Intelligence Brief: What does CES tell us about enterprise IoT?
20 JAN 2021
Typically, CES involves a handful of core activities: hours walking through the exhibition halls; stopping by the booths to browse through various weird and wonderful products; chatting to other tech pundits; sitting on the floor and wondering why you haven’t eaten lunch yet. Most of all, though, CES is about leaving the show with a powerful sense of what it was about and where technology is heading.
This year’s CES was different. Due to its virtual nature, it lost its discovering charm and turned into more of a Netflix-esque experience: late night scrolling through product pages, and binge-watching exhibitors’ recorded product videos and talks.
One constant, however, was the fact CES is no longer just a consumer electronics show.
Over the years, it has slowly (but steadily) evolved into a wider technology event, showcasing a full range of new products and services for smart homes, connected cars, enterprise applications and vertical solutions. This is, after all, why the show goes by the name CES and not the Consumer Electronics Show.
To this end, I want to look the key themes of CES 2021 through the lens of the latest GSMA Intelligence Enterprise in Focus research. It would be impossible to cover all the insights in one blog post, so here are my top five.
The digital transformation imperative. As Satya Nadella famously said in April 2020, “We’ve seen two years’ worth of digital transformation in two months”. Companies had to quickly adjust their operations, often deploying cloud-based solutions to increase operational visibility. Our research bears this out, with 63 per cent of enterprises deploying IoT as part of digital transformation initiatives, up from 2019. Retail, of course, has been one of the most affected verticals and it was interesting to hear its perspective. During a CES keynote, Walmart’s CEO Doug McMillon talked through how 5G, AI and robotics will change their business and discussed steps they took to ensure employees’ safety and customer satisfaction. While Alibaba’s Tony Shan commented the Covid-19 (coronavirus) pandemic has accelerated retail’s digital transformation, he also pointed out that, to be successful, businesses ought to have a digital mindset and digitally-enabled on and offline experiences. This requires investment, though, and not all of the companies can front that. Some are just struggling to survive. With the vast majority of enterprises being SMEs, and OECD statistics showing closure rates among these businesses at between 20 per cent and 40 per cent across all regions in May 2020, the outlook is less rosy.
IoT projects on hold. The pandemic has also had a detrimental effect on surviving enterprises’ IoT plans. As revealed by our survey results, the proportion of companies planning to deploy IoT within a year contracted by more than 20 percentage points between 2019 and 2020. Most of this change was accounted for by enterprises with fewer than 250 employees. This is part of a wider trend of deployment postponement, since a third of all enterprises now plan to deploy IoT in more than two years’ time, up from 15 per cent in 2019, indicating more careful planning and scepticism about a return to normal soon (see chart, below, click to enlarge). Such sentiment was (unsurprisingly) absent from CES. Companies, instead, displayed products to address immediate challenges related to adjusting to current conditions: smart masks, disinfecting robots, body sensors and gates which detect Covid-19 symptoms, as well as smart air filtration systems.
Measuring success. Compliance as an IoT success metric is consistently on the rise: from 31 per cent in 2018 to 52 per cent in 2020, driven largely by compliance requirements with data security and privacy regulations. Revenue generation, however, became the top metric of success in 2020, at 68 per cent, just ahead of cost saving (65 per cent) as companies came under pressure to grow the top line. That’s what our enterprise survey tells us. But I love a good use case. This year, Caterpillar, a mining equipment manufacturer, made its debut. Like John Deere from a couple of years ago (see my rumblings from the 2019 show), it was showcasing its autonomous equipment and the benefits it delivers, including a 30 per cent increase in productivity, cost reduction (20 per cent), and safety (zero incidents).
Don’t forget the human element. Integration, security and cost continue to be the top challenges to IoT adoption for enterprises. Internal resistance as an IoT obstacle has grown in importance, 40 per cent of enterprises in 2020 listed it as a challenge, up from 26 per cent in 2018, reflecting the fact that education on the benefits of IoT needs to extend beyond C-level. To fully embrace digital transformation companies, need to undergo a change management process to get buy-in from people on the ground. This was reflected in CES speakers highlighting the importance of building trust and being transparent with employees and partners. At the same time, however, some sectors are facing a skills shortage, which IoT can help solve. DHL highlighted it had to address issues with capacity and labour availability and adjust its health and safety protocols in face of the pandemic, some of which it achieved by leveraging automation (read robotics), and being able to supply employees with the best tech and ensure flexibility. Karl Weiss, VP and CTO at Caterpillar, echoed this, mentioning industries like mining and construction are currently lacking skilled labour, and that automation helps by taking over repetitive, mundane tasks which would otherwise be done by a human.
5G or not to 5G. Asked about which features/capabilities are critical to IoT success, our enterprise research points to all the 5G flavours: enhanced MBB, critical IoT and massive IoT. It is very hard to directly translate IoT decision makers’ appetite (here measured as very important feature or capability) into actual, on the ground deployments. However, what was clear at CES was the interest surrounding 5G bringing new opportunities for collaboration, value co-creation and innovation. The US MNOs were front and centre of this, with, AT&T Business CEO Annie Chow highlighting its outside-in approach, less fixated on modality/configuration and focusing instead on use cases raised by its work with customers on private wireless networks over the past two years. Verizon’s chairman and CEO Hans Vestberg highlighted a range of 5G initiatives during his keynote, including its collaboration with the Smithsonian, NFL, City of San Jose and UPS, as tit look to find the best way to leverage 5G.
I do hope next year’s CES will be back to its usual format. There’s nothing more valuable to an analyst that to be able to touch and see, and quiz exhibitors on their products. I also fully embrace seeing more industrial vendors showcasing their tech: after all, it is a tech show.
– Sylwia Kechiche – principal analyst, IoT and Enterprise, GSMA Intelligence
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.