” represents a market of vast potential, technology suppliers must be aware of the current industry dynamics if they are to successfully navigate market development.  What are the defining characteristics and marketplace dynamics that will drive success ….. or failure?

Fostering Market Defining Business & Technology Platforms:

Smart Systems solutions will not work if they are just a disparate collection of hardware, software, and network products from different vendors. Business practices, as well as standards and protocols for interoperability, security, and performance will be required and will come in time. But for now, vendors that can provide technology and business platforms for integration, and can do so as a product that can be sold to diverse customers, will have an early advantage.

Managing The Contention Between “Vertical and Horizontal” Opportunities:

Vertical expertise will become an increasingly critical differentiator.  Will large IT vendors and carriers with dominant shares and scale economies in horizontal technologies add new “vertical” solution elements to their infrastructure offerings? How will smaller vendors focused on vertical niches perform in a world increasingly dominated by behemoths? Everyone will need to carefully pick the horizontal technologies that they want to master and/or the verticals that they want to dominate, but trying to manage the contention will be a tricky balancing act.

Complex Systems Will Drive Need For Open Ecosystems & Alliances:

The dynamics surrounding emerging Smart Systems are incredibly complex.  Basic enablement, network connectivity, systems integration services, value-added services, and other device management functions are all needs that generally must be addressed when customers seek to connect intelligent devices.  Given all of the elements that must be addressed from the customer standpoint, open alliances between suppliers clearly represent the best available means to address the complexity facing the end customer.

User Centered Experience Moves To The Forefront of Customer Value:

By combining technologies from multiple domains and packaging them into a cohesive user driven experience, Apple is able to win nearly universal buyer acceptance.  Looking beyond Apple to ZipCar, Facebook and other players coming from the rapidly evolving mobile internet arena, there are a variety of new business models emerging which embody user centered experience as the driving force underlying competitive differentiation. To say that user experience has not been a defining dimension in B2B players’ solution design methods would be a gross understatement.

To date, adoption of Smart Systems solutions has largely been the focus of equipment OEMs and “specialist” value-added services players. We believe the market has entered a phase where specification, justification and deployment of Smart Systems will shift to end use segments and customers – the dynamics of buying behavior will increasingly be ruled not by single-vendor solutions but by the integration of complex multi-vendor systems. This shift is occurring at the same time that the Telcos, large consolidated IT infrastructure players, professional services organizations and application players are expanding their presence in this arena.  Typical of emerging tech markets that are shifting to mainstream opportunities, new and established players all become challenged by the rapidly evolving competitive dynamics informing the maturation of customer solutions.

How well will various supplier groups align with the Smart Systems opportunity as it develops? Over the next several weeks, we will be exploring key segments of the supplier community developing Smart Systems solutions — their market positions, strengths, weaknesses and strategies – stay tuned.


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