Channel Expert: Solution Providers Should Chase $11B IoT Middleware Opportunity


With the Internet of Things expected to eclipse the traditional IT industry in both the number of endpoint devices and revenue within the next 10 years, solution providers should pursue the $11 billion services-friendly opportunity that is IoT middleware.

That's according to Stephen DiFranco, a former channel executive at Hewlett-Packard, Lenovo and Broadcom, who delivered the opening keynote for The Channel Company's IoTConnex Virtual conference Wednesday. DiFranco, who is the founding principal at the IoT Advisory Group, laid out how big the IoT opportunity could become and where solution providers should invest.

[Related: Top 9 IoT Applications You Need To Know About]

DiFranco said his firm estimates that the number of connected endpoints will reach 20 billion by 2020 while noting that other research firms have predicted as many as 30.7 million devices by that year. Based on current estimates, that means the number of IoT endpoints will eventually surpass IT.

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"Why is this very important for your community of IT integrators, developers, MSPs and service providers? Because you will be the companies that will be providing most of these services for the IoT industry," DiFranco said. "You probably already are beginning to be engaged in projects where IoT smart devices are now part of the information architecture, and we believe that you'll be brought in more and more."

While DiFranco forecasted that the IoT economy will reach $3 billion in revenue by 2020, he said solution providers should chase opportunities in the IoT middleware market, which he estimated will be worth $9 billion to $11 billion. One of the major reasons he said solution providers should pursue it because it's the segment within IoT that has the most potential for services revenue.

"The smallest piece of the pie is perhaps the most critical because it's the piece of the pie that brings the entire pie together," he said.

DiFranco defined IoT middleware as the point that fits between the IoT endpoints and the cloud and often sits on an edge server. Middleware includes device management, connectivity management, security management, application enablement and device analytics.

In the health care industry alone, IoT middleware will represent a $1 billion to $2 billion market by 2020, according to DiFranco, which will only increase as more medical devices become connected.

"A mid-sized hospital has 10,000 devices, only a third of which are connected today. The other 6,000 devices are still waiting to be connected, many of which will be replaced by devices with connectivity in the next five to seven years," he said.

As hospitals introduce more smart devices, even something as simple as a connected hand sanitizer that tracks whether staff or visitors are sanitary, the implications for IoT middleware infrastructure can be major, DiFranco said.

"That might not seem like a terribly interesting application, but that application alone requires connectivity to every single room, additional wireless networking, a middleware solution to record the data, and to be able to support it through the application and cloud," he said.

Solution providers said the vast number of devices involved in even basic IoT solutions will often require amped up infrastructure.

Corey Kirkendoll , CEO 5K Technical Services, a solution provider in Allen, Texas and 2018 CRN IoT Innovator, recently recounted the story of a customer who called one morning dismayed that no one could connect their laptops, and it turned out that, unbeknownst to the customer’s IT department, IoT was the culprit.

“The facilites manager walks by and says, 'Hey, we just got a great deal. We just replaced all of our lights with smart lights.' Well at that point in time he had basically jumped on the Wi-Fi, he tripled the number of devices on the [network], blew out the DHCP scope and we were in trouble,” Kirkendoll said. As a result, 5K Techical Services had to rearchitect the network.

For solution providers getting started in IoT, DiFranco said it's important for them to focus on the verticals where they have the most experience and customers. As for middleware platforms, there are roughly 200 on the market, according to DiFranco, some of which are general purpose and others that focus on specific verticals. And unless a solution provider already has expertise in operational technology, the solution provider will likely need to partner with an OT integrator that can handle the installation of physical devices, he added.

"You want to be the person putting the edge servers in the hospitals and being able to deploy the IoT platform or middleware that will connect [everything]," DiFranco said, noting that major vendors like Dell, Hewlett Packard Enterprise and Lenovo now sell edge servers.

DiFranco said it's important for solution providers to consider investing in IoT because of how prevalent it will become over time.

"What we need to think about going forward is that IoT will be an industry that will be as large and as important to the [independent software vendors], the [value-added resellers] and the [systems] integrators as IT has been for a very long time," he said.

Diana Blass contributed to this story.