Leading Chinese companies lay out the opportunities and challenges presented by the internet of things
Supported by the government, China’s leading digital players are gearing up to lead the world in harnessing the internet of things (IoT). With its massive managed economy, the country should be well placed to achieve the coordination required to address key challenges, such as achieving interoperability between different systems and keeping the IoT secure.
Some of China’s leading players used the GSMA’s Mobile World Congress Shanghai this week to put a spotlight on the opportunities and challenges facing the fast growing IoT ecosystem.
Li Yue, CEO of China Mobile, told the event that his company is targeting IoT revenue of 100 billion yuan (U.S. $15 billion) by 2020, according to a China Daily report. That would be an impressive achievement given carriers’ low average revenue per connection in the IoT sector. The report said that China Mobile, the world’s largest mobile operator, is aiming to connect five billion items by 2020.
However, most of these devices are likely to connect to a gateway using a short-range wireless link, rather than being connected directly to China Mobile’s cellular networks. In a joint report published this week, the GSMA and the China Academy of Information and Communications Technology forecast that China’s machine-to-machine (M2M) market will grow to one billion connections by 2020, with the majority making use of new low power, wide area network technologies. That compares with 100 million M2M devices connected directly to cellular networks in China today.
Realising economies of scale
As the new connected devices will be spread across many different industry sectors from agriculture to logistics to energy, as well as the consumer market, they are likely to be supported by complex and diverse value chains. That could limit the economies of scale and scope available to China’s leading digital players.
At the event in Shanghai, Alibaba, a leading digital commerce retailer and wholesaler, pushed for much greater integration between different internet of things systems and solutions. Zhang Chunhui, president of Alibaba’s OS business, called for IoT players to put customers’ interests first and connect their platforms, according to a report by Mobile World Live, the GSMA’s new service. In a separate presentation, Zhao Xianming, chairman and CEO of telecoms equipment supplier ZTE, also flagged the importance of integration, together with the need to evolve business models and address technical challenges related to diverse use cases, according to Mobile World Live.
Shaping IoT specifications
China’s aggressive push to harness the IoT means the country could play a pivotal role in determining which IoT specifications survive and thrive, and which will fall by the wayside. Ian Ferguson, vice president of worldwide marketing and strategic alliances at U.K.-based chip designer ARM, recently told Computing that China is likely to shape the eventual consolidation of the myriad of internet of things technologies being touted today. “China imports more technology today by value than they do oil,” he said. “They are taking an incredibly long-term view of investment towards technology and I certainly believe that this will create a new ecosystem of players. They look at return on investment very differently compared to other markets.”
State-controlled China Mobile is certainly prodding vendors to move the IoT forward. It has established a “Cellular IoT Open Lab” in its 5G Innovation Center to enable system equipment suppliers, chip makers, module providers, device vendors, operators and developers to test and develop products, and ensure they will work together.
The giant operator is working with western vendors, as well as those based in China. This week, for example, China Mobile, Ericsson and Intel claimed to have completed the first demo of an application running on a new cellular internet of things technology (NB-IoT) recently finalized by standards body 3GPP. Using China Mobile’s environment monitoring application and platform, the three companies used the new technology to capture temperature, humidity, brightness, and other data from multiple sensors.
