For all that we’ve heard about the Internet of Things (IoT), it would seem that there is a tremendous amount of money to be made in a digital environment with very few boundaries. Actually, there is. It’s just that the money is not sitting where most people think it is. Rather than profits being generated by device manufacturers and the computer chips that power the IoT, the real money is in software development. More specifically, it is a nearshore software development.
The early years of the IoT as a business model saw manufacturers competing for dominance with their latest and greatest devices. Everyone from the cell phone maker to the major appliance company was reaching out to customers in the hope of attracting them with the connectivity of those devices. But hardware is cheap.
We have done such a good job of mastering the mass production beast that we can produce tons of equipment and hardware for next to nothing. And what we cannot produce affordably here can certainly be manufactured in China. That means profit margins on hardware and IoT-ready devices are virtually nonexistent. Every company investing in the next connected device (and there are now literally billions of the active worldwide) will be lucky to break even, let alone make a profit. To make money in the IoT, you have to play in the software development arena.
Universal Connectivity and Service Platforms
As evidence that software development is the moneymaking machine in IoT technology, consider the reality that Cisco spent $1.4 billion to acquire a much smaller company named Jasper earlier this year (2016). Jasper’s claim to fame is a cloud-based IoT service platform that makes it possible for device manufacturers to effectively monetize their IoT technologies worldwide.
The biggest challenge of the IoT is one of universal service and connectivity. Hardware and device manufacturers all have ways of doing things, resulting in various ways of communicating over the Internet. Their devices do not play together very well if they don’t utilize the same communication methods. Companies such as Jasper have stepped in with software development to create platforms that offer universal service and connectivity. Cisco’s lavish spending to acquire Jasper shows just how important this is.
Cloud Computing Environments
Equally important to the IoT are the cloud computing environments that make mobile computing possible. And this is where nearshore software development really shines. Where companies such as Microsoft and Amazon laid the foundation for cloud development a decade ago, smaller tech companies are picking up the torch and carrying it into the future. It is that collection of domestic and nearshore software developers that are creating the cloud-based platform and flexible APIs necessary to effectively utilize the IoT for good.
Big Data Ties It All Together
Last but not least is the reality that without Big Data, the IoT would be virtually useless as a marketing tool. But Big Data itself is still a relatively new beast. Making it work in the era of the IoT requires creative and innovative software developers capable of figuring out how to use all of the data collected by billions of devices.
Once again, nearshore software development is a big part of this. In countries like Mexico and Argentina, the supply of young, tech-savvy workers are far more than we have available here. And these young people are the kinds of innovators the industry needs to exploit Big Data.
The real money in the IoT is in software. Is it any wonder we are seeing an explosion of companies south of our border offering nearshore software development? Not really.