Every company should master developer ecosystem skills. Our new IoT Megatrends 2016 report sheds light on the state of the art in the IoT developer economy, distilling the major data points and insights from our research into six important trends in IoT. IoT Megatrends 2016 from VisionMobile Software is eating the world. [tweetable]Access to developers has become a competitive advantage in every industry[/tweetable]. Today a business in media, games, finance, or transportation, can only compete by using software to improve productivity and efficiency through every part of the business. Businesses in healthcare, construction and agriculture now find they need to use software developers to remain competitive. As the Internet of Things takes hold and more and more traditional products get a software component, this trend only accelerates. Already, [tweetable]over 5 million developers are active in the Internet of Things in early 2016[/tweetable]. This year, we estimate that their number will grow by 800 thousand developers. That’s about the population of South Dakota, Macau, or Cyprus. [tweetable]By 2020, there will be close to 10 million Internet of Things developers[/tweetable]. 6 key trends for 2016 In our 60+ page IoT Megatrends 2016 report, we highlight 6 key IoT developer trends for 2016. Developers are more and more the center of commercial strategy. If you’re not into developers, you’re not doing it right. If you believe that the Internet of Things is only about making new, stand-alone devices and solutions, then think again. More and more key players in every IoT market build their strategy around developers who can extend the product beyond what it was when it left the factory. From Amazon and SmartThings in the home, Apple and Pebble on your watch, and Ford and Automatic in your car, all the way to ThingWorx and IBM in industrial settings, 3D Robotics and DJI in drones, and Oculus and Microsoft on your virtual reality headset – developers are key to success in the marketplace. And it’s clear to see why. Our report offers four ways that developers can extend a business: as innovators, customers, extenders, and distributors.The trend towards placing developers in the center of commercial strategy is in full swing. For example, Industrial IoT counts almost as high a percentage of professional developers as the mobile ecosystem does, while the smart home sector trails behind. Battle of the Smart Home Hubs. Every major consumer technology is vying to become the hub of your home nowadays, from Amazon (Echo) and AT&T (Digital Life) to Xiaomi and Xfinity (by Comcast). It shouldn’t surprise then that with 1.4 million developers, the smart home is the most popular IoT sector. Smart home hubs compete on three axes – new touchpoints, new interaction models and developers – each of which raises important questions for the future. Touchpoints like voice control, next-generation remote controls, apps, and messaging are the core of the user experience, but most solutions don’t come from the maker of the smart home hub itself. Who will control the customer relationship in the future, harvesting user loyalty? Conversational platforms (voice, chat) in particular are coming up strong. Meanwhile, the rise of artificial intelligence fundamentally challenges the central role of developers as creators of use cases. Will developers go extinct? For now, key players still count on developers to drive value creation, also in AI-driven conversation platforms. The 4 frontiers of wearable platforms. Innovation in wearables is in full swing. Wearables move from consumer electronics devices to being unobtrusively embedded in clothing, which make the technology more and more relevant for traditional fashion companies. Soon, brands will compete on digital identity – an opportunity to create a powerful connection with users. Smartwatches and AR/VR platforms will compete on who has most apps. In smartwatches, Android Wear is under pressure from new platform challengers. On the one hands, Chinese internet companies build their own Android derivatives for wearables. On the other, victims of the Android smartphone strategy build direct challenger platforms based on Tizen or webOS. Finally, our research shows that [tweetable]data-centric apps are more lucrative than simple smartwatch apps or new wearable devices[/tweetable], but that few developers go that way today. From Connected Car to software-defined transportation. The innovation focus in Connected Cars is shifting from the dashboard to vehicle data, and in the future to data-driven transportation platforms. Car makers struggle to keep control over and to gain access to the necessary supply chain, expertise, and data to be leaders in this evolution. Will car makers miss automotive computing just like Microsoft missed mobile? We’ve explored this trend in depth here. Consumer and Enterprise technology converge. Consumer and enterprise technology are increasingly converging in most industries. The smart home of today will become the smart office of tomorrow, as smart locks turn into access control and smart TVs into meeting room equipment. The equivalent of wearable-sensor-driven health apps in the enterprise are people analytics, such as the Humanyze platform. And Jeff Immelt, head of GE, famously said this about data technologies developed at Amazon, Google, or Facebook making their way into the industrial world: “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.” Consumer, and not enterprise technology will be the foundation for the converged future. Why? Consumer markets offer much faster product evolution and validation with customers. Consumer-grade ease of installation coupled with enterprise-grade security will be the future. [tweetable]Developers from their side will be increasingly mobile between consumer and enterprise markets[/tweetable]. The hottest business models in IoT. The prevalent business models in the Internet of Things are moving from product sales to recurring revenue, and from products to services. Industrial IoT technology creates opportunities for vendors to sell access to assets like jet engines or locomotives as a service, rather than selling the machines themselves. In the home, smart appliances (e.g. washing machines) are becoming an e-commerce point of sale for consumables (e.g. washing powder). Companies like Nest, Oscar Health Insurance, or Automatic have paved the way for moving from a ‘consumer pays’ model to a ‘consumer gets paid’ model, subsidizing devices with other revenue streams like insurance or energy company rebates. The full IoT Megatrends 2016 report can be downloaded here for free. #developer #iot

[The hype around wearables is giving way to new opportunities for developers. Wearables move from “smartphone copycats” to wearables-first applications, to data-driven powerhouses. In this post we present the recording of our webinar on developer trends in wearables, and we answer the most pressing questions from participants.] Wearables are moving from a period of hype to a period of deeper exploration. In a previous post, we called the Internet of Things the peace dividend of the smartphone wars, and IoT developers the baby boomers of that period. In other words, smartphone innovation made hardware technology abundant. It’s no longer the bottleneck. IoT breakthroughs will happen not by making more powerful processors or larger memories, but by identifying new applications for the sensors, devices and connectivity. This certainly seems to be the case for wearables, which arguably started with the first Fitbit in 2008 and boomed after the launch of the Pebble and Android Wear in 2013 and 2014. Those were the days of the wearables hype. That hype has now died down. Developers in particular are getting more cautious about wearables. Between Q4 2014 and Q2 2015, the percentage of IoT developers targeting wearables dropped from 28% to 21%. Developers have not turned their back on wearables entirely – many still plan to develop for wearables in the future – but the initial enthusiasm is making way for realism, and a search for truly valuable uses for these new devices. Towards deep exploration and mature platforms We investigated the burgeoning space of wearable developers and platform in detail in our October 2015 report: The Wearables Landscape 2015. The report draws data from the 670+ wearable developers that participated in our 9th edition Developer Economics survey (Q2 2015). We also took a good look at the platform space for wearables, and presented a leaderboard of the 15 smartwatch platforms vying for developers’ hearts and minds. Some of the key insights from the report include: Wearables move from “smartphone copycats” to wearables-first applications, to data-driven powerhouses. Companies experiment with fashion, authentication, entertainment, and workplace applications. Digital identity will be the new axis of competition for fashion brands. The future winning developer platforms for wearables are emerging right now. These winners will be as dominant as Android and iOS are in mobile. In smartwatch platforms, Apple Watch OS leads, while Android Wear is under pressure from new challengers. Data apps are the next big untapped opportunity for wearable developers. Platforms are emerging for health and wellness apps, and for productivity-oriented people analytics. Data platforms will be at least as important in defining the wearables market as smartwatch platforms. Developers have yet to discover these lucrative data app opportunities. Power shifts from West to East. Strong Chinese wearable platforms are emerging that no longer need the West for innovation, or to reach a critical mass of users. The wearable developer population of Asia is almost as big as those of North America and Europe combined. We covered all of these insights in our webinar on the topic. Your questions After the webinar, we received lots of questions from participants. While we didn’t have time to cover all of them during the webinar, we don’t want to withhold you our answers. Q: Do you foresee any technology discontinuities which will drive either customer or enterprise adoption of wearables & hence market size to the next level? A: While there are certainly interesting technologies on the horizon (I mentioned printable electronics and energy harvesting in the webinar), we look for the key market driver elsewhere. What wearables need are killer apps – use cases that are so powerful that they become almost universally desirable. The way to find a killer app is not by doing better market research, but by exploring thousands of use cases and letting the most powerful ones emerge. That’s why app platforms (both on the device and the data level) are so important, and also why it’s so important for app platforms to have the most apps. Q: Does having an app store, like the Pebble app store or the Myo market, impact the size of the developer and app ecosystem? A: Absolutely! App stores are the glue that connects developers and users. App stores reduce the effort it takes for users to find a suitable solution for their needs, and makes it easier for developers to get discovered. But it’s more than just convenience. Having this discovery, promotion, and sales mechanism, is a key element of starting network effects, where developers and their apps attract users to the platform, and users provide an attractive addressable market for developers. Network effects are the dominant economic driver of app platform success. Q: Do you see data being stored on the device, centralized on the mobile, or rather sent to the cloud? A: Engineers will presumably pick the solution that makes more sense, given the ever-evolving capabilities in bandwidth, on-device storage, battery life, connectivity, and requirement to connect the watch to a phone. Different companies will have different philosophies in this regard, e.g. Apple is more device-oriented, Google more cloud-oriented. The more interesting question is what developers will do with that data. In a device-centric model, you’re not just limited in processing power, storage, and battery life, but also to the data coming from that device itself. The more “up” you go, the more opportunities there are to connect device data with other sources (like other devices, smartphone sensors, or internet services) and with historical user data. Q: Do you believe there is an opportunity for testing the software for wearables? Or do wearable leaders appeal more to the Shiny Object Syndrome phenomenon and focus more on initial market appeal rather than quality? A: To answer this question, we can look back at the history of smartphone apps. Quality was indeed not the first consideration in the early stages of the app ecosystem. Still, the user rating feature of app stores ensured that reasonably successful apps had to take care of quality. Over time, as competition increased and technology matured, testing and quality became more important. Today, we track as many as 180 app testing tools on developereconomics.com, depending on which ones you count. I would expect a similar evolution in wearables. Q: How would you calculate the value of the longer lasting customer relationship for traditional fashion brands? A: When fashion embeds digital technology into its products, its economics change to that of a digital company, to some extent. To calculate the value of a long-lasting customer relationship, digital metrics like customer lifetime value, churn, customer acquisition cost, etc become more and more relevant for fashion businesses. These are fundamentally different metrics than the ones fashion companies use today, and it will take time to adjust the corporate culture to valuing them properly. Q: When it comes to those health data platforms, do you by chance have any data regarding adoption of those by health players (clinics, hospitals, etc)? There are a lot of strict regulations regarding medical data… A: We are currently collecting data about developer adoption of health data platforms in our 10th wave Developer Economics survey, so stay tuned. It’s very early to see a lot of systematic data on these emerging platforms. There is some anecdotal evidence out there, e.g. see this article on the progress of Apple ResearchKit. Regulation might not be as big a hurdle as it seems. Some types of data and applications are not explicitly regulated (yet). There’s a spectrum between, say, simple step tracking and data generated by the CAT scanner in your hospital. Even for the more serious medical research, the work of Apple (ResearchKit), Google (which also has research partnerships) and others prove that it can be done, with a reasonable amount of time and investment. #businessopportunities #connecteddevices #wearables

Developer programs and third party software developers used to be important only for companies making computer operating systems like Microsoft, IBM or Apple. Many people still remember how Steve Ballmer, CEO of Microsoft, rallied his troops chanting the word “developers” 16 times. Ballmer was right – Microsoft won the battle for dominance of personal computing by winning developers. 20 years later, however, Microsoft lost the battle for dominance of mobile to Google and Apple; by losing the support of developers. Today access to developers has become a competitive advantage in almost every industry, from games and media to banking and agriculture. Forward-looking companies invest millions of dollars, and their best minds, to create APIs and developer programs. No matter how a company runs its business, developers can extend the company’s business model in five major ways. How? Let me explain. A successful developer program can boost all 3 aspects of a company’s business model: value creation, value delivery and value capture. 1. Developers as customers The most obvious way of thinking about how 3rd party developers can make you money is to see developers as paying customers, i.e. capture value by selling to developers. For example, Amazon Web Services, Microsoft Azure, Google Compute Engine or Salesforce App Cloud. There are also many companies for which selling services and tools to developers is the only business. For example Twilio, a startup company that has created an API on top of standard telecom services, has built a $100million-a-year recurring business (2014 figures) by providing tools for developers to integrate SMS and telephony into their apps. 2. Developers as product extenders Developers can also boost your business by adding new features you never designed or even thought of – thus making your product more valuable to your paying customers. The most obvious example is the Apple iPhone. Apple’s developer program led to the creation of over one million apps for the Apple App Store. These apps are 1+ million features that make the iPhone more valuable for the users. Often the value is added through new functionality provided by the app, but sometimes it’s just about constant supply of cool new things. Essentially the iPhone is not a phone, but a computing platform allowing 3rd party developers to extend it beyond anyone’s imagination. There is an ever-growing list of companies which work with developers to extend their products making them more useful: From SmartThings (recently acquired by Samsung) in smart home, to Automatic and Ford in connected cars, and DJI in drones. [tweetable]Developers can extend products through informal partnerships[/tweetable]; consider how someone using IFTTT can get a Nest thermostat to talk to a Philips light bulb or Amazon’s Echo smart home hub. All without the need for closed-room partnerships, consortia meeting in exotic locations, or even NDAs. 3. Developers as data harvesters Google and Facebook, both data-driven advertising companies, turn to developers to make their their ads more effective for advertisers. Android, Google’s mobile operating system, helps the company to harvest data about mobile users. Developers make Android more valuable to users through 1.6 million apps available on the platform. More Android users means more data for Google making Google ads on the desktop more effective, and therefore more valuable for advertisers. Facebook works with developers to integrate their identity services into as many apps as possible. The reason is simple: the more apps use Facebook’s login system to identify the user, the more Facebook will know about their users. Similar to Google; developers help Facebook to harvest user data to make their ads more effective and make more money. 4. Developers as distributors [tweetable]Developers can help deliver your product to new markets and new users by being a distribution channel[/tweetable] for your business. For example, Uber works with developers to integrate the company’s on-demand transportation services into new apps and services. The company works with large partners (United Airlines, Hyatt), successful Internet companies (OpenTable, TripAdvisor) as well as young startups (Momento, Tempo) to make Uber’s “take me from A to B” services accessible in wide array of use cases. Developers also help Uber to sign up new users. The company’s affiliate program rewards developers for each valid first trip in the U.S. by a new user whose trip request originated through their app. 5. Developers as resellers [tweetable]Developers can also help resell your product by being a sales channel[/tweetable] for your business. Amazon works with developers to boost sales of physical and digital products. Amazon Mobile Associates program allows developers to earn up to 6% as revenue share on purchases made through their apps and games. Amazon Replenishment Service enables connected devices to order physical goods from Amazon when supplies are running low. Seeing developers as a sales channel is not limited to the realm of Internet companies. Wallgreens, the largest drug retailing chain in the United States, also works with developers to boost sales of its digital print services. The Walgreens Photo Prints API allows users of mobile apps to print photos to any of the 8,000+ Walgreens locations in the US. The mobile app developers earn a revenue-share commission with every photo order that’s placed through their app. — Building a developer program and an ecosystem quickly becomes the norm and the baseline for competition in almost any industry. In fact, checking whether a company has a developer portal (typically at developer.company.com) is a leading indicator of how well the company is prepared for the future. — Michael #businessmodels #developers

Developers certainly use developer programs from the platform vendors, almost half of them dropping by daily, but when they’ve got specific questions they value third-party sites, populated by their peers, more than the official channels. That’s a key conclusion from VisionMobile’s 9th Developer Economics survey – a biannual event which gathers data from more than ten thousand developers around the world. That survey yields a whole load of demographic and procedural data, including how (and why) developers make use of developer programs. That information has been gathered together into Developer Program Benchmarking 2015. Along with rankings for 15 of the most-popular developer programs the report looks at what developers value most, and where they think there is room for improvement. One of the most-interesting findings is the support for third-party forums over and above those provided by the platform vendors. Neither topped the list of importance: documentation and example code were, unsurprisingly, the things that developers wanted most from a developer program. IDE integration came next, but directly below those three was support on public forums such as Stack Overflow and Instructables. That puts third-party forums two ranks above those devoted to a specific platform or technology, and hosted by the platform vendors. Those dedicated forums were cited by 20% of mobile developers, and 24% of desktop developers, as being in their top-three desired features. Well short of the 31% (mobile) and 30% (desktop) who put third party sites into that category. Peer support is obviously important – Stack Overflow has become the primary source of developer Q&A in recent years, claiming more than 16 million solutions provided and 8 million developers using the site every day; a significant proportion of the total developer population estimated at 18 million. Github – recently valued at $2bn by the Wall Street Journal – hosts repositories for Google, Microsoft, and Amazon, while Intel works closely with Instructables. With that in mind it’s less surprising to see that the four companies rated best for their involvement in third-party sites are the same four who rated best overall for services offered to developers. The commitment in reaching out to developers is reflected in the services provided to developers who come calling. But why do developers eschew official channels to such an extent? In part it is lack of trust, born of a cynicism endemic to the younger generation which makes up the majority of developers. There is a feeling that official channels won’t host comments, or responses, critical of the vendor’s products or services – though there is no evidence that this is the case, and vendors are quick to provide examples which contradict this view. Perhaps more important is the way in which modern developers work across platforms, and are often looking for support which will help them work with competitive products. A developer working on an Android app, for example, may want advice on integrating that application with Amazon’s cloud service, and IBM’s equivalent, so will look for support on a third-party site where developers may have experience they can share. Those posting also feel a freedom to discuss the merits of competitive platforms, such as the payment systems available through Google and Amazon’s respective application stores, where support on either vendor’s site may be more focused on their own product range. This perception is largely false, as vendors’ forums host a wide variety of discussions, but the effect remains pervasive. Developer Programs which rated highly all invest in third-party sites, providing staff to answer questions and ensuring that their agenda is represented in every discussion. As applications continue to expand across platforms – taking in cloud services and IoT resources – so developers will increasingly look beyond hosted forums to community sites like Stack Overflow and Instructables: a trend that developer programs will have to follow if they wish to stay relevant in an evolving industry.

E-commerce as we know it is about to be fundamentally reshaped, as every connected object in the future becomes a potential commerce channel. Internet of Things – from smart home devices to connected cars – will transform e-commerce and allow it to stretch across the breadth of the customer journey – from awareness, to intent, to purchase. Billions of “things” will double as e-commerce points of sale (PoS), unbundling and extending PoS for e-commerce outside the web, app and product silos controlled by e-commerce players. But how will we get there? Read on – and also download our latest free report, focusing on the Commerce of Things, presented by Braintree! E-commerce is forecast to continue to grow fast, and m-commerce twice as fast for that matter, the latter poised to reach a value of $600 billion by 2018. The Internet of Things (IoT) is at last leaving the hype phase and is becoming a revenue-creating reality. By 2020, there could be as many as five connected objects per every smartphone user. And by then, the IoT market is set to reach a value of $1.7 trillion. IoT and e-commerce have until now evolved in parallel. They are now embarking on a common journey where every connected object becomes a potential e-commerce real estate. With IoT, washing machines can now not just deliver detergent just in time by knowing when your supplies run out, they can also recommend the right detergent, based on your usage or type of clothes, on demand. Car makers can recommend where you buy your gas, by understanding your drive journey, availability of gas stations, pricing on-demand discounts, and gas station commission – in fact Google’s Waze does this already. Watchmakers can command a commission from health insurers, as they can monitor your heart rate, temperature, fitness habits and determine what risk zone you are in. Moreover, makers of connected devices can now afford a negative BOM (bill of materials) “à la Dell”, by subsidizing the cost of hardware with the revenues from bundled e-commerce services. E-commerce is already the biggest revenue generator among mobile developers, yet only a small minority have acknowledged it and few have seized it with both hands. Mobile developers using e-commerce (for physical or digital goods) have median monthly revenues of $1,000-$2,000 compared to a measly $200-$350 median monthly revenue for mobile developers across all revenue models. Yet, only a small share of mobile developers, 9%, have chosen to work with e-commerce, based on our 9th Developer Economics survey wave of May 2015, of more than 13,000 software developers globally. We expect however that this number will grow as off-the-shelf fulfilment and payment platforms ease the pain of managing inventory, customers and transactions. Scaling up will become easier and therefore e-commerce a less daunting and more appealing option for an increasing number of developers. Services such as Dash Replenishment Service (DRS) and Pinterest’s buyable buttons are all early, and telling, examples of the commerce things to come. They show how e-commerce is evolving towards letting customers make purchasing choices based on impulse and context instead of having to browse and select among a myriad of items. They also show how a purchasing decision is vastly simplified when discovery and payment friction has been removed. The e-commerce of things journey has only started but it will have far-reaching consequences for e-commerce, IoT, and overall how goods and services are consumed in the future. For an in-depth analysis of how developers and IoT are shaping e-commerce, download the free VisionMobile report on the Commerce of Things. -Andreas: As Founder, Andreas oversees the growth and strategy at VisionMobile. He has been working on the mobile industry since 2000, helping take the very first smartphones to market. Since then he’s worked with the top technology brands including Microsoft, Intel, Google, Amazon and AT&T. In his academic life, Andreas is an Adjunct Professor at Lund University, Sweden, where he teaches Internet Business Models. He is passionate about mapping the future and the economics that will shape how people communicate, work and play. You can reach Andreas at: andreas@visionmobile.com or @andreascon -Marlène: Marlène Sellebråten has researched and written about the global telecoms, mobile and mobile innovation market for 15 years, working as an analyst, a tech editor and a consultant, for analyst firms such as Gartner and publications such as CommunicationsWeek International (now Totaltelecom). More recently she was editor-in-chief of Sweden’s leading publication on B2B mobile, Mobilbusiness, as well as Sweden’s largest publication on B2C mobile, Mobil, before joining VisionMobile as an Analyst Partner. You can reach Marlène at: marlene@visionmobile.com or @MSellebraten

There is growing consensus that fully autonomous cars will become a reality by 2020. Google self-driving cars have driven over 1.2 million miles. Elon Musk, Tesla CEO, predicted in September 2015 that Tesla cars will have fully autonomous capability in 3 years. Zvi Aviram, CEO of MobileEye, a supplier of self-driving systems to many car makers, expects their technology will support fully autonomous driving by 2019. Most traditional car makers still see autonomous driving as a feature of the car, rather than a market shift that will open the path to the creation of a completely new winner-takes-all industry. It’s just like PC makers focusing on adding connectivity to their products and missing the transition to the Internet platforms (Google Search, Amazon, Facebook). Or telecom operators focusing on adding always-on fast data connectivity to their networks and missing the transition to the mobile platforms (Google Android, Apple iOS). Is the same about to happen in the car industry? Are car makers about to miss the transition to transportation platforms in the same way as PC makers missed the transition to Internet platforms and telecom operators missed the transition to mobile platforms? The future transportation value stack will be very different from the existing automotive industry. It quite remarkable that only two companies, Google and Uber, are present in all layers of the stack that are necessary for creating a dominant transportation-as-a-service platform. The car hardware (the body, the power train, the wheels) increasingly becomes a commodity. Modern cars are good-enough for typical everyday use offering little opportunity for differentiation. Car commoditisation will only accelerate with the transition to electric vehicles. Electric vehicles are much simpler mechanically and easier to make, which opens the gates for new players, including such electronics and Internet services players like Apple, Google, LeTV and even Acer. It’s also notable that Tesla ‘open-sourced” their electric vehicle patents in 2014 pledging not initiate patent lawsuits against anyone who, in good faith, uses Tesla’s technology. Autonomous driving is about guiding the car along the road, following the rules while avoiding obstacles and crashes. It involves lots of sensors, computing power and sophisticated software, but the most important part here is the ‘data’. Self-driving systems are machine learning systems that are trained to evaluate the environment and make fast decisions on how to react. The ‘data’ represents all the collective experience learned by multiple cars driving in test and real-world conditions. The more cars you have on the road and the more miles these cars have driven in all possible conditions, the more experienced, safe and precise the self-driving system becomes. Google is undisputed leader here having its fleet of test cars driven over 1 million miles. Tesla’s Autopilot feature introduced in October 2015 on Model S cars will allow Tesla to start training its self-driving system in real-life conditions on tens of thousands of cars. Uber seem to be behind in terms of putting real self-driving cars on the roads. The company poached 40 researchers and engineers from the Carnegie Mellon’s robotics lab in March 2015 and partnered with University of Arizona on optics research for self-driving cars. Navigation is about figuring out which roads and streets the car should drive on in order to get from point A to point B. Google is again is a clear leader here with Google Maps and Waze. A consortium of German carmakers (Audi, BMW and Daimler) is trying to uphold an alternative acquiring the Here Maps business from Nokia in August 2015 for $3.1 Billion. Uber also works to create a proprietary mapping platform winning independence from Google and Here Maps. The company acquired San Jose-based deCarta in March 2015, absorbed part of Microsoft Bing mapping assets in June 2015 and has partnered with TomTom in November 2015 to use its mapping and traffic data. (Is Microsoft about to miss the huge opportunity in the future automotive and transportation markets?) Fleet routing this is where it gets much more interesting. Self-driving cars combined with Uber-style on-demand services make individual car ownership less and less attractive. Some people even claim that hardware-as-a-service is the end game for Tesla. The shared usage models will turn car market into something that looks like a public transport platform, where operators will match in real-time the demand for transportation with the location and the capacity of self-driving vehicles. In other words, fleet guidance is about deciding in real-time where every car needs to go. Which car needs go to a specific pick up point? Shall the car drive to where the demand is expected in the coming 15 minutes? What is the optimal time to recharge or refuel? When and where to go to do the service and maintenance? Where to park, and more. This is a very complex computational problem to solve at the scale required to support fleets of thousands of self-driving cars. Bill Gurley, one of Uber’s early investors, gives a glimpse into how difficult it is in his blog explaining why UberPool is the new Uber’s “Big Hairy Audacious Goal.” (BHAG). UberPool helps the company to build capabilities that will be directly relevant for the optimal routing of large autonomous fleets. I’m sure Google is not standing still here as well. Being a machine learning company, it has the scale and the technical depth to become the leader in this space. Add to that real-time bidding capabilities with extremely complex optimisations that Google has mastered for its online ad business. One can even argue that building such transportation platform is the reason for Google’s interest in self-driving cars. It’s very difficult to see how traditional car makers will be able to compete with software-centric companies in this space. Finally, the transportation platform is the most intriguing part of the value stack. Moving people around Uber-style is not the only use for self-driving cars. What else can we do with the fully autonomous fleet of robotic vehicles, given that they don’t not have to look as Uber or Google cars of today? These robotic vehicles can be specialized delivery vehicles (see this Domino’s Pizza car as a hint for how they may look like), small delivery drones like Transwheel or StarShip or even autonomous motorbikes, like Motobot by Yamaha. The number of possibilities and applications for autonomous transportation is mind boggling. No single company, even as nimble and well-funded as Google or Uber, will be able to address all possible needs and use cases by themselves. The recipe for addressing these yet to be known needs and use cases is in plain sight. It is a platform connecting vehicle manufacturers, vehicle operators, service providers and application developers with users (much like Google did with Android). The platform will harvest permissionless innovation by startups and developers to discover and deploy new services and applications we cannot even imagine today – in the same way that no one could predict Instagram, Snapchat or WeChat on smartphones. Uber already works with developers extending its service into a platform. Google also has a long history of relying on permissionless innovation by developers to win its competitive battles, from Google Maps to Android. It’s only natural that Google will use the same approach to dominate self-driving cars. It’s still too early in the game to say which companies will dominate the future transportation market. One thing is a safe bet: The future transportation ecosystem will look very different from the existing automotive industry. It will resemble modern technology ecosystems with their platform business models, permissionless innovation by developers, and domination of software-centric companies. — Michael

The question in question is the question of questions This week we launched our tenth biannual developer survey – asking thousands of developers around the world what they’re working on and how they’re doing it. If you’re involved in software development, in any way, then go and fill it out – it will only take you fifteen minutes and I’ll wait here while you do. Answers are easy. It’s asking the right questions which is hard. Doctor Who – the fourth one At Vision Mobile we spend a lot of time composing questions, especially when we’re compiling a survey like this one. The process sounds easy enough – phrasing 30 questions we’d like answered to provide insight into the developer ecosystem, but it turns out to be a surprising challenge. For a start we have to create a lot more than 30 questions: the survey tailors itself to ask each person about the industry in which they work, based in the first round of questions. The survey can thus be designed to last around fifteen minutes, but the whole industry can be covered. Some questions we repeat every six months, choice of language, mobile platforms, and so forth, so we can spot developing trends, but sometimes an old question will need new options as the industry changes. A year ago we added Swift to our language list, and were surprised to see how quickly it had gained popularity, now we’ll be waiting to see if that growth has been sustained and at what cost. Other questions are created from scratch: the technology behind the Internet of Things might not be entirely new, but the developer interest is. For the first time we’re asking about Open Source in IoT, drilling down to see how this new industry is evolving. After the questions are written the task is far from over, for once the words are down then the “discussions” can begin. How many options should be listed? Which toolkits are worthy of mention? Whose products should be used as examples? How many IDEs can one developer realistically use? VisionMobile employs experts in many fields; with practical experience developing software and an intimate knowledge of the challenges involved, but like most developers these people are driven by a passion for their subject, and have strong opinions on the tools and techniques they consider important. The survey has to be impartial so we try to ensure that all the experts are equally unhappy, for balance. Software development is a global industry these days, so the survey has to reach a global audience. Once the questions have been written, discussed, dismantled, and rebuilt to a mutually-acceptable level of dissatisfaction, then they have to be translated into almost a dozen languages, always ensuring that the clarity of the original remains intact. And then it is done. Perhaps not quite a joy forever, as Keats would have it, but certainly a thing of utility. Questions laid out, check boxes ready to be checked, radio buttons ready to be… radioed(?). Everything waiting for the thousands of developers such as you (what do you mean you haven’t done it yet? Get over over there now, this minute). They are drawn by the desire to contribute to the project, or get access to some of the results, or win a prize in the draw, or just know that their opinion matters to the companies and organisations which will be referring to the data over the next six months before the whole process kicks off again. Shakespeare’s Hamlet asserted that “To be, or not to be” was “the question”, but in these days of Continuous Delivery the questions will never end, and we have turn to a pair of Hamlet’s school friends (Rosencrantz and Guildenstern, with the help of Tom Stoppard) to see where that might lead us:

Back in 2008, Nokia sold 468 million phones making the company the undisputed king of the mobile phone market with over 40% market share. This same year, Apple sold little over 10 million iPhones and launched iPhone App Store with just 500 third party apps. By the end of 2010, when Apple App Store had over 300,000 apps, it became clear to all including Nokia that the number of apps is much more important than the number of devices. Apps drive demand for phones creating network effects between users and 3rd party developers. Smartphone users attract developers. Developer create apps. Apps attract more users, which attract more developers. A very similar dynamic begins to unfold in messaging platforms. Popular messaging apps evolve into developer-centric platforms having the same kind of network effect as iOS and Android. Soon we will compare messaging apps not by number of users, but by the number of bots/integrations available on the platform. Messaging users attract developers. Developers create bots. Bots attract more users, which attract more developers. Messaging has emerged as a new interaction paradigm on mobile, with leading apps (Whatsapp, WeChat, Facebook Messenger, KakaoTalk, Line, Viber) amassing hundreds of millions of users. David Marcus, vice president of messaging products at Facebook says in his interview to the Wired magazine: “The messaging era is definitely now. It’s the one thing people do more than anything else on their phone.” So far, competition between messaging apps is based on number of users. In Q3 2015, Whatsapp (acquired by Facebook for over $19B) has 900 million monthly active users; Facebook Messenger – 700 million; and WeChat – 600 million. But now things start to change. While Facebook leads in number of messaging users, Chinese Weixin, or as it is known in the West WeChat, is a clear leader in turning messaging into a platform. WeChat at its core is a messaging app for sending text, voice, and photos to your friends and family, but it is also much more. Connie Chan, Partner at Andreessen Horowitz, explains on the company blog: “Along with its basic communication features, WeChat users in China can access services to hail a taxi, order food delivery, buy movie tickets, play casual games, check in for a flight, send money to friends, access fitness tracker data, book a doctor appointment, get banking statements, pay the water bill, find geo-targeted coupons, recognize music, search for a book at the local library, meet strangers around you, follow celebrity news, read magazine articles, and even donate to charity … all in a single, integrated app.” WeChat achieves this by supporting lightweight apps that are called “official accounts”. There are well over 10 million official accounts on the platform: from celebrities, banks, media outlets, and fashion brands to hospitals, drug stores, car manufacturers, to internet startups, personal blogs, and more. These lightweight apps are approved to access exclusive APIs for payments, location, direct messages, voice messages, user IDs, and more. Essentially, WeChat is not only messaging app, but a developer-centric platform allowing developers to add value to the service. Facebook has no choice but to follow WeChat. Facebook’s David Marcus said at the Code/Mobile conference in October 2015: “Messaging is really, truly the next frontier. The Asian paradigm has shown there’s a there there.” Having introduced Messenger platform at its F8 developer conference in March 2015, Messenger has adopted the WeChat approach and will now be open to 3rd party developers to build new “tools for expression” and also let users communicate with businesses through simple conversation threads. WeChat and Facebook are not alone in their attempts to take messaging to a new level. Telegram, which started as a more secure Whatsapp clone, evolves into something much more interesting with the announcement of their Telegram Bot Platform. The developer-centric platform allows 3rd party developers to create Bots, which are simply Telegram accounts operated by software sporting AI-like features. The same trend shows itself even in the more conservative enterprise space with Slack Technologies Inc. having risen to $2B valuation in less than 2 years. Slack is a messaging app for teams designed to enable integration of messaging with popular enterprise apps and services. The company has 1.1 million daily active users, but also 100 integrations with 900,000 integration installs on the Slack platform. These range from Giphy gifs to expressing feelings to co-workers; to MailChimp email marketing service; Crashlytics to monitor mobile app bugs; Trello for tracking tasks or manage help tickets from Zendesk. The Slack Platform also supports bot users allowing companies automate many processes. A bot user is a special kind of free user account optimized for writing automated bots that connect to Slack using the Real Time Messaging API. Users can interact with bots using direct messages or even invite bots to private groups. For example, The New York Times data science team has built a Slack bot to help decide which stories to post to social media. The bot, called Blossom, predicts how articles or blog posts will do on social and also suggests which stories editors should promote. All within the framework of the messaging app. Slack evolves into an enterprise developer-centric platform. There are already several startup teams experimenting with building companies on top of Slack messaging platform. Similar to what happened in mobile platforms, the basis of competition in messaging apps changes from the number of users to the number of bots (integrations) and the messaging apps themselves evolve into developer-centric platforms. Today Whatsapp is the largest messaging network with 900M users. It does one thing, messaging, exceptionally well. But it increasingly starts to resemble Nokia. Nokia also did one thing, mobile phones, exceptionally well, but missed the transition to developer-centric platforms, where the winners are decided by developers. #automation #businessandproductivityapps #slack

1.5 million developers are working on Smart Home solutions. And yet, the Smart Home market is struggling to move beyond early adopters into a mainstream market. Data from our new Smart Home Landscape 2015 report sheds light on this conundrum, and much more. The Smart Home is on fire. At least, IoT developers think it is. [tweetable]A third of them (32%) are currently working on Smart Home projects, according to our Q2 2015 Developer Economics survey. That’s close to 1.5 million developers.[/tweetable] Does this mean that the Smart Home market is going to take off, fueled by thousands of clever solutions? Maybe not. The number of smart connected homes could hit up to 700 million homes by 2020, rising from somewhere between 100 million and 200 million homes now, according to Gartner. But others are not so sure. In fact, [tweetable]the Smart Home market is struggling to move beyond early adopters into a mainstream market[/tweetable]. Gartner itself hints at a “lack of a good business model or the immaturity of home IoT products”, which “has not stopped gateway makers from trying to develop the market”. Fortune magazine puts it this way: “Early adopters, venture capitalists, and entrepreneurs have bought into the idea of a smart home, but mainstream consumers haven’t.” And according to Argus Insights: “Early adopters have gotten what they need, and now products are not compelling typical consumers to create a connected home. Acquisitions by Google and Samsung have done little to spark consumer interest.” It will be up to developers to lift the Smart Home into the mainstream. It’s up to them to experiment and discover new, better, use cases for the Smart Home. And therein lies the catch. Hobbyists rule While today’s Smart Home developers are plentiful, the vast majority of them are not pushing to develop the market. Out of all Smart Home developers, 70% are involved in the Internet of Things as a hobby or a side project. Only 30% are doing IoT in a professional capacity. When we look at the goals and motivations of Smart Home developers, this picture becomes even clearer. More than a third of Smart Home developers (36%) are Hobbyists, primarily interested in building solutions for themselves. Another third (32%) are Explorers who are learning the ins and outs of IoT. For Hobbyists in particular, Smart Home is an attractive choice: 57% of Hobbyists choose Smart Home, versus only 37% of non-Hobbyist IoT developers, a 20 percentage point (pp) difference. On the other hand, professional Guns for Hire working on commission (-10 pp), Gold Seekers hoping to strike VC money (-11 pp), Optimizers aiming for efficiency gains (-18pp) and Data Brokers selling repackaged data (-18 pp) seem to shun the Smart Home. In short, [tweetable]7 in 10 developers, significantly more than in other IoT verticals, are building solutions for their own benefit first, not yours or mine[/tweetable]. Many of the solutions that they build are in a sense reinventing the wheel, reimplementing obvious use cases (e.g. access control, lighting controls) that don’t push the envelope. They’re certainly not building the comprehensive, ecosystem-driven systems that might make Smart Home technology worthwhile for the average consumer. The next wave of Smart Home developer ecosystems Several shifts need to happen for the Smart Home to reach mainstream. Smart Home Hobbyists and Explorers need to graduate into Smart Home entrepreneurs. Those innovators need to discover new, more compelling use cases. Thirdly, a new generation of Smart Home platforms must empower entrepreneurs to bring those solutions to market. The good news is that these shifts are already in motion. In our newly released Smart Home Landscape 2015 report, we investigate which platforms are best positioned to fuel the next wave of Smart Home solutions. We also investigate how developers can break free of devices, morph smart home tech to fit tomorrow’s smart office, and move beyond the Smart Home’s walls into Smart Life applications to create tomorrow’s killer apps. #smarthome

Every six months we ask developers around the world those four questions, to see how the industry is evolving. Now in its 9th edition the VisionMobile Developer Economics survey reached out to 13,000 developers, from 149 different countries, and the results are available in our biannual report: State of The Developer Nation Q3 2015. Who 94% of our 13,000 developers are male, showing a gender imbalance which needs to be addressed if the industry is going to reflect society as a whole. North America is making some progress here, but even in the land of opportunity only a tenth of developers identify themselves as female, and the figures of the rest of the world are much worse. It’s perhaps surprising that Africa is next best in terms of equality, while Europe is positively embarrassing with only 4% of developers ticking the box for the minority sex. South America offers the greatest imbalance, but nowhere do developers reflect the proportion of women in the general workforce. What Cloud is increasingly important for developers, and cloud developers the most likely to be generating revenue (67% of them are bringing in more than $500 a month). But there’s no rush to the public offerings such as AWS or the Google App Engine, despite all the media attention: 44% of cloud developers are creating apps in private, for use on private clouds. Only 10% of mobile developers are chasing e-commerce revenue, but 1/5th of them are earning more than $100K a month — Developer Economics (@DevEconomics) July 30, 2015 The Internet of Things is also getting a lot of developer attention, though more a quarter of IoT developers (26%) don’t know who their eventual customer will be. Half of those developers are making applications, rather than hardware or firmware, reflecting the evolution of the IoT industry. When it comes to mobile the two dominant players (Android and iOS) are squeezing out the competition and 37% of mobile developers are targeting both the leading platforms. Interest in creating apps for Windows Phone has dropped slightly since we last asked, from 30% to 27%, but developers are understandably nervous of Windows 10 and the uncertainty over Microsoft’s commitment to mobile. How Across the developer community the most-popular development language is now a combination of JavaScript and HTML5. The evolution of web languages has imbued them with functionality, while cross-compilers and packaging tools can make them indistinguishable from native applications. That’s been enough to attract 71% of developers in North America, though only 58% in Asia where old-school languages such as Java and C retain their presence. 27% of devs using Swift consider themselves self-taught — Developer Economics (@DevEconomics) July 30, 2015 Learning a new language is always a challenge, though the growth in Apple’s Swift shows that developers are willing to invest in their education. Swift is, perhaps unsurprisingly, attracting a good proportion of self-taught developers (27% of those primarily using Swift consider themselves self-taught), while Java, C#, and Objective C, all appeal to degree holders (around 60% have degrees) who prefer a more-formal learning environment (around 17% are self-taught). Why Not all developers are motivated by money, in fact many professional developers are hobbyists or amateurs in another field. More than half of our mobile developers, for example, are also mucking around with IoT – some professionally, but mostly just to see what it can do, and what they can do with it. Developers are predominantly young, with an average age of around 30, and have both the time and the motivation to explore new areas. Many are involved in open-source projects: 11% tell us that Linux is their primary desktop target platform, despite the fact that the open-source OS accounts for less than 2% of desktop installations. In mobile the path to revenue, if not riches, is clearly selling products and services, in the manner of Uber or Just Eat, rather than downloads and booster packs, in the manner of Candy Crush and Minecraft. Only 10% of mobile developers are chasing e-commerce revenue, but almost a fifth (19%) are taking more than $100,000 a month – a figure that only 6% of those reliant on advertising can match. Only 10% of mobile developers are chasing e-commerce revenue, but 1/5th of them are earning more than $100K a month — Developer Economics (@DevEconomics) July 30, 2015 The State of the Developer Nation The whole report, complete with graphics and figures, is a free download, and packed with more insight and analysis from Vision Mobile. #de9 #developereconomics

Facebook is now starting to hit physical limits to its digital growth. Three quarters of the company’s revenue are coming from North America and Europe where user growth is slowing down. Facebook’s average revenue per user in the “rest of the world” region, which includes many developing nations in South America and Africa with highest user growth rates, is 10 times lower than the average revenue per user in North America ($0.90 vs. $9.30 per user respectively). To grow its business in emerging economies [tweetable]Facebook needs to look into business models beyond advertising and app installs[/tweetable]. Signs are that Facebook is preparing its next pivot. Piecing together Facebook moves and hires, we believe that [tweetable]Facebook will be launching a social marketplace combined with financial services[/tweetable]. This will unlock new multi-billion dollar markets in the world’s fastest growing economies. A pivot which could be 10 times bigger than its pivot to mobile, which since starting in 2012 was responsible for 76% the company’s ad revenue in Q2 2015. From social network to social marketplace BuzzFeed recently reported that Facebook is experimenting with building out shops within Facebook Pages. E-commerce shops within Facebook pages will turn the social network into a humongous social marketplace where the entire shopping experience will occur within Facebook — from product discovery to checkout. Facebook has created a sprawling mobile messaging empire with its Whatsapp, Facebook Messenger and Instagram apps – reaching 800M, 700M and 300M active monthly users, respectively. In doing so, Facebook is not leading, but following. Facebook is copying the business model of WeChat, Line and KakaoTalk, the asian social messaging apps, which proved that mobile messaging can be monetised through e-commerce. WeChat, Line and KakaoTalk evolved into all-encompassing ecommerce platforms where users can shop for everything from stickers and games, to groceries and cars, and even book taxis and flights. Instagram is already used by people to sell everything from goats to art, and Facebook should be able to turn it together with Messenger and Whatsapp into powerful mobile e-commerce platforms. Adding payment services to Facebook’s messaging empire makes perfect sense. David Markus, who left the position of Paypal CEO to lead Facebook messaging platform, said in his interview to Wired: “VOIP is just one way that the company hopes to use the messaging app as a platform for much bigger things, including online payments.” In March 2015, Facebook unveiled a US-only peer-to-peer payment service for Facebook Messenger that lets you connect your Visa or Mastercard debit card and tap a “$” button to send friends money on iOS, Android, and desktop with zero fees. From Internet.org to Bank.org For now, the Facebook payment service is an extension of a traditional banking service. But what about the countries where Facebook pushes its Internet.org initiative for affordable Internet access? To make payments work in countries without established banking services Facebook needs to create its own “backroom” infrastructure for “storing” money and become a digital bank. The initial opportunity for Facebook is remittance services – a global $583 billion market controlled by  Western Union and MoneyGram. But this is just the beginning. A bank is a financial intermediary that accepts deposits and channels them into loans, where banks make most of their money. In other words, [tweetable]a bank is a platform connecting customers that need credit with customers that have capital surpluses[/tweetable]. To be successful, a bank needs to manage risk and minimize defaults. Financial services in emerging economies require new business models and approaches to managing risk. For example, InVenture runs a Mkopo Rahisi service in Kenya that with the help of an Android app creates a reliable credit score by analysing more than 10,000 data points from the activity on a customer’s mobile handset. Instead of giving this score to banks, InVenture services the loans independently. Shivani Siroya, founder & CEO of InVenture writes: “Since our app launched in Kenya last spring we’ve provided millions of dollars of loans to tens of thousands of customers. Our repayment rate is at more than 85% and more than 90% of our borrowers come back for a second, third, fourth, even fifth loan.” Facebook’s ability to manage credit risk based on information from its social network would be second to none. Imagine how big such lending service for the unbanked can become at Facebook scale! Facebook was always an interesting company to watch. It could well happen that Facebook’s advertising and app install businesses that get so much attention today are just a stepping stone to a much bigger ambition. The ambition of becoming the ecommerce and financial infrastructure for the world’s fastest growing economies. #businessmodel #ecommerce #facebook

The industrial world is undergoing a fundamental metamorphosis. Every industrial company has become a software and data company, overnight. In our latest report, the Industrial IoT Landscape 2015, we bring data on the 1M+ Industrial IoT developers in the world today, and we show that the winning Industrial IoT developer ecosystems are already emerging. “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.” – Jeff Immelt, CEO of General Electric, Minds+Machines summit, 2014 The industrial world is undergoing a fundamental metamorphosis. To paraphrase GE’s Jeff Immelt: every industrial company has become a software and data company, overnight. Two very different engineering cultures are clashing and converging. On the one hand, the traditional industry that knows how to build reliable mechanical and electrical machinery that lasts for decades. On the other, the fast-moving software and data science industry, incubated in consumer markets like e-commerce, digital advertising and social media. Industrial companies will have to be imbued with a software and data mindset if they are to stay competitive. A formidable challenge, to say the least. The transformation of industry is not just about adopting new technology for incremental improvement. When data is put at the center of how industry operates, it will affect the entire business: not just engineers, but also production workers and product designers, marketers and salespeople. There is a dire need for people skilled in handling data with software across all these groups. At the same time, software and data technology are rapidly becoming more accessible. This opens up opportunities not just for large-scale companies – the Bosch’s, GE’s and IBM’s of this world – but also for smaller manufacturers and technology providers. Small fish can become big fish quickly in this new pond. In our new research report, the Industrial IoT Landscape 2015, we tell the story of this metamorphosis from the perspective of those who have the necessary skills – software developers – and those who work to democratize Internet of Things technology – platform vendors. Over 1 million Industrial IoT developers crave better platforms The advent of software developers working in an industrial context is no longer theory. We estimate that [tweetable]there are already over 1 million Industrial IoT developers in the world today[/tweetable]. 61% of Industrial IoT developers are professionals, creating IoT products, selling their services as contractors, or employing their skills to improve their company’s products or processes. The Industrial IoT sector counts significantly more highly-experienced developers (with 6+ years experience) than other areas of the Internet of Things, across software, web, mobile and IoT technologies. This said, [tweetable]the bulk of Industrial IoT development is not performed by veterans[/tweetable] who have been connecting machines for decades. Just like in the broader IoT space, we see a large influx of new blood, starting about 2 years ago. Almost 2 in 3 Industrial IoT developers (63%) has less than 2 years experience in the Internet of Things. The top challenge for 48% of Industrial IoT developer is immature platforms, tools and standards. Developers crave modern software platforms that empower them to build careers and businesses. Our analysis shows that a specific class of platform vendors – companies from Amazon to SAP – have already started providing developers with top-of-the-line tools. The Industrial IoT Landscape 2015 report contains a full profile of Industrial IoT developer demographics, psychographic segmentation, challenges and platform selection criteria. We have evaluated 30+ platforms on their ability to build vibrant developer ecosystems. Find out more here.

[First published in Mobilbusiness, a Swedish online news and analysis publication that uncovers the latest and most relevant news on mobile innovation, market trends and enterprise mobilization.] IoT companies that focus on wrong types of innovation will be left behind. Wayne Gretzky, a legendary athlete, explained why he was so good at the fast-paced game of hockey: I skate to where the puck is going to be, not where it has been. The mobile market is a powerful example: Nokia, BlackBerry, Microsoft, Palm and many others missed the market shift and were left behind. The same will be true for the Internet of Things (IOT): five years from now the IOT market will be very different from what it is today. [tweetable]The future IOT winners skate to where IOT is going to be, not where it is today[/tweetable]. IOT: create a market or vanish Harvard Professor Clayton Christensen explains in “The Capitalist Dilemma” that innovation, comes in three varieties: one is performance-improving (sustaining), another efficiency and a third one market-creating. The history of the mobile handset market is an excellent illustration of how market-creating innovation drives growth and reshapes huge markets in the matter of a few short years. Before 2010 both Nokia and Research in Motion (RIM), the maker of popular BlackBerry devices, were at the top of their game. Nokia owned then 40% of the global handset market, netting $2.6 billion in Q4 2007. Fortune named RIM the world’s fastest-growing company in 2009. But then the tide turned: Market-creating innovations by Apple and Google completely reshaped the industry, wiping out once all-powerful companies. Instead of competing with Nokia and RIM on sustaining and efficiency innovations, Apple and Google created a new market for mobile computers. In this new market demand is driven by apps catering to all possible needs and use cases. More precisely, the demand for mobile computers was (and is) driven by app entrepreneurs who work to discover and address unimaginable variety of user needs and use cases. The entrepreneur-driven demand has created huge new markets that are several times bigger than the existing mobile handset market could ever become. 3 million IOT innovators today The data from VisionMobile’s Q1 2015 Developer Economics survey of over 4,000 IOT developers reveals that the forces of the market creating innovation are already in full swing. Already, more than half of mobile developers (53%) are involved in IOT development. We estimate that this amounts to over three million developers innovating in IOT today. The evolution in the mobile industry holds a clear lesson for companies eyeing the IOT opportunity. Much like in mobile, market-creating innovations will define where the IOT market will be in the future. And just like in mobile, companies that focus solely on sustaining and efficiency innovations will be left behind destined to skate where the market has been. Today analysts forecast billions of connected devices in the market by the end of the decade. But is the number of devices even the right metric? Just like smartphones, the amount of IOT devices shipped is the end-result, not the driving force of the market. Just like in mobile, the demand for IOT products will come from an army of IOT developers/entrepreneurs discovering and addressing thousands of needs and opportunities for consumers and enterprises alike. Just like in mobile, developers/entrepreneurs will decide who will be the winners and losers in the emerging IOT market. The same companies that took the lead in the mobile market now reuse the playbook of market-creating innovation building developer ecosystems on top of their IOT platforms. VisionMobile’s IoT Developer and Platform Landscape 2015 report shows that Apple, Google, and Samsung (who also acquired SmartThings) are the clear leaders attracting most developers across Smart Home, Wearables, Health and Wellness and Connected Cars verticals. [tweetable]The future IOT market will not be the larger version of today’s market[/tweetable]. It will be dominated by developer-centric platforms, operate based on new business models, address needs that we cannot foresee today and serve new categories of customers. To win, skate to where the IoT is going to be: work with developers, play in the consumer market and try new business models.

Microsoft has finally raised the white flag in the battle for smartphone dominance. Microsoft announced that the company will be scaling down its mobile phone business it acquired from Nokia laying off 7,800 employees and writing off $7.6 billion (this is almost the entire value of the Nokia Devices and Service business minus the cash it came with). The decision is dramatic, but hardly unexpected. David Pierce writes in WIRED: “Give Nadella some credit for seeing the writing on the wall, though to be fair it was basically written in huge letters and lit by floodlights.” The writing on the wall is still there and can help us see where Internet of Things will be in a few years. Lesson 1. Business model, not product features define your destiny In my analysis from 3.5 years ago on the VisionMobile blog I argued that the paramount challenge for Microsoft and Nokia is a broken business model, not product features, user interface or integration of software and hardware. (A business model describes how a company creates, delivers and captures value.) From my 2012 blog: “The basis for competition in software and mobile has changed – the once-successful business models of Microsoft and Nokia can no longer ensure profitable growth. Combining two business models of the 1990’s won’t help the two companies regain their positions in the new world order, dominated by companies with Internet-age business models, like Apple, Google, Amazon and Facebook. Looking at the industry through the lens of software-defined business models has helped us to accurately predict years before the story unraveled the duopoly of Apple and Google (2009), the demise of Palm (2009), the outcome of HP’s foray into mobile with WebOS (2010), BlackBerry’s meltdown (2010), and the failure of Windows Phone (2012). The story repeats in Internet of Things. Much like in mobile, [tweetable]software-defined business models cause deep shifts in how value is created and delivered[/tweetable]. The IoT winners will be decided by business model innovation, not by technology, product features or standard committees. VisionMobile’s Stijn Schuermans wrote about it here – What the Internet of Things is not about. Lesson 2. Skate to where the money will be, not where it has been The mobile industry continues to change. In 2013 we wrote, together with Sameer Singh, in the The evolution of the handset business models: “A third wave of disruption will again reshuffle the deck for all [mobile] industry players. We will see growth in a new class of business models, where handset hardware is no longer seen as a source of profits, but is treated as a distribution channel for digital products and services. As price competition increases, commoditization pressure in the smartphone industry, variations of “hardware as distribution”, could become one of the primary drivers of profitability. In 2014 Xiaomi became the most valuable tech startup in the world by executing on “hardware as distribution” business model and creating a new e-commerce market for itself. From “Only for fans, or why Xiaomi is not what you think it is”: “Comparing Xiaomi with other traditional smartphone makers is like comparing Apple with Orange (a mobile network operator). The two happen to be in the same industry, but they are really in different businesses. Apple, Samsung, Huawei, Lenovo sell phones to make profits. Xiaomi sells phones to seed competitive e-commerce business that goes far beyond mobile. Nokia and Microsoft focused on chasing today’s competition and missed the market transition that turned their strengths into weaknesses. The same will be true for the Internet of Things (IoT): five years from now the IoT market will be very different from what it is today. The future IoT winners skate to where IoT is going to be, not where it is today. Lesson 3. Follow developers to find future winners Microsoft and Nokia spent a fortune trying to attract developers to its Windows Phone platform. But it was too late. Google and Apple understood the importance of developers much earlier and had established thriving developer ecosystems. VisionMobile’s Andreas Constantinou wrote in “The Dead Platform Graveyard”: “You can’t buy developer love. You can only plant the seeds.” The data from the VisionMobile Q1 2015 survey of 8000+ developers shows that the majority of developers, including most valuable innovators, make apps for the Android and iOS duopoly (71% and 54% of developers respectively). The story of Windows Phone proves that distant 3rd place is not viable in the ecosystem race. Moreover, as we argued earlier, ecosystems create “Black Oceans” that make competition impossible for late comers to the ecosystem party. Software developers emerge as a driving force in industry after industry, not just in mobile. VisionMobile’s Stijn Schuermans writes in Developer Megatrends 2015: “Developers are conquering the wrist, with 3,500+ Apple Watch apps and 2,300+ Android Wear apps. They’re conquering the car. Android Auto and Apple Carplay will be available on dozens of car models this year. 250+ OBD apps provide aftermarket solutions for car data, with growing support from big players in telecom and insurance. Developers are conquering the home, taking advantage of new technologies and platforms like Samsung SmartThings, Apple HomeKit, Google Weave, Eclipse Smart Home or dozens of device APIs. Developers are even conquering the sky. Major drone players like DJI (from Phantom fame), 3D Robotics (dronekit.io) or Airware are providing SDKs for drone apps, helping developers to put drones to use in industry, agriculture, construction or mining. Cities, healthcare, clothing, factories, … – They’ll all fall to the wave of innovation by developers. Much like in mobile, [tweetable]IoT competitive battles will be decided by attracting developers, not by standards committees.[/tweetable] There is a lot to learn from how the mobile industry was reshaped by software-defined business models, market-creating innovations and developer ecosystems. The lessons are in the plain sight. Microsoft and Nokia ignored them at their own peril. Who will be next?