Just How Serious is Cisco about an IoT Transformation?

Cisco’s announcement it was buying Jasper Technologies for its IoT cloud service platform created a lot of buzz, not all of it favorable.  Many on the Street think Cisco is paying too much for a market entry play, given that Cisco already has IoT offerings.  My view is that there’s good and bad in the Jasper deal, so whether it was smart for Cisco or not will depend on whether Cisco sees the balance of the two.

IoT has overtaken the cloud and NFV as the most-hyped technology of the current age, and like all technologies that get hyped the boundaries of IoT have gotten very fuzzy.  That’s particularly bad in the IoT case because the real opportunity, which is M2M or “environmental intelligence” is often submerged in the “I” part of IoT.  How many people think that sensors and controllers will be placed directly on the Internet, available for hacking and malicious use by anyone?  Most, as it turns out.

I’ve cited my view of IoT in prior blogs.  We will never make universal connection of sensor devices to networks practical if we insist on taking these devices directly to the Internet.  Yes, there are applications where direct Internet presence is logical—I’ve personally seen examples in transportation were cellular Internet access is essential to track big expensive cargo carriers, ships, etc.  But for most home, business, and industrial applications, sensors that work on low-cost local technology and are networked internally rather than right onto the Internet are much more sensible.  And despite what the “I-centric” IoT proponents say, the real opportunity for a controllable, sensible, IoT model is bigger than the opportunity for a direct-on-the-Internet model.

Jasper is a control platform for IoT, something that does some of the things that Verizon’s IoT program also provides, like managing the online devices and access plans.  It appears to me that it could do a lot more than this—linking applications, analytics, and sensor/control applications into a cloud community, but the focus of the company seems to have been dragged into that I-centric, LTE-connections-for-everything, approach.

The most-cited IoT example these days is the “connected car”, which is essentially mobile broadband client in a vehicle, where it can both provide Internet-app access (including WiFi to in-car devices) and connectivity to the car’s own computer for vehicle status, control, and diagnostics.  We’ve had the capability to do all of this for years, of course, but what’s significant about the connected-car example is that it’s all about managing what is effectively a bunch of handsets “owned” by cars instead of people.  Only a small part is related to true M2M, and that part was supported by services like OnStar years ago.  It appears that most of Jasper’s focus is on the management of the connected-car model for IoT, where you have a community of cellular-Internet elements that represent fairly static sets of information.

The good news for Cisco is that this is the kind of IoT that network operators really love.  How could you, as the CFO for a big mobile operator, not salivate at the thought of a zillion machines each having their own phones (in effect)?  Forget about competing for all the human users, who stubbornly refuse to reproduce at the growth rate needed to keep everyone fat and happy in total-addressable-market terms!  Sell to machines instead, or rather to their manufacturers, which is easier.

I think Jasper is focusing on the notion that IoT in general can be viewed as a “connected-x” model where “x” is “home” or “factory” or even “worker”.  In short, they’ve seen IoT as focusing on a mobile broadband connection, and their software focuses on managing the connecting device more than on providing higher-layer “cloud-like” services over it.  Is that practical, though?  The “home” application of the model may be a good way to look at its viability.  Home security and control are often, these days, linked to wireless services to call into the monitoring service.  This is another nice broadband opportunity, and if Cisco thinks that they can expand Jasper into this space then they might have made a smart buy.  The problem arises, both for connected-home and business applications beyond and for Cisco as a seller, when you consider the sensors behind the connection.  If we think that every window, door, and motion sensor is going to be connected with its own mobile broadband plan we’re smoking something.  So does Jasper, and Cisco, believe that?  It’s hard to say.

Jasper’s material doesn’t refer specifically to a model of IoT where a controller that has a cellular connection might act as a proxy for local sensors and controllers that use a more economical communications technology for their connections.  It doesn’t foreclose such a model, though, and I think that it would be possible for Cisco to promote a two-level networking solution for IoT that looks just like this controller-on-the-Internet-and-sensors-on-the-cheap model.

To do that, Cisco is going to have to make Jasper into a lot more than managing devices and cellular data plans, which is where most of it goes today.  Cisco has analytic tools that could be used for IoT big-data collection and reporting.  They could build the kind of big-data-centric IoT that I believe is the real hope for the IoT market.  That’s the model that GE Digital’s Predix already supports, but of course GE Digital may not be well-known to service providers.  If Cisco could promote “real” IoT to network operators using Jasper-Plus technology they might grab a lot of market share in the IoT space.

That would do wonders for Cisco in SDN and NFV, if they wanted to excel in those two areas.  A cloud-modeled big-data-centric IoT would be the largest consumer of cloud services, of NFV, and of SDN.  If somebody like Cisco had the golden key to that IoT model they could pull through their own cloud/SDN/NFV solution with it.  Presuming, of course, that they wanted to do that.  In both SDN and NFV it’s not clear that’s the case.

Jasper leaves IoT trapped in conventional connected-car mode in a positioning sense.  Jasper talks about the cloud model of IoT.  If the cloud is the goal then for carriers the goal translates into carrier cloud and implicates NFV as the means of service feature deployment.  Cisco can break out of this any time they like with a nice PR blitz of the kind Cisco knows well.  If they do, they redefine IoT forever and make fools out of Street skeptics.  Cisco does have a chance to redefine itself with Jasper, but it’s going to take some significant work, and it’s far from clear that Cisco’s prepared to commit the resources.

However, competitors like Nokia or HP could jump out and articulate a true two-tier strategy before Cisco got around to it, which would then force Cisco to say “Me too!” or heap disdain on the two-tier model and bet on everything-on-mobile-broadband.  Since that can’t possibly penetrate the IoT opportunity as far or as fast, Cisco would be behind in its own market.  And GE Digital might take a more aggressive stance and preempt all these guys.  Or everyone might sit on their hands, in which case we’ll have a very long delay before we see an IoT revolution.

“Only the brave deserve the fair,” was the saying of old.  We’ll see who’s going to be brave here.