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GE discovers that industrial IoT doesn't scale By Stacey Higginbotham This week Reuters did a deep dive into problems with GE's industrial IoT efforts. The company had taken a two-month "time out" to fix problems with its Predix software platform designed for the industrial IoT and has asked executives to cut costs. GE is also backing off selling the platform to all industries, and will instead focus on oil & gas, aviation and energy.



Since launching its industrial IoT effort five years ago, GE has spent billions selling the internet of things to investors, analysts and customers. The idea of adding sensors to its equipment, analyzing the data captured from those sensors and using that to generate business insights wasn't new, but GE made a huge effort to commercialize it. — Invenergy plans to deploy GE’s Predix based reliability management software on 13 GE turbines at six gas-operated thermal plants in the U.S. GE has had success selling Predix into the oil & gas market. GE is learning that the industrial IoT isn't a problem that can be tackled as a horizontal platform play. Five years after it began, GE is learning lessons that almost every industrial IoT platform I've spoken with is also learning. The industrial IoT doesn't scale horizontally. Nor can a platform provider compete at every layer.



For example, Samsara, a startup that formed in 2015, aimed to build a wide-scale industrial IoT platform that started with generic sensors. It has since narrowed its focus to fleet monitoring and cold-chain assurance, which is how some of the earliest users of its product used it.



Helium is another company that had a similar vision. It makes sensors and sends data over a proprietary wireless network to a gateway or (originally) the Helium cloud. The original plan was that companies would buy the sensors and build out rules in the cloud. But that was too open-ended, and Helium now has decided to link data from its sensors to other provider's clouds. It is also focusing on managing those sensors from a Dashboard setup.



In Samsara's case, the company went from a broad focus to a few specific industries. In Helium's case, it decided to stop building out a cloud where industrial customers could host their data so it could focus on management software and act as a connector between customers' data and their cloud of choice.



A year ago it decided to stop building out its own cloud data centers and started signing partnerships so customers could run Predix in Amazon's or Microsoft's clouds. As part of the current refocusing, it appears to be narrowing its customer focus to industries where it already has customers using its equipment.



This makes sense. When I began covering the industrial and enterprise internet of things it quickly became clear that while IT could be generic, the data analytics elements and the real-world devices in the field that were being monitored would require specialized knowledge. What has happened is that at the computing (and even device management layer) larger cloud providers like Microsoft and Amazon are winning.



I think we'll see connectivity also steer toward the big platforms, whether its cable providers offering LoRa networks, cellular companies, or a few of the specialized low power wide area network providers. The hardware will likely be dominated by bigger companies such as Intel, Dell, HPE and those with established IT credibility. We'll also see industrial gateways from the likes of Advantech and Eurotech.



But it's the many areas of specialization here the industrial IoT gets interesting. I think we're going to see startups emerge around data analytics and AI such as Uptake, C3, SightMachine Flutura, and Foghorn. Many of these will have specific areas of expertise such as C3 with energy and Flutura with oil and gas.



There's also a role for specialization in building the overall IoT solution for companies. A hospital aiming to connect patient rooms needs a different set of knowledge around regulation and security than a company trying to create connected conference rooms needs. Today, those areas of specialization are ripe for startups.



Rick Bullota, who founded Thingworx which was sold to PTC, said that he anticipates a lot of M&A in the coming 12-24 months as more businesses embrace the insights and business transformation enabled by the industrial IoT. He also says that the buyers of industrial IoT products are coming more from the business side than the tech side, which means that the overall package of technology will become more important, rather than the individual pieces.



Get ready to hear more about end-to-end solutions.



Meanwhile, GE's software and industrial IoT efforts are still impressive. While it planned on revenue of $15 billion by 2020, it is now scaling that down to $12 billion in part to clarify what is software versus connected hardware it sells to industrial clients. Back in 2015, GE's Kate Johnson, then-CEO of Intelligent Platforms,



So when it comes to the industrial IoT, the opportunity is big. It's just taking a while to figure out how to attack the market. Step one is realizing that it's silly to take on the big cloud and connectivity providers. Step two is quitting the platform dreams and focusing on a specific area of expertise. GE's decisions are similar.A year ago it decided to stop building out its own cloud data centers and started signing partnerships so customers could run Predix in Amazon's or Microsoft's clouds. As part of the current refocusing, it appears to be narrowing its customer focus to industries where it already has customers using its equipment.This makes sense. When I began covering the industrial and enterprise internet of things it quickly became clear that while IT could be generic, the data analytics elements and the real-world devices in the field that were being monitored would require specialized knowledge. What has happened is that at the computing (and even device management layer) larger cloud providers like Microsoft and Amazon are winning.I think we'll see connectivity also steer toward the big platforms, whether its cable providers offering LoRa networks, cellular companies, or a few of the specialized low power wide area network providers. The hardware will likely be dominated by bigger companies such as Intel, Dell, HPE and those with established IT credibility. We'll also see industrial gateways from the likes of Advantech and Eurotech.But it's the many areas of specialization here the industrial IoT gets interesting. I think we're going to see startups emerge around data analytics and AI such as Uptake, C3, SightMachine Flutura, and Foghorn. Many of these will have specific areas of expertise such as C3 with energy and Flutura with oil and gas.There's also a role for specialization in building the overall IoT solution for companies. A hospital aiming to connect patient rooms needs a different set of knowledge around regulation and security than a company trying to create connected conference rooms needs. Today, those areas of specialization are ripe for startups.Rick Bullota, who founded Thingworx which was sold to PTC, said that he anticipates a lot of M&A in the coming 12-24 months as more businesses embrace the insights and business transformation enabled by the industrial IoT. He also says that the buyers of industrial IoT products are coming more from the business side than the tech side, which means that the overall package of technology will become more important, rather than the individual pieces.Get ready to hear more about end-to-end solutions.Meanwhile, GE's software and industrial IoT efforts are still impressive. While it planned on revenue of $15 billion by 2020, it is now scaling that down to $12 billion in part to clarify what is software versus connected hardware it sells to industrial clients. Back in 2015, GE's Kate Johnson, then-CEO of Intelligent Platforms, told me GE reported $4 billion in software sales in 2014 and expected $7 billion in 2016. (Johnson left in July to work at Microsoft .)So when it comes to the industrial IoT, the opportunity is big. It's just taking a while to figure out how to attack the market. Step one is realizing that it's silly to take on the big cloud and connectivity providers. Step two is quitting the platform dreams and focusing on a specific area of expertise.

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Startup Profile: Runtime has built an OS for things Bear with me because with this week's startup profile we are going deep into the weed of IoT enabling technology.



These microcontroller operating systems handle the basics of how a chip implements security, communicates with networking chips and handles higher level software. Runtime's innovation could make it much faster and cheaper for product companies to build and manage chips for connected devices. Runtime , a company that is building an operating system for microcontrollers, has raised $7.5 million in first round funding from NEA, Foundation Capital and Danhua Capital.These microcontroller operating systems handle the basics of how a chip implements security, communicates with networking chips and handles higher level software. Runtime's innovation could make it much faster and cheaper for product companies to build and manage chips for connected devices. — The Mynewt Bluetooth compliant software can handle 32 device connections running at the same time. That's great for connected lighting and multiple wearables feeding information into a hub. Let's dig in. The OSes for lower-level Microcontroller Units (MCUs) used in sensors, wearables and other battery-powered devices are known as real-time operating systems because they handle data coming at them as it comes in. There are dozens of Realtime Operating Systems (RTOSes), which makes building IoT devices complicated. That's a problem companies like ARM have tried to solve by creating a unified RTOS for IoT, but for now most companies use a proprietary variant based on the type of chip they buy, or they use FreeRTOS, an open source project.



So the market is still fragmented which means if Whirlpool wants to build a connected appliance, it has to buy the MCU from a vendor, buy the connectivity radio and hire a few engineers to put everything together. If Whirlpool switches the underlying chip in later products it will still need the original expertise on the original chip's RTOS to ensure its older machines stay updated.



Runtime offers a twist on this scenario. It is following in the footsteps of FreeRTOS and ARM with Apache Mynewt, an open source OS under the Linux Foundation. But the aim is to provide more than the bare-bones elements of an RTOS by adding things like software to connect the MCU to a radio, security elements and the ability to run file systems.



The idea was to build a modular, fully functioning OS for microcontrollers that also has the benefit of breaking up elements such as secure boot loaders or radio connectivity. That makes it highly configurable without requiring a lot of the extra engineering time. It also means the component parts can spread more widely, offering a new source of business for Runtime.



Runtime has built a cloud that can manage devices that use the Mynewt OS, which is how it hopes to make its money. Companies can hire Runtime for consulting, support and also cloud management for Mynewt devices. CEO James Pace says the company has $1 million in bookings and between 5 million and 10 million devices in its cloud today.



Pace has been thinking about this problem for years as a member of the team that started Silver Springs Networks. In 2015 he formed Runtime to build Mynewt and help lower the complexity associated with building connected devices. With a more configurable and fully functioning OS, designers can build exactly the features they need into a MCU and save room on the chip for more application-specific needs.



For example, Pace says one customer purchased an MCU from a vendor where 90% of the available memory was taken up by the vendor's own code. By putting Mynewt on the chip instead, the vendor was able to claw back 30% more space for its own software. This is a big deal for companies trying to create more customizable hardware.



Better software on the chip can increase battery life, enable special functions or just make things faster. And with the ability to use the same underlying code even if you buy chips from another vendor, this feels like a good solution for companies wanting to build their own connected devices.



However, there is plenty of competition, both from chip vendors who have their own RTOSes and also from module vendors such as Particle and Electric Imp, which are solving the same problem but in different ways. My hunch is the big enterprises that want to build connectivity into their existing product lines may veer toward modules, while companies trying to build hundreds of millions of connected devices will look closely at something like Mynewt.



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You can see how connected device security is — After a breach of 8,000 Telnet passwords earlier this year Roland Schwab took to Tableua to perform a visualization of how bad IoT security is. Of exposed passwords only 142 were unique. Most were admin:admin. For an article on the topic, check out Fast Company. For the visualizations check out Schwab's public Tableau pages.