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Startups Predicted To Be The Driving Force Behind The Internet Of Things

Written by Ken Gaebler
Published: 10/15/2014

Gartner estimates that by 2017, half of all IoT solutions will come from companies that are less than three years old.

The Internet of Things (IoT) is one of the most widely anticipated trends in technology. But according to a recent Gartner report, the development and growth of IoT applications will be driven by makers and startup companies--not enterprises, tech providers or consumer goods companies.

Internet of Things Startup Opportunities

The business innovation vs. technological innovation story is a familiar one. Makers, defined as inventors and entrepreneurs involved in the creation of innovative products, have a long history of success in technology and other industries. But as IoT solutions edge toward the marketplace, it has been widely assumed that large corporations and technology providers would have the most influence on the industry--an assumption that Gartner claims may be all wrong.

"Conventional wisdom is that the growth of the Internet of Things is driven by large enterprises. As is always the case, there is an element of truth in conventional wisdom and major consumer goods companies, utilities, manufacturers and other large enterprises are, indeed, developing IoT product offerings," said Pete Basiliere, research vice president at Gartner told Business Wire.

"However Gartner's Maverick research finds that it is the makers and the startups who are the ones shaping the IoT. Individuals and small companies that span the globe are developing IoT solutions to real-world, often niche problems. They are taking advantage of low-cost electronics, traditional manufacturing and 3D printing tools, and open- and closed-source hardware and software to create IoT devices that improve processes and lives," he added.

Basiliere pointed to entrepreneurs who are already using low-cost 3D printers, open-source electronics platforms and traditional tools to create IoT devices to solve niche problems. In general, these solutions and grassroots initiatives are focused on consumer conveniences rather than cost savings, which tends to be the focus of enterprise- and public-sector IoT.

As a result, Gartner predicts a wave of startups to be created and funded around IoT product niches. Although many of these businesses will fail, the most successful companies and solutions will eventually be acquired and consolidated by large suppliers, creating opportunities for people around the world to benefit from IoT technology.

"It won't all be smooth sailing. Certainly there is no small number of factors working against makers and startups, whether they have an IoT offering or a more traditional product or service," said Basiliere. "Most small businesses fail within five years, and many of the 'successful' ones will be lifestyle companies that barely generate enough revenue to support an individual or family."

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