Ericisson’s Elizalde says crossing the ‘chasm’ key to success of any new IoT launch

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It’s far easier to fail than it is to succeed when it comes to launching a new IoT offering and more times than not it is all because a certain business acumen either goes missing in action or never existed in the first place.

That was one of key messages delivered by Daniel Elizalde, head of the Ericsson D-15 IoT studio in Silicon Valley during a recent webinar hosted by Topio Networks entitled Demonstrating Customer Value in IoT and Edge.

The webinar itself looked at the following: “Can we build a solution? Does the market want it? Can we make money? Without clear, well-researched “yes” answers to each of these questions, IoT and edge projects end up being abandoned in the pilot stage, or even worse, developed to completion before discovering that there is no product-market fit.”

Elizalde, who also teaches IoT product management at Stanford University, conceded that many IoT and edge projects are abandoned at the pilot stage and for a myriad of reasons, the bulk of which are non-technical in nature.

“This is a shame,” said Elizalde, who has trained over 1,200 professionals around the world on his approach to IoT strategy. “The types of solutions we need to build for IoT and edge computing are very complex and it takes a lot of effort, a lot of people and a lot of money to get them to the point where they are usable.”

A key theme in the webinar revolved around Crossing the Chasm, the famous marketing book by Geoffrey A. Moore, first published in 1991. In it, according to a Wikipedia posting, the author concludes there is a “chasm between the early adopters of the product – the technology enthusiasts and visionaries – and the early majority (the pragmatists).

“Moore believes visionaries and pragmatists have very different expectations and he attempts to explore those differences and suggest techniques to successfully cross the chasm.”

These include “choosing a target market, understanding the whole product concept, positioning the product, building a marketing strategy, choosing the most appropriate distribution channel and pricing.”

Elizalde, said that many start-ups end up “dying at the chasm.

“What we are seeing is that the first two areas – innovators and early adopters – are usually technology enthusiasts. They believe if they engage with you from a technology perspective there will be value.

“A lot of companies that are starting to work with IoT, edge, AI etc. find their foothold with early adopters and innovators but as you can see, percentage wise it is fairly small.

A chart in his presentation broke down how important it is to get to the other side. Innovators at 2.5% and early adopters (13.5%) are a miniscule piece of the revenue pie. The real success comes with the “early majority and late majority (34%) and finally, the laggards who represent 16% of sales opportunities.

The early majority are the big established companies who are profitable and can take a company to scale, said Elizalde.

“Once the pragmatists see that a solution works, they start working together with other companies and spreading the word so to speak. It is at that point a product starts to receive traction.”

Most IoT and Edge projects are abandoned in pilot stage, or even worse, developed to completion before discovering there is no product-market fit, said Elizalde.

To that end, he described three possible case studies with a product fit that are geared at organizations on the other side of the great divide:

Healthcare: The problem as explained by a hospital manager: “We can’t keep track of all our hospital beds. I’m having a hard time accepting new patients since I don’t know if I have room for them.”

Solution: A system that tracks the location and availability of all beds across hospitals.

Retail: The problem as explained by a retail manager: “We lose over 25% of our inventory to theft every year. It’s costing us a fortune.”

Solution: A system that tracks the inventory on the shelves and monitors customers to alert for theft.

Energy: The problem as explained by an electric utility operator: “We are losing a lot of money when power lines fail, and we are not able to meet our commitments to our customers.”

Solution: A service where we guarantee zero unplanned downtime by monitoring the power lines in real-time and providing proactive maintenance before the power lines fails

“Edge computing allows us to generate insights closer to the source much faster,” said Elizalde. “If your customer has concerns about data leaving their premise or latency or control of the actual hardware, it gives you that capability.”

The challenge arises, however, when it comes to moving from the pilot stage to a full-scale rollout.

If a firm is unable to install at scale or provision at scale, that’s when problems arise.

Since it is not the customer’s responsibility to manage an IoT deployment, it’s at this point where a pilot ends up being dropped, said Elizalde: “That happens all the time. They are willing to try the technology, but only if it works … We need to start targeting the pragmatists so that we jump over the chasm and start seeing scale.”

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