IoT Leaders: The Hype Cycle & Why It Matters for IoT

Podcasts

Have you ever noticed that every promising new technology gets massive hype… only to disappear, often for years, before it actually starts changing the world?

To understand why, you need to understand the IoT technology hype cycle.

And once you do, you’ll see IoT in a completely different light.

In this episode, we speak with Leonard Lee, Managing Director and Founder of Next Curve, who explains what the hype cycle is and what it means for IoT.

We discuss:

  • The stages of the hype cycle
  • How organizations can find opportunities in every stage of the hype cycle
  • Why IoT is in the “Trough of Disillusionment” — and why that’s not necessarily a bad thing

Read the transcript

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Nick Earle (00:00):
Welcome to the IoT Leaders podcast. And in this episode, we’re going to have a very interesting guy with an amazing CV. I’m going to come back to that in a minute, but let’s just say he’s spent a significant time in some large industry analyst research companies, and also as a sort of entrepreneur in his own right now advising people around many subjects, including IoT. So, Leonard, first of all, welcome to the IoT Leaders podcast.

Leonard Lee (00:32):
Thank you so much. Thank you so much. It’s a pleasure to be here.

Nick Earle (00:35):
Yeah. And as a reminder to everyone, my name’s Nick Earle. I’m the CEO of Eseye. So, let’s get started, Leonard. I have to smile because I’m actually looking on my screen, at least, at your LinkedIn profile. Now, it’s not every day you find somebody that their description on their profile says tech industry analyst and strategy consultant. Okay. Solution architect. Okay. Innovation coach. Okay. Startup and board advisor and then Trekkie and musician. So, that’s pretty varied. And then later on when you scroll down, what you actually see of course is that you then spent time in a publisher, IDG and a CIO magazine contributor as well as quite a bit of time as a managing partner in Gartner. So, a pretty broad background. You seem to have dabbled in quite a few things.

Leonard Lee (01:34):
Yeah. And if you were to describe my background, that’s exactly how you would describe it. It’s very diverse and it’s reflective of just my interests. I’m just an extremely curious person. And going back to the Trekkie and the musician bit that you cited, I thought it was just a creative way of saying futurist and just the innovative creative guy.

Nick Earle (01:57):
The creative guy. Yeah.

Leonard Lee (02:00):
Yeah. Yeah. And the whole Trekkie reference is simply because today we’re… Gene Roddenberry’s vision of the future, we’ve realized probably about 70% of it, right? I mean, we have tri-quarters.

Nick Earle (02:16):
Yes.

Leonard Lee (02:16):
We do have phasers, believe it or not. And then the only thing we’re missing, I think, are warp engines. So, who knows?

Nick Earle (02:27):
Who knows? Elon would probably say it’s a simple problem that he’s got one working in the lab.

Leonard Lee (02:34):
Right.

Nick Earle (02:36):
But anyway, it’s interesting you say that about teleporting because when I was at HP actually 20 years ago, Joel Birnbaum was a famous head of R&D for HP. He was demonstrating three-dimensional holographic telepresence. So, where you could actually see a three dimensional shape and that was 1999. And then was it the Killers or whatever, then started using it on stage and whatever, but still not… It’s technically possible, but the price not there. But that’s not what we’re going to talk about on this podcast. What we’re talking about is… We got to narrow this down.

Leonard Lee (03:21):
Yeah, yeah, yeah.

Nick Earle (03:23):
Let’s beam ourselves down, not up. Down to planet Earth and let’s talk about IoT. I’m going to start with the Gartner thing.

Leonard Lee (03:34):
Sure.

Nick Earle (03:34):
And one of the themes on this podcast series is it’s always been… We said it was going to promise so much and why hasn’t it truly delivered yet? And we’ve always said this is to demystify IoT. It’s the complexity but you’ve actually helped to create a metric for measuring it, which is the IoT hype cycle. So, first of all, just before… In case there’s anybody listening who doesn’t know what the… And it’s pretty famous thing, the IoT hype cycle in Gartner. Can you just maybe describe what it is? And then we’ll talk about where IoT currently is, which has got an amusing story.

Leonard Lee (04:22):
Yeah, sure. Well, first off, I didn’t create Gartner. Some brilliant individual at Gartner did, and it’s just really cool frameworks for characterizing the progress and maturity of technology as it goes through this cycle of hype and de-hyping, I guess, is what you can call it before it actually gets to this practical state where it’s delivering value to humanity, the economy, or what have you. And it really starts off with what’s called the technology trigger phase, where you have all these emerging and nascent technologies, maybe even sciences that are at the very beginning stages of becoming commercialized, right.

Leonard Lee (05:14):
And so, what happens is that these technologies go up this hype curve, right, and reach this peak of inflated expectations. So, I guess some recent examples are things like 5G. In fact, that could be probably the perfect example. Ind the past two, three years, it’s common to the mainstream in terms of media attention and just attention amongst governments and it’s kind of reached a peak, and then what happens is that eventually the ground truths start to become exposed, and what then happens is that the expectations of the technology start to go down toward what’s called the trough of disillusionment, where all these hyped expectations are not met in reality or even in the near term. And then everyone’s kind of disappointed. But eventually, there’s-

Nick Earle (06:30):
Eventually.

Leonard Lee (06:31):
Yeah. Some folks who really understand what the state of the technology is, what can actually be done with the technology, that start to figure out some practical and valuable applications in technology and then next thing, we’re starting to get out of that trough and we reach what’s called the plateau of productivity, right. A slope in enlightenment because before that, you have a slope of enlightenment where you’re starting to figure it out, right? You have those smart people figuring it out and then you reach this plateau of productivity where now you reap the benefits of the technology, but-

Nick Earle (07:12):
Everybody then… And that’s where you start getting less adoption, right?

Leonard Lee (07:16):
Right, right. And then you have the mass adoption. So, that’s what the hype cycle is. It’s actually pretty brilliant and they have an army of analysts at Gartner that create hype cycles for a wide range of different segments of what you would call the technology universe. And it’s fun stuff.

Nick Earle (07:39):
And it’s interesting when you look back over time. Any snapshots, sometimes it has more context when you look at it over years. So, by the way, just as you talked, I did a quick Google on 5G. 5G is absolutely perched at the top of the hype cycle. Gartner currently got it right on top. I’m sure we’ll come back to that. And I started Googling 2013 because for IoT and prior to that, I think it was called M2M. And it’s just perfect. The dots. Almost if you put the charts together and run them as a small video, it would make a lovely, beautiful film. The dots started from 2013. Like one of those paper things where you flick the paper and-

Leonard Lee (08:31):
Yeah, yeah, yeah, yeah, yeah.

Nick Earle (08:33):
The dot climbed right up to the top of the expectations, the peak. I think it was about three, four years ago and where it is right now, and I didn’t know this before until just about 10 minutes before we started recording this. It is now absolutely perfectly at the bottom of the trough of disillusionment. In fact, in the current guard, this slide, at least the one that I found, it is the single worst one of all the technologies. So, we are really-

Leonard Lee (09:05):
I’m sorry to hear that.

Nick Earle (09:06):
I take that as a positive thing. You’ve got to try and find positives in anything. I take that as a positive thing because the whole purpose of the IoT Leaders podcast was to demystify and say, “What are the complexities?” And what’s it going to take to be a winner? And if there ever was a time to have a podcast looking at IoT, we can now say Gartner agree that this is really, really needed. I mean, this thing is about as low as it can go. I don’t know whether there’s anything lower than that, but the only way is up.

Leonard Lee (09:35):
Yeah. And slope of enlightenment. We need enlightened people to now make a… I’ll find that where the pot of gold is for IoT, right? And where the promise is. So, yeah. I think this is the perfect time. I think it’s the perfect time.

Nick Earle (09:53):
So, let’s talk about that at least. And let’s at least shine a light on where the gold might be. And there are clearly companies out there that are are doing it successfully, but there’s been a lot of experimentation so far. It’s clearly not at the mass adoption phase, but at the same time, there’s been a lot of technology advancements that are starting to take some of the friction away and. In our case, it would be looking at how to make the devices predictable and how to have ubiquitous connectivity and interoperability between the players, but as someone in… Just talk to me about your current company that you formed and you now run because you’re giving advice to a lot of people in this and other areas as well, aren’t you? So, maybe just explain what you’re currently doing.

Leonard Lee (10:48):
Yeah. So, as you mentioned, I was with Gartner for a time. And I realized during my tenure there that some of the leading companies, technology companies, their key requirement need was to understand where are things going? Where should they place their bets? How do they qualify these new market opportunities that may be forming or are forming at the intersect of all these different transformative technologies that are kind of now coming together very rapidly?

Leonard Lee (11:27):
And so, that revelation is what brought me to start neXt Curve. And our mission is really to be a research advisory firm that takes a cross domain approach to research and specifically look at some of these emerging market opportunities and areas and supporting our clients. And so, we’re looking at some of these key focus areas of the day. Topics such as industrial IoT. More specifically these applications related to ultra low latency, reliable, wireless networks. So, if you want to think about it as IoT plus 5G, it’s one of the areas that we’re looking at. We’re looking at the Open RAN Movement. This hot topic of de jure in the telco industry.

Leonard Lee (12:30):
We’re looking at edge cloud computing and its impact on our future computing models, private cellular networks. And security and trust is another big area that we’re looking at. So, we’re looking at a number of different domains because we think some of the big opportunities require you to really have a holistic view, a lens that you applied in order to see the opportunities and gain some clarity on where things are going. So, that’s neXt Curve.

Nick Earle (13:08):
Okay. So, would it be fair to say then that because you covered five or six, amongst many others, emerging technologies, many of those are actually climbing the curve because they’re pretty new.

Leonard Lee (13:20):
Yeah.

Nick Earle (13:22):
So, you always have the issue of, well, if they climb the curve, they have to come down the curve and then they have to rise the curve and… That can take different times. Sometimes it can be quick, but often it’s a three or four year journey. So, would it be fair to say that what you’re saying is that if you’re a customer trying to think, how do I? There’s clearly something here. It’s clearly the potential for putting these technologies together and changing the customer experience and changing the competitive dynamic for my company and lowering costs, creating whole new markets is huge, but I think what you’re saying then is that… But you really have to understand what’s coming to actually plan how you’re going to start moving because it’s just-

Leonard Lee (14:09):
Right.

Nick Earle (14:09):
I guess it’s moving so quick, right?

Leonard Lee (14:11):
Right. Exactly. And you also have to know… Like I was saying at the beginning, the state of the technology. And so, I have this term or the saying that I oftentimes share with my clients is… When they ask me what does neXt Curve do? It’s like, well, we try to help flatten the hype curve or the hype cycle. So, as the hype is going up, we help you understand what’s the real state of the technology. Right. And so that you’re not getting on the wrong side of the hype cycle and when things are coming down, you don’t get caught too much on the downside of things. So, you’re basically honing in on the plateau of productivity to the whole cycle. Right.

Nick Earle (15:00):
Whereas the line that the bowling ball can go down the middle without guttering one way or the other.

Leonard Lee (15:07):
Right. Because there’s always opportunities through the whole continuum of the hype cycle. The thing is that as a company, you need to know where to focus, right. And where the value is in each stage. And it’s going to be different as you go from, let’s say, the trigger phase where a lot of times the opportunities are going to be… They have to generate high value because the technology is typically expensive at that point, not economical for most applications but further down the line when you get to the plateau of productivity, the economics are much better. So, you have a wider range of applications that you could consider.

Leonard Lee (15:51):
So, those are the types of things that we try to help our clients with. And that requires you to have now increasingly a broader understanding as well as a deep understanding of how these technologies are evolving, where their states are at any given point in time. So, yeah. It’s tricky stuff.

Nick Earle (16:12):
It is. And, of course, the whole dynamic of the IT industry and the venture capital model is that the number of… The technologies themselves are emerging quicker. They’re fragmenting into sub-technologies, and they are being refined and updated quicker. And so, this is not a, “I’ll take a look and then after six months I’ll put my head down and implement the process,” right? You got to be scanning, I guess, constantly.

Leonard Lee (16:42):
Right. And they’re all coming together too at an increasingly rapid rate, which makes things even trickier, right?

Nick Earle (16:51):
So, if I’m a client of yours… I’ll add a fourth one to what I just said. And some of them… Not all of them will make it. Some of them will just flare out. And the IT industry says, “That’s okay. That was version one. We’re onto version two, but you’ve now built a product or an offering and you’re now down a blind alley.”

Leonard Lee (17:12):
Yeah.

Nick Earle (17:13):
So, if I’m a client of yours, what do you do? Do you sort of do a… Is this like a regular subscription service where I keep on checking in with you and am I doing the right thing? What do you think about this? Would this be applicable? Is it that sort of actually type approach?

Leonard Lee (17:31):
It’s a consultative type thing. We typically publish our thought leadership pieces and our analysis on our research blog, but the stuff that we do is very specific for a client. You can’t scale this stuff out. Do you know what I’m saying?

Nick Earle (17:48):
Yes.

Leonard Lee (17:50):
And so, the work that we end up doing is very advisory and intimate if you will. And specific to a client’s needs, but one of the things that we try to do is we publish pieces publicly at no charge just simply so that we can help people understand some of the basic trends that are affecting the markets as well as the technologies today.

Nick Earle (18:20):
Let’s try and go deeper on one of them. You mentioned… Or maybe one or two, depending on the time we have. Let’s start off with the one at the top, at the peak right now. It’s got the best view from the top of the mountain, 5G. Yeah, I was talking to somebody the other day. Regularly talk to people about this. They say if I read the press or the blogs or anything about this at virtual conferences, 5G, 5G, 5G, 5G, and yet I can never really find anybody who’s implemented it and can actually say, “This is what it did for me.” And then from our perspective, people ask us, “Well, do you do 5G?” And we say, “Yes, we do. We’re a platform that we do all of the RAN, radio access network, technologies from narrowband up,” and now I’m getting emails on 6G conferences.

Leonard Lee (19:24):
Oh, yeah, yeah, yeah.

Nick Earle (19:25):
Here it comes. Here it comes. I don’t know whether they’re real or that’s just somebody phishing, but the point is that it’s just simple stuff. You didn’t realize that it’s a whole new device. I mean, simple stuff. It’s a whole new modem and module in the device and they’re really expensive. And then you see the adverts and it says, “We’re the first cellular phone with 5G coverage.” Here in the UK, we have EE. A network called-

Leonard Lee (19:53):
EE.

Nick Earle (19:56):
Yeah. They’ve got 5G coverage in a really small area. And so, you kind of… As long as you’re standing in that area, you’ve got 5G and then they’ll build it out. So, what advice would you… If I was a client and I said to you, “I really think 5G is…” Do they come to you with a technology or do they come to you with a business problem? What do they do?

Leonard Lee (20:20):
That’s a good one. They usually come with the technology.

Nick Earle (20:25):
I was thinking that’s what they did. Yeah.

Leonard Lee (20:29):
Just like your prospects and your clients. They come with the technology and they often then have… Then I back them up into, “Well, what’s the problem that you’re trying to solve?” Or, “What is it that you’re trying to do? What are you trying to go to market with?” And something like 5G. And I think this is the problem that IoT shares. 5G in of itself is such a complex technology topic. There’s so many layers to it, right? It means different things to different audiences. It’s immensely complex.

Nick Earle (21:07):
Yes.

Leonard Lee (21:07):
And same with IoT. IoT is becoming increasingly complex because we keep throwing all kinds of stuff at it and including all kinds of technologies in it and it’s becoming overloaded, right? So, the confusion only grows and there’s a huge deep need for enlightenment. And 5G is the same thing. I mean, I typically tell a lot of my clients, “Look, 5G is probably not what you need to worry about right now,” especially if it’s an end user client enterprise. It’s like, “What is it you’re trying to do?” And how does wireless connectivity fit in and enabling some of the key things that you’re trying to accomplish or the problems that you’re trying to solve.

Leonard Lee (21:59):
And the bottom line is in many instances, it boils down to this, especially in an industrial. Wired makes sense. There’s no need for wireless. So, okay. You checked off 5G. Totally irrelevant. WiFi, even, mostly irrelevant, but in others, it makes sense, but how do you start with the problem that you’re trying to solve or the innovation that you’re trying to institute and then work your way into selecting and considering the appropriate technologies? Yeah. I mean, that’s typically how the scenarios that I get into and they play it out.

Nick Earle (22:54):
And I think it was always True. That’s been a truism in my… I’ve been 40 years in IT. I started very young clearly, but I’ve heard that comment in different forms, pretty much every year for 40 years. And you start thinking, “Okay. It’s clearly not going away and it’s, therefore, it probably won’t ever go away.” So, why does it keep on coming at it? And I think that part of it might… This is my own “Nick Earle” theory. It’s almost an abrogation of responsibility by senior management in that if you actually think it’s a technology project, it’s a technology project. So, you give it to the techies. And in this case, it cascades down to, “Well, what is it?” 5G is pretty hot. The CEO has heard about it or has been to a conference. So, we need to look at it because it’s hot, you know AI, blockchain-

Leonard Lee (23:53):
What’s your 5G strategy?

Nick Earle (23:54):
Yeah. What’s your 5G strategy? And the answer, to ignore it for as long as possible is not a good answer, but anyway… So, then it gets… And then therefore it just takes a life on its own. It gets born as a 5G project, but the real question is, if you could create a new experience, it’s the imagineering, the part of the process where if you could create a new experience that would… The moonshot project type approach where you could completely change the dynamic in the industry. You could disrupt. You could offer a hitherto. It’s the Apple approach. I re-watched the other day. I probably watched it about seven times. I re-watched Steve Jobs on stage at the Flint Center, the launch of the iPhone. And the gasps from the audience when he… He does the pinch where he shows the App and he says, “Watch this.” The audience gasp. And it’s because no one ever knew they needed it. And from that second on, everybody has to have it. I have to have that. Nevermind all the other stuff, the iPhone. I have to have that, so I can do that on my photos.

Nick Earle (25:11):
But the idea of, if you could create something that would be incredible that would change the dynamic, that will be really cool, and actually would take you either significantly reduce your costs and/or give you a massive competitive advantage, then what would that be? That’s an imagineering whiteboard session with a whole series of people of which arguably the technology guys almost not need it at that phase because you’re more into the marketing guys, the sales guys, the outside agencies, and then you get into, “Okay. If you got three ideas, which one’s the best one?” Are they possible? And if they’re possible, how? And what’s the technology? And then eventually you get to, “Do I need 5G in this case?” But it is…

Nick Earle (26:02):
We have 2,000 customers. I would say 95% of them come to us the other way round. I’ve decided to do cellular. I got a narrow band project, 4G. It’s just a case of trying to work out data pricing. I really just need… Often, it’s procurement. I’ve chosen cellular. What’s your SIM price? And what’s your data? It’s like, what are you trying to achieve? So, I guess companies like yourselves and others and to some extent, ourselves, when it cascades down to us are really trying to pull people forward into the beginning of a business planning process and a way in the technology. It’s kind of a weird thing for people in the technology industry to say, “Don’t want to talk about the technology.”

Leonard Lee (26:57):
Right, right, right. Yeah. It entirely depends on who you’re talking to also, right? I mean, if you’re talking to the CEO, the way that you’ll talk about these technologies will obviously be different than…

Nick Earle (27:11):
Well, that will be business oriented, but we’re very rarely… These projects by the time we see them, at least, they’ve come via the IT. The tech or the procurement department.

Leonard Lee (27:24):
Right, right, right. But there’s a whole education process that’s happening by the time things reach the procurement department, right. And I think that’s really where we play and… And also, again, just setting expectations around the technology at the head, and hopefully you have something in the form of a more distilled set of expectations when things reach the procurement group or even the CIO or the CTO, right. And, surprisingly, I think folks might find surprising that there are many CIOs who just… They don’t understand 5G and some of these other technology, including a lot of the IoT stuff because if they’re not… They don’t have the operational domain as part of their purview. They’re just not familiar with the operational environments in most instances, right. And so…

Nick Earle (28:34):
And that’s very… Excuse me. A very, very common… Just today, I spoke to someone who’s responsible for a global IoT project, potentially hundreds of thousands of devices, just somebody today. And one of their first comments was, could you just take it through with me really easy, try not to use many acronyms, please? Just make it… And they were very, I mean, refreshingly honest. Just dumb it down for me because I have the responsibility of this project and you just explained to me. It’s one of the reasons… Just talk a little bit about our company.

Nick Earle (29:24):
It’s one of the reasons why… We’re the only IoT company at least that we know of. And no one’s ever told me they know of another one that actually also does the design of the hardware. We design the hardware and we do the connectivity. We can help design a piece of hardware to meet the use case. And then we can make it connect automatically just by switching it on anywhere in the world. And that’s why we got the customers that we have because it’s single skew, ubiquitous, 100% connectivity, but people say to us, “Why did you buy a hardware company? Don’t you realize it’s all about cloud? It’s all about software. Where’s your blockchain strategy and AI?” And especially the venture capital guys. It’s like, “Oh, you’re not very sexy for us because you’re in hardware. And you work with mobile network operators. Oh my God. I mean, that’s like the two worst things that we ever see in our portfolios.”

Nick Earle (30:18):
And what we say is, “Look, you’ve got to…” If you’re going to start off with the imagineering, as you said, your process dovetails into our process because you start off with the imagineering, what are you trying to achieve? What problem are you trying to solve? And then if you could do this, if you could do that, but just draw me a picture. Just forget the text. Just draw me a picture of what it might look like. And then you say, “Okay.” So, that therefore you’d need a thing, a device. Maybe it’s an edge aggregation device.

Leonard Lee (30:43):
Yeah.

Nick Earle (30:44):
You need a thing that takes data from all these sensors, that does this processing on it, that has localized “if then else”. We do it at the edge and then back holes, the metadata to private or hybrid cloud. Yeah. That’s what I did. Okay. So, you do realize then that that thing doesn’t exist. You just drew on the whiteboard. I mean, you’ve just drawn a piece of hardware that doesn’t exist. And at that point, the blood drains from people’s faces. They say, “Okay. There is an off the shelf hardware devices that I can buy.” “So, you’re telling me…” This is when they realize, “Oh God. I wish I hadn’t been assigned to this project because I’m now having to…” Not only have I got the project monkey on my back, if you like, but now you’re telling me I have to design hardware. Oh God, where’s the exit?

Nick Earle (31:39):
And then, so we realized that that was a huge issue because IoT hardware has to be designed for the use case. It’s not like cell phones. Every piece of IoT hardware pretty much low-end trackers is unique. And so, we bought a hardware design company that could actually help with this process and work with some of the bigger design companies. And then so we start after the imagineering has been done. That’s where we kick in and say, “Okay, what’s your device?” And before we get going, you get connectivity. Forget whether it’s narrowband, Cat-M1, 3G, 4G 5G. Forget that. What’s the device look like and what the software and what’s the “if then else”, the Boolean logic and the security?

Nick Earle (32:27):
And that’s a really important piece of work. And once you create the device, the hardware, which you can do in sort of rapidly three to five months, you can do this, you then got something you can try out there and say, “We’ll take it out there and see whether or not people like it.”

Leonard Lee (32:45):
Yeah.

Nick Earle (32:46):
And typically then you have a much higher percentage of success than what we’re seeing all the data. Back to Gartner and others with these reasons why I think IoT is at the bottom of that trough is that everybody knows the stat. 80% of IoT projects fail before they started.

Leonard Lee (33:07):
Oh, yeah. I think one of the reasons why the expectations were so inflated was because everyone thought that the data was there. They said, “Oh, wow. We’re going to have X trillion…” I don’t know. Is it trillion or a gazillion or whatever devices connected?

Nick Earle (33:28):
Yeah.

Leonard Lee (33:28):
And we’re going to have hundreds of billions of this and that with modules and blah, blah, blah. Like you said. Everyone was saying, “Well, data is the oil and the analytics is where it’s at.” Well, analytics and all that stuff you do in the cloud doesn’t really matter much if you don’t have the data. And the data has to get sourced from sensors. Very fundamentally sensors and then it somehow has to go through that whole chain.

Nick Earle (34:04):
That has to be filtered and-

Leonard Lee (34:06):
Otherwise, you have no data.

Nick Earle (34:08):
Yeah.

Leonard Lee (34:08):
You have no goals.

Nick Earle (34:10):
Or too much data.

Leonard Lee (34:12):
Yeah.

Nick Earle (34:12):
And it’s like, “Ah, it’s just noise.” So, actually, it does… Going back to where we started, I think we can look back and say, that’s why all technologies actually go through this because we talked about IoT, about 5G. I mean, AI, blockchain, all the ones that you said narrowband… Narrowband is kind of really interesting because it creates so many opportunities that low cost, very good for battery powered devices, but then there are other issues that you find that a lot of the mobile network operators still don’t support. They don’t do roaming. So, it’s another thing which is, I want to do narrowband, but I don’t want to have to swap my SIMs in and out on each device. And then what you find is that there’s hardly any roaming agreements for narrowband. And you think, “Is that a technical thing?” Turns out that it is, but principle reason why there isn’t any or aren’t as many as you need.

Nick Earle (35:22):
It’s a commercial thing because the person receiving the roaming is only getting 20% of the revenue of the person who sold it. And if narrowband is a penny per month, you’re only getting 20% of a penny. Again, it’s not worth it. And so, this all points to planning, information, doing your research before you start. If necessarily delaying the project, because starting again is really expensive.

Leonard Lee (35:56):
Right, right. Yeah.

Nick Earle (35:59):
Okay. So, let’s talk about, just to finish off here, the hope. We always in these podcasts, we always… It’s part of the definition of our podcasts. We do point people at how complex it is because you just have to understand that you have to navigate this and where to go for help, which we’ve done here, but at the same time, we don’t want to leave them as individuals in the trough of despair because the potential, it will change the world. I mean, it will be trillions or whatever.

Leonard Lee (36:36):
One way or the other. Yeah.

Nick Earle (36:37):
One way or another, it’s going to change the world, hopefully, in our lifetime. And it is changing the world. And there are companies that… I mean, hell, we’ve got 2000 clients and they’re all doing stuff. And there’s a lot of people doing stuff. So, do you have any examples of where you’ve seen people sort of baffled through the pieces, work out the strategy, put something together and where you would say, “This company is a good example of someone who’s using it for commercial advantage or has got some successful projects out there.” You can point to people and say, “Look at what these guys are doing. This is definitely worth spending the time on because look at the examples. The growing number of examples of people who are being successful right now.”

Leonard Lee (37:28):
Yeah. This is the way I look at it is this is… One of the things that I’ve discovered about IoT is that we’ve been doing IoT for, well, conceptually for a long time. And there are certain industries that have been long entrenched in developing the IoT principles. In fact, you might even argue they’re the ones who have driven the technologies as well as just the solution patterns that we… The archetypical solution patterns that we look at in the IoT space, whether it’s preventative maintenance or remote monitoring, what have you. Right.

Leonard Lee (38:08):
And I always go back to the work that I’ve done in the oil and gas industry, working with some of the super majors with their innovation programs and the future type programs where they’re trying to figure out, “Okay. How do we now take the most advanced technologies available today and ideate through how we can now do the crazy stuff that we do today even better?” And you can get some amazing examples out of that industry that I think just trickled down into other industries that we talk about today like manufacturing. The whole industry 4.0. I have to be honest with you. What they’re doing is pretty basic compared to what the oil and gas industry has been investing in-

Nick Earle (39:01):
I would agree.

Leonard Lee (39:01):
… a wide range of this stuff. In fact, I often jokingly tell folks… Yeah. CTO of oil and gas company will sit there and laugh at you if you can’t walk up to them and say, “Hey, look. There’s this thing called IoT.” It’s like, “Okay. We’ve been doing that for a long time.”

Nick Earle (39:17):
We’ve been doing that for a long time.

Leonard Lee (39:20):
Let me teach you something about this stuff, right. Now, in other other industries, they’re on a learning curve and some are doing it okay and some others are doing it kind of okay or not so okay. I think that the challenge that we have right now with being in the trough of disillusionment is we’re trying to figure out where that path to value is. Where’s that path to that particular industries pot of gold? And it’s a tough one, right? It’s a tough discovery process that they’re going through. And one of the reasons why it’s tough and it’s tough for everyone, including the consultants and the service providers and the vendors is because the technologies continue to evolve so quickly.

Nick Earle (40:14):
Yeah.

Leonard Lee (40:15):
And that’s very, very challenging.

Nick Earle (40:18):
And your example is a good one. And as sort of we bring it towards the end of this podcast, I think we could probably join the dots on this and actually shine a light on it. Will be a bright light in terms of there’s hope because the manufacturing industry is dealing with a lot of legacy… Huge amounts of legacy equipment on the manufacturing floor, which was definitely predated. IoT or M2M as it was. But in the case of… You take a wellhead or an oil field or refinery. I mean, these things have got… Typically, you have a lot of modern equipment in there. There’s a lot of legacy, but there is modern, but there’s trillions of sense. I mean, I think there’s something like 10, 20 million sensors on an oil rig or somebody told me that. And that’s probably a low number.

Nick Earle (41:10):
So, everything in there is sensors. And because it’s remote, the idea that certainly we’ve seen is that back to 5G, where’s the pot of gold? If you design a device… Let’s take maintenance for a rig. You know you’ve got 10 million, 20 million sensors, but it’s way too much data. So, you design a custom device that something starts to go wrong. An engineer can hold it up and the thing about 5G is you can get augmented reality like Pokemon type capabilities in and you get… In other words, a virtual reality expanded bill of materials or a very complex piece of the rig. And you can see all the different data, the flows and there’s red and flashing light. There’s something there.

Nick Earle (42:00):
And the point about that with it being 5G is then you back haul it. Huge amounts of data. Massive amounts of data, but you could have somebody in Houston analyzing that and the rig could be somewhere off the coast of Western Florida or whatever, and they’re looking at it and they’re saying, “Ah. I know exactly what’s going wrong or what is likely to go wrong.” So, even just the idea of flying the helicopter out to the rig with the right part as opposed to what frequently happens today is they go out there and say, “I finally worked out what it is. I now need to go back and get.” Because the cost of a minute’s downtime is just such a big high cost for these guys.

Nick Earle (42:45):
So, we see 5G being a confluence of the use case. It could be a time to remediation. The accustomed device… You need a custom device that is able to take data in various protocols from various sensors, but only some of them and a new technology like 5G, which actually has such high bandwidth, low latency capabilities that you actually can do something much more complex. Almost like taking the technology from the gaming industry and cascading it into that.

Nick Earle (43:23):
And I think that’s a good use case, but all three things came together. The idea, how can we have less downtime on the rig or predict when the drill bit will overheat or whatever it is. The custom hardware, because there’s nothing off the shelf for work, so how do I design one and test it? And then, therefore, what technology should I use? But if you approach it that way, that could be worth tens of millions of dollars a year per rig.

Leonard Lee (43:52):
Yeah.

Nick Earle (43:53):
And then you’ve got a winner on your hands. So difficult, but you know what you’re doing and why you’re doing it.

Leonard Lee (43:59):
Yeah. Yeah. I think you’re onto something. And it’s something that we oftentimes advise, especially in a lot of startups is focused on the high value stuff that’s simple to do.

Nick Earle (44:16):
Yeah.

Leonard Lee (44:17):
And that’s the good news that it will be simple. You don’t have to do all this magical-

Nick Earle (44:22):
Ambitious.

Leonard Lee (44:23):
… stuff.

Nick Earle (44:24):
Yeah.

Leonard Lee (44:24):
Right. You don’t have to be like… Right. You don’t have to be Gandalf the Gray of IoT to do all these slay the Balrog of the problem. It can be pretty simple, but the tricky part, the hard part is figuring out where those large, high value pockets are. And that will be the challenge as we’re in the trough of disillusionment coming out. The sad reality is that it’s going to be a tough journey for a lot of players that are out there today. But that would be the recommendation I would leave to your audience is… Just kind of keep it simple, but keep your sights on. Prioritize on things that are high value because there’s no high value. What you just described, it’s just not going to justify the spend. And it seems like such a simple-

Nick Earle (45:28):
It seems-

Leonard Lee (45:29):
… logical thing, but it’s something that people need to be reminded of constantly.

Nick Earle (45:36):
Exactly. And, Leonard, I would say as one closing thought from me before we wrap this up, and this has been great. Thank you. I would just say, but also people tend to look in the wrong place for the value. So, for instance… Forget the oil rig side, but in the… I have general IoT device, consumer electronics. I think, “Well, I can sell more of this thing than…” If it’s smart and it has loads of wizzy features, I’ll sell more because it’s cool. People will buy more. So, the value will be… I’ll sell twice as many units. And I would say, “No, no, no. That’s not the value. No, that’s nice, but that’s not the value. The value is…” If you could… Let’s take one of our customers Bosch robotic lawnmowers. If you could make a single SKU product, make it once and sell it in any country and people switch it on, it just connects and the data just goes to the cloud, then you just saved millions of dollars in the supply chain. We’d probably save millions of dollars in the manufacturing process. You could probably save millions of dollars in the warranty avoidance process. And you’ve probably enabled the marketing department not to spend millions of dollars trying to collect information from users because you’re now getting the data from every device of how it’s being used.

Nick Earle (46:52):
In other words, the value is in the boring corporate backend processes which were built for a completely different world that wasn’t smart enabled. It’s not selling 5% more lawnmowers. That’s an added bonus. And so, we would always say, “Look for the value in the corporate processes.” By the way, if you can find it or postulate that it’s there, that will actually get you into the C-suite because that’s what they care about actually because we’re spending a fortune on complexity.

Nick Earle (47:28):
And so, that’s the bullseye. If you can find the value in the backend processes and a lot of the systems integrators, that’s what they do. And then say, “This is where the money is. This is the simple use case. I’m now going to go for it. I want to design something, roll it out and try it.” I would agree. That’s the point that you come out of the curve. They’re the companies that are doing it and they’re the companies that often we get on this show at least, and we say to them, “What did you do? And how did you do it?” And they’re always pretty modest, but they typically have done that.

Leonard Lee (48:08):
Yeah.

Nick Earle (48:09):
Listen, we could go on for hours. We said in advance, we probably could. And I think we could. You’ve been very generous. I didn’t think we’d get into Lord of the Rings.

Leonard Lee (48:16):
I was trying not to get into the Lord of the Rings.

Nick Earle (48:20):
Yeah. I was trying to think of-

Leonard Lee (48:22):
Star Trek and Lord of the Rings.

Nick Earle (48:23):
Star Trek and Lord of the Rings. That’s a couple of bookends. So, what more could you with a bit of IoT disillusionment in the middle? Okay. Leonard, thank you very much. Let’s wrap it up now. And to our listeners, I hope you enjoyed this show. Just as a reminder, there’s a whole series of these now out there. And so, check out the back catalog and there’s going to be a whole series more going to be released going forward. If you have any feedback as always, you want to either make some comments, we love getting your feedback or suggest subjects that we should cover or even people that you think we should talk to, just contact me, Nick Earle, on LinkedIn or send an email to iotleaders@eseye.com. But in the meantime, thanks for listening. Leonard, thanks for covering a wide variety of subjects. We didn’t get into the music, but maybe that’s for the next time visit. I’m sure there’s a whole series of stories there as well. And thank you everybody. And I’ll talk to you again on the next episode. Thanks for listening.

Leonard Lee (49:36):
Thank you. Cheers.