Upon visiting Disney World, in Orlando, Florida, a few weeks ago with my family I learned quite a bit had changed since my last visit, 15 years prior. I had read about Disney’s integration of the ‘MyMagicPlus’ system which connects individual park visitors, via a RFID chip-embedded wristband with a two year battery life, to the Cloud - albeit the Disney Cloud. These “MagicBand” wristbands are truly something remarkable; similar in design to a FitBit, but with extreme data mining capabilities.
These wristbands provide constant monitoring of the likes, dislikes, schedules, birthdays, menus, allergies, hotel room access, ride preference and much more, of each and every guest who purchases the convenient band. With over 50 million visitors annually, Disney has created access to incredible sums of data. Disney then uses this raw data to further their ultimate mission of creating a magical, easy and streamlined Disney World experience.
First Stop Amusement Parks, Next Stop, the World?
Integrating the IoT into the Magical World of Disney was an incredibly futuristic move. Converting the park into a data mine set Mickey and friends back about US$1B, roughly half of the park’s annual revenue. The MagicBand does indeed provide the magic; allowing for a cash-free visit by attaching your credit card to your device, reducing wait times at the top attractions, allowing the staff to greet you by name everywhere you go, and even helping to find your lost child amongst the masses. But the truly magical idea behind it all comes with the understanding that these IoT advances are soon to be magnified onto the world.
Is the Disney MagicBand a test-bed for the future? Will hospitals, schools, airlines, cruise ships, retirement homes and entire cities be next? If so, what hurdles will need to be overcome to manage the complexities of connecting millions of people to billions of sensors?
Technologically speaking, we’re getting closer by the day. Incredible advances in data analytics and data processing over the past few years prove these advances, with more companies jumping on the IoT bandwagon almost daily. Just this past week Huawei and Comverse both announced their SDN Cloud platforms, and companies, like Jasper Wireless and others, are offering IoT Service Platforms, which help to connect machines and their sensors to service providers, the people and their many devices.
Hardware- from batteries to SIM cards and sensors- has also all seen vast improvements, thus increasing the feasibility of the IoT. Organizations like ETSI, IEEE and TM Forum are working to establish global standards and best-practices. In addition, 5G networks are right around the corner, and will provide over 1,000 times the capacity of today’s 4G networks, opening the door to supporting the billions of connected devices that are expected to be coming onto the market.
IoT Hurdles – A Surprising Foe
Surprisingly though, one of the biggest hurdles for startups in the IoT space has been the wireless providers themselves. Mobile carriers have not been eager to add connectivity to new devices because it lowers their “average revenue per user”, or ARPU. ARPU is one measurement that investors watch closely. For U.S. wireless companies, ARPU is typically around $33/month per subscriber.
Connected cars have ARPUs similar to smartphones, but wearables and devices such as connected watches are closer to $5, which is why operators are cautious in that market. This mindset is hurting new IoT startups that are unable to deliver high enough ARPUs.
Moving Towards a Solution
Historically, when service providers were challenged to address lower ARPU customers or ‘down-market’ opportunities, many chose to launch (or partner with) a separate brand, or MVNO. This allowed the service provider to protect its parent brand from the consequentially low ARPU, but still allowed for driving new revenues, fostering innovation and addressing a growing market. Isn’t it time for the IoT MVNO?
It is time for CSPs to band together and embrace the changes to come, as competition is on the way. For example, French Internet service provider Sigfox received US$115M in funding to help build a separate network specifically for “things” by utilizing Ultra Narrow Band technology that connects to the cloud. This won’t be the only path to the IoT though, as this technology has its own limitations; in fact, the complex world of ‘things’ will most likely require multiple service delivery options, depending on the types of data being transmitted.
Either way, the next few years will be very interesting as the IoT players determine their rightful places. The question is, will they be able to deliver an experience as magically seamless as Disney does?
To hear more of my thoughts on IoT, follow me @HumeraMalikHM