2020 IoT Prediction: A New Open Source Business Model—IoT-as-a-Service—Will Emerge

Today, many in the IT industry are asking what the future holds for the open source community. This community, through an evolving set of different business models, has been a force behind the IT industry’s growth and success since the early ‘90s. From Red Hat and MySQL in the ’90s, to Cloudera and Hortonworks in the ‘00s, to most recently MongoDB and Elastic in the ‘10s, companies using open source-based business models have been leaders in delivering service and solution offerings that have changed the way we generate, access, and use data to create value. Meanwhile, developers in the open source community have used these companies’ offerings to build applications that have driven the economy’s digital transformation, even as open source business models have evolved over time.

Today, the open source community finds itself at an inflection point. Over the past year acquisitions of GitHub, MuleSoft and other open source companies totaled approximately 50 billion. Meanwhile, perhaps the greatest example of how an open source business model can build a large, successful business – Red Hat – was purchased by IBM.

While these acquisitions demonstrate the value that open source business models can create, they also show that the time has come for the next evolution of the open source business model. Having seen the emergence of the “Support and Services” open source business model in the ’90s, the “Freemium” model in the ’00s, and the “SaaS” model in the ’10s, what new open source business model will emerge in the ’20s?

I predict the new open source business model that will emerge is “IoT-as-a-Service.” Companies with IoT-as-a-Service business models use open source technologies to not just connect IT systems to people (as they have previously), but also to industrial equipment, vehicles, appliances and other “things.” While these companies might sell IoT open-source based software and hardware and other infrastructure, companies with IoT-as-a-Service business models focus on monetizing value by empowering their customers to collect, analyze and use their IoT data.

The demand for this business model is here – companies want to be able to collect and use the 79.4 zettabytes (ZB) of data that IDC predicts the 41.6 billion connected IoT devices will be generating by 2025. Carrie MacGillivray, Group Vice President of IoT, 5G and Mobility at IDC says that in this new, more connected world “data becomes the common denominator – as it is captured, processed, and used from the nearest and farthest edges of the network to create value for industries, governments, and individuals’ lives.”

In addition, the technological building blocks for this business model are here:

• Inexpensive sensors and other edge devices,
• Low Power Wide Area (LPWA) cellular technologies that enable low cost, energy efficient connections between edge devices and cloud platforms, and
• IoT-focused cloud platforms from AWS, Microsoft Azure and other cloud providers that allow developers to use their existing programming skills to build new predictive maintenance, equipment-as-a-service and other transformative IoT applications

Bringing it all together are companies embracing this next wave of the open source business model with new IoT-as-a-Service offerings (including Sierra Wireless). By combining open source technologies with their own technologies, these companies are able to offer embedded middleware (like Sierra Wireless’s Legato) and all-in-one IoT infrastructure solutions (like Sierra Wireless’s Octave). Together, these open source-based, IoT-as-a-Service offerings make it easy for developers to use their existing open source development skills to quickly build new IoT applications. Meanwhile, these offerings also simplify IoT application deployment and management for the companies that commercialize and use these applications.

Given all this, I make this 2020 IoT prediction – next year expect to see companies big and small begin to increasingly use open source technologies to launch IoT-as-a-Service business models that enable companies to use IoT data to generate new types of value for their customers and themselves. To support these efforts, also expect these companies to build out their ecosystems as they rush to get developers and others in the open source community to use their offerings to build the new IoT applications that will allow practically anything – rings, rubbish bins, truck trailers, air compressors, washing machines – to securely, quickly and easily deliver data to the cloud for the applications that will drive the next phase of the economy’s digital transformation.

Start with Sierra to learn more on how new open source IoT-as-a-Service business models can help you unlock value in today’s connected economy.