If you read technology websites frequently, you’ve most likely heard of the much-talked-about Internet of Things. Businesses and organizations have seen the potential of the Internet of Things (IoT) for years now, but the market is still very early in its development. That market is set to explode as more and more objects become connected to the Internet and each other. Within the next decade, the number of connected devices is expected to expand into the tens of billions range. The opportunity is there for businesses to get in on the IoT action, and much of the progress will likely be made by creative entrepreneurs.
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The fresh-thinking minds of startup entrepreneurs will be the ones to innovate and invent, creating the next big devices that will be fully utilized by the Internet of Things. Unlike much larger businesses and corporations, startups have more freedom to explore and experiment with new ideas. For a marketplace that’s still so new, the best ideas will tend to rise to the top and get noticed. The route to that destination may be different depending on the startup and the products involved, but there are a number of options that deserve a closer look.
Create a startup
The first method for entrepreneurs to take advantage of is perhaps the one most people think about when discussing startup ventures. That is, startups would create a company dedicated to making products under its own brand. The products made under the brand would be sold directly to customers or businesses (or both), giving the startup full control of operations. With the explosion of mobile devices for pleasure and work through BYOD policies, along with the recent increase in Internet-enabled objects, these startups could have a headstart on the competition. Either they can build up their own brand and possibly sell their platform to third parties, or be bought by a much larger tech company (think Google’s purchase of the home automation company Nest).
This approach does present some significant challenges. First, while it may be very possible to develop prototype devices, the movement to large-scale manufacturing is much more difficult. Many startups simply don’t have the necessary capital to make that leap unless they get enough investors on board. Second, in such a new marketplace, the burden falls on the startup to help customers and businesses understand just what these new products are and how they can be used. Without customers, the startup will be dead in the water, and without investors, the first challenge is tough to overcome.
Provide services or technology
The other approach startups and entrepreneurs can take may not sound as glamorous, but it might prove easier and more effective. This route has the startup acting as a background player, one that provides services and technology related to the Internet of Things to companies that are already well-established. This is possible because the Internet of Things requires that everyday objects are embedded with the technology necessary to connect them to the web. That means the startup wouldn’t develop the next iPhone, but would rather work on objects that don’t attract mainstream attention, like warehouse light fixtures and irrigation pumps.
While these objects may not create the same type of buzz as those produced by Apple or Microsoft, they are still needed by businesses all over the world and require embedded intelligence to work with the Internet of Things. Startups get the chance to work directly with businesses, showing off capabilities only they can perform while also expanding the market and competing in ways they couldn’t through the other method. And once a relationship has been established with a manufacturer, that relationship can last for years.
Working with the industrial sector presents advantages for startups in the IoT marketplace. The Internet of Things is in the midst of rapid expansion, in part because the sensors are getting cheaper, smaller, and all-around better, big data is easier to gather and analyze, and networks are more prevalent. With more access and cheaper sensors, the Internet of Things is now affordable for the industrial sector. It’s an emerging market startups would be wise to work with now, with the potential for big dividends in the future.
The Internet of Things will be a large part of the world over the coming years. The technology that will be used is only just starting to gain traction. Entrepreneurs with innovative minds have the chance to capitalize on this rare opportunity. Those who do will have the advantage they need to perhaps even become an industry leader.