Network effects will determine success for IoT platforms

15 February 2017
Report type: Research Note
Author(s): Isabel Chapman
Keywords: M2M, machine-to-machine, IoT, Internet of Things, platforms, network effects, ecosystem, developers, partnerships, alliances, security, privacy, pricing
Companies: Samsung, Nokia, Apple, Amazon, Uber, Airbnb, GE, Microsoft
Number of Pages: 6

As the IoT platforms space expands and matures, there is an expectation that the merger activity will start to increase, and some of the weaker offerings will drop away. There will be winners and losers, and the challenge for enterprise users is to know which platforms to favour. Equally, there is a sense from vendors that there needs to be a more sophisticated approach beyond a features analysis in an increasingly cluttered platforms market.

This Research Note draws on recent notable examples in the IT and digital space to introduce a way of both predicting victors and becoming one of the winners. Metcalfe’s law, and by extension network effects, provides a framework in which to analyze success factors as well as essential elements of any platform, such as security. Platforms need to be viewed as a means by which producers and users can satisfactorily engage in mutually beneficial activities.  

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