The Internet of Things is most definitely a major buzzword in the technology world. The concept seems like a lot to take in; machines talking to machines, every object connected to web, what to do with all that data. However, this shift in connectivity will leave huge opportunities for MSPs and the businesses that they serve.

On this episode of MSPradio, we chat with Steve Hilton, Co-Founder and Analyst at MachNation, to talk about the Internet of Things and how it will affect managed services providers in the future.


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Episode Transcription:

Nate:                       All right folks, welcome back to another episode of MSP Radio. I am your host Nate Teplow and we have a really interesting topic here today. We are going to be talking about the Internet of Things. It’s a big topic, definitely a buzzword in the industry and we’ve got a great analyst here on the line speaking with us.

                                    Before we get to him, I’ve got to remind you guys to subscribe to our podcast. If you go to the iTunes store and search for MSP Radio, you can subscribe there and get episode straight to your iTunes account.

                                    We are also available via the Stitcher App for android users.

                                    So as I mentioned, we will be discussing the Internet of Things today, what is it, how’s it going to impact the MSP industry and how you can take advantage of some of the opportunities that it will present MSP’s and IT solutions providers.

                                    So I would like to welcome Steve Hilton to MSP Radio. He is an analyst at MachNation and he has been talking about this stuff for years before it was even a buzzword.

                                    So Steve, welcome to MSP Radio!

Steve:                      Thanks Nate, good to be here.

Nate:                       Yeah, we’re excited to have you on the show. I think this is a really interesting topic and something that our MSP’s and our audience will get a lot out of so we are excited to have you.

Steve:                      Thanks.

Nate:                       I just wanted to start, what is MachNation, the company work for? What you guys do and what you do for them?

Steve:                      Sure. Well I am the president and cofounder of MachNation. MachNation is the only dedicated analyst firm and apps development shop focused exclusively on the Internet of Things, the Internet of Everything; so the future of connected world.

Nate:                       Cool. And I also wanted to just give a quick definition of the Internet of Things. I know we hear it a lot and we talk about it but what is your definition of the Internet of things?

Steve:                      That’s a really good question. So there are lots of definitions to the Internet of Things. MachNation defines the Internet of Things as the connecting of endpoint devices, devices from very simple sensors to Internet of Things computers. And these devices, they generate the data that are used primarily for tracking monitoring or controlling assets.

                                    So you could think of IOT solutions as fleet management, the tracking of a commercial truck to understand where it is and to route it in the right direction. You could think of IOT as smart electric meters so literally the electric meters that are on all of our houses, imagine that those are connected and feeding data back to the electric company in your area to allow them to plan for electric consumption better.

                                    Or even little cardiovascular disease monitoring devices that we would wear on our bodies because you and I work so hard, eventually we’re going to have a heart attack and when we come out of the house we need to we are one of these devices so that our healthcare providers can track our health. It can read the health of our heart, it can take your pulse rate, our temperature, our blood pressure et cetera.

                                    All of those things fit into this world that we call the Internet of Things.

Nate:                       Yeah I know, is very interesting. I mean it’s kind of way to think about this future world where everything is just connected and everything feeds back into the system. So what are some of the things that you do on an everyday basis just in terms of research and conferences? I know you immerse yourself in this world but what are some of the things that you do on a daily basis regarding the Internet of Things and how you kind of conduct your research?

Steve:                      Well, there’s a lot of things that we do. As I described earlier in MachNation, those key things, we are dedicated to analyst firm and we also develop apps. So on the analyst said, we spent a lot of time talking to vendors and solution providers and communication providers in the market. Just understand what they are doing in the Internet of Things space. So this is everything from companies like Cisco and Microsoft to AT&T and Verizon and Vodafone.

                                    So a really broad mix of companies just understand what they are doing, we write our research, sort of looking at the future trying to figure out, “If this is what is going on today, one needs to be happening in the future to make the Internet of Things successful?” That’s what we do on the analyst side.

                                    On the development side, we develop asked. So we just launched our first application it’s called IOT 3 so I-O-T and the number 3. And one of the challenges in the IOT world and it’s not like you can go to just a single supplier and buy an IOT solution. Generally when enterprises want to buy the solutions they have to go to 4-7 suppliers. So it’s really hard to assemble an IOT solution. So we built is our first app, it is an app that you go in and you answer 20 questions. You are an enterprise, you go and you answer 20 questions about sort of specifications about the solution that you are interested in and the app actually provides you a list of vendors by technology type that you can work with and gives you some of their reference architectures and some of the technology specs.

                                    And we do both of those kind of things at MachNation.

Nate:                       That’s cool. So can you give us a quick definition of what an IOT solution is? I will admit, I’m a novice when it comes to this topic but what is an IOT solution? What does it do for me as you said, enterprises are adopting it but how are they using this?

Steve:                      Sure. I think there are probably two questions that are sort of, what is the solution? And how enterprises are using it?

                                    And we can take an example of really any solution like for example that electric smart meter. So that’s on the side of a business or on a house and you seen those electric meters right? You’ve got the little thing whirling around on the inside measuring sort of how much money we’re going to play the electric company at the end of the month.

                                    So an IOT solution, imagine that that electric meter has some sort of communication module in it. It could be a Sim card, so like the same kind of Sim card that might be in your cell phone. And that meter is sort of spinning around, data is coming off in the earth, it is going down into the Sim card and shooting out into a communications network somewhere and then in some data center the data for that meter is being collected and aggregated with a bunch of other data. So there is some platform that’s allowing all that data from your meter and everyone else’s meter to be aggregated.

                                    And then there is some kind of analytics tool because you have to be able to then take that data and slice and dice it and understand what it means for those millions of customers consume electricity.

                                    These meters may be collecting this information every six seconds or every 12 seconds, it’s a lot of data! So there is analytics tools that’s analyzing sort of the data.

                                    Then there is some sort of application that sits on a server and that application allows someone sitting in front of a computer to sort of make sense of the analyzed data so that’s the smart metering application. And that’s sort of the nuts and bolts of the solutions. It involves hardware, it involves platforms, it involves applications, there is some sort of connectivity element. What do these kinds of solutions do for customers? And that’s your second question.

                                    And I think there are two things that really come out of the solutions in the case of the electric, the smart meter, it really helps an electric company save cost. The big problem of electric companies these days is they are not able to build additional generation plants. It’s not like you can just build a new nuclear power plant. Some people would be like, “Yeah, that’s that are popular,” or a coal burning plant. So it allows the electric companies to better understand electricity demand so they don’t have to build plants as quickly, it helps them save cost.

                                    And that’s what a lot of these IOT solutions do.

                                    Another things these IOT solutions do is they actually help enterprises, businesses create new revenue streams so for example if you are in an enterprise like Bosch, the big German equipment manufacturer, I don’t think you have any Bosch power tools at home Nate?

Nate:                       I don’t personally but I have definitely seen them.

Steve:                      Okay, so you see them in Home Depot or Lowe’s. Imagine that that power tool, the power tools of the future will have communications modules on them and that information will be sent back to Boston help us design better equipment.

                                    So if they could do that so in a certain sense is helping Bosch create new revenue opportunities. They are also cases where this equipment will have these IOT solutions in them and maybe Bosch would actually be able to sell a service to a customer that bought the power tool, maybe it would be an additional warranty service; so the power tool is starting to fail and Bosch is able to recognize that ahead of time on behalf of the customer and then the customer knows to bring the tool into a service shop. So there are these new revenue opportunities for businesses also.

Nate:                       Yeah, I mean it sounds a lot like the managed services industry at least from what you describe. I mean just to give you kind of a timeline of the industry but IT solution providers used to sell hardware and they would push hardware and sell servers and desktops and those devices to our clients and as software has become more accessible and more ingrained, the access to the services to them because they can, they can monitor these devices and they can see the feedback that they gave and they can attach the services, the IT services around the devices that they are selling. And it sounds like these companies with the Internet of things possibility, they can kind of be doing this as well, even just basic household products.

Steve:                      That’s one of the huge trends in the Internet of Things. It’s sort of the recognition that whatever business is doing today, think about the product and the services you offer and add connectivity to it. And then what are you able to provide? It really helps businesses diversify their revenue streams. You are not just to the companies anymore. You are product and services company.

Nate:                       Yeah, that’s really interesting.

                                    So we are coming up on our commercial break here and I just have one more question for you just relating to what we were just talking about and if I am an MSP, should I be a little concerned? It is something that customers you think are going to buy the services direct? And I know MSP’s and focused on your household like your refrigerator, they are not going to start pushing refrigerators. Just the idea of companies providing these services along with the product that they actually sell like should I be concerned if I am part of the channel?

Steve:                      No way. I mean it’s amazing. This thing that’s happening, this Internet of Things trend, is something that we are forecasting for the next 10 years. So it may be in 350 million connected devices today, we are growing to 24 billion connected devices in 10 years; it’s a 30% growth rate. I think there is much more upside for the MSP community in being a channel for these businesses.

                                    No business today that offers sort of a product, whether it’s a technology product or some other kind of product, has the right channel to market for all of these IOT services. I think this is just a tremendous opportunity.

Nate:                       Yeah, I would agree with that.

                                    So we’re going to have to take a quick commercial break here. We are talking with Steve Hilton from MachNation, again talking about the Internet of things. As I mentioned, we’re taking a quick commercial break. When we come back well going to talk more about this opportunity for MSP’s and for the channel as it relates to the Internet of Things and how you can actually take advantage.


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                                    And now back to our show!

Steve:                      All right welcome back everyone to MSP Radio. We are talking here with Steve Hilton, CEO and founder of MachNation. We’re talking about the But how it is affecting business now and I want to transition a little bit toward small business. So we mentioned that there are electric companies or big manufacturing companies who are starting to adopt this concept of the Internet of Things. But our partners, they serve small businesses and there is a typical trend that starts with the enterprise, new technologies, new trends; started the enterprise and then they filter down to small businesses.

                                    So Steve, my question for you is, what stage are small businesses in this whole kind of Internet of Things option and how are they using it and where you see going in the next few years?

Nate:                       That’s a really good question Nate. So small businesses have adopted some of the solutions already but it’s probably not as well adapted as large enterprises. The kinds of solutions that are most appeal to small business today are things like fleet management, so the idea that okay, I do have a fleet of five vehicles, it would be nice to be able to track where they are for any number of purposes including security of the vehicles.

                                    Small businesses have solutions like point-of-sale terminals. So in the retail environment they are swiping credit cards and stuff like that. The other kinds of solutions that we are seeing more in terms of small businesses are things like energy management, the ability to sort of control the energy usage in their facilities and their businesses because energy is expensive.

                                    They are just so many solutions that are being brought to market. There is healthcare solutions aimed at small businesses like nursing homes or assisted-living facilities to help bitterly the tracking of patients, the tracking of residence in those communities for their safety and for healthcare reasons. So there’s all kinds of solutions for small business, businesses that are both sort of industrial businesses, retail businesses, healthcare businesses et cetera.

Steve:                      Yeah, absolutely. So if I am an MSP, what should I be thinking of? Should I be excited about this? Should my mouth be watering? Or should I be a little bit scared about all of these different technologies and opportunities that are that are kind of colliding there?

Nate:                       I think what I recommend for MSP’s is, think about what you are really good at today. If you are really great at sort of setting up networks for businesses and those networks are used to make sure that employees have access to Wi-Fi on their laptops or on their smart phones, think about that in the future connected word where it is not just smart phones and laptops that are being hooked up in the office.

                                    Imagine if for the same small business, you’d be able to set up a wireless network that does both as a sort of laptops and PCs and smart phones, giving those access but also giving access to all of the remote sensors on the small businesses, small factory floor or in their dry-cleaning facility.

                                    So imagine everything, all these other devices connected; 99% of the things, electromechanical things that aren’t connected today, imagine them connected. That’s a huge opportunity for MSP’s. It gives you the opportunity to provide more value, more services to the small business and there should be a series of other services which can operate not just the sort of hooking up of the network anymore but the monitoring of those new types of sensors, the new types of equipment that’s connected, additional services revenues and stuff.

Nate:                       Yeah, absolutely. So what can I do if I am an MSP? What can I do to get ahead of the curve? The kind of see this coming. We know there’s an opportunity but what can I do to actually prepare for it?

Steve:                      I think a good place to start is to contact the technology vendors that your partner is with today. So if your partner is Microsoft, if your partner is Cisco, IBM, HP, whoever your partner is into, it doesn’t matter. Contact them and see what their thoughts are, what their offerings are in the Internet of Things word.

                                    And some vendors are a little bit more progressive than others. If you’re also a partner with any of the communication service providers in the United States like AT&T or Verizon or Sprint or T mobile or US Cellular or any of folks, They are looking at this opportunity. They have quite a few offerings already. They tend to call them M to M, machine to machine offerings but check those out and have those conversations. There is already some great things that you can start thinking about and start offering.

Nate:                       Yeah, I think I mean those big technology players and their partners like Microsoft and Cisco, I think they are helping to drive this and education is one of the best ways to get ahead of it. So I agree with your point that just communicate with them and learn from them and understand what they are offering so you can be prepared for this coming down the pipe.

Steve:                      Yeah, I mean it’s interesting. In the October timeframe, towards the middle of October, there’s a big events taking place in Chicago called the IOT world forum. This will be the second year of the IOT world forum. The first one was last year. We had 1000 attendees and it was in Barcelona Spain. And it was just incredibly successful.

                                    Cisco was one of the major sponsors. This year there is a lot of other sponsors as well for the event. I think there’s a total of like 20 sponsors, there would be 1500 people in Chicago. And it’s another great way to learn about what’s going on for your MSP’s I guess that are near Chicago.

                                    And I want to look into, it’s called the IOT WF.com so www.IOTWF.com. And MachNation is actually one of the hundred companies that sits on the steering committee for this massive event. We sit on it with just a bunch of household names on this steering committee like [Rockwell 21:19] and [ABB 21:20] and Shell and Cisco and IBM and big companies.

Nate:                       Yeah, it sounds like a great event and definitely hope our partners check that out. And if you are in the Chicago area, come October.

                                    So I wanted to just actually steer this a little bit away from the IT MSP space and I guess personally, something I always think about when it comes to the Internet of Things is all these machines talking to each other is… How does this affect human interaction? How are humans going to interact with this whole Internet of Things?

Steve:                      Oh, that such a great question!

MachNation actually recently wrote a white paper about this concept, that IOT, Internet of things is set up a part of something larger for us. We call it the Internet of everything. And one of the things that happens, I think in this connected future is that the way humans and technology interact starts to change. So in the IOT world, in the Internet of things word, humans are… To the extent we are tracking a human, we basically sort of put the device on a human and we track them. So like in a nursing home, imagine the patient’s or residents wearing devices. Or even in a truck, a fleet management solution, your tracking the truck what you are also tracking the driver so there is some tracking going on.

                                    The Internet of everything is sort of this future world. Imagine that not only are we tracking but we are providing information back to the human that’s being tracked and that human is able to change behavior or is able to collaborate with other humans in new ways because of the data that that is shared back with the human. So it’s really an amazing concept if you think about sort of our future world and how we will interact with these connected things.

Nate:                       Yeah, I know it is really interesting and kind of a follow-up question for this is; should we be scared? I think of this might be kind of a cheesy example but I think of the Terminator and Skynet becoming self-aware and it’s self-aware. And is that like… Not that I believe that this kind of sci-fi realization will happen but is there something we should be concerned about in terms of all these data that is just… That we are swimming in?

Steve:                      It’s easy to start thinking about all that in the crazy word like from the science fiction word neither machines taking over. And we are not there. And in fact, when I gave you the definition of the Internet of things, it’s about connected devices for tracking, monitoring and control. That last one is the issue that things start to get kind of creepy; the idea that the machines, we not only track and monitor them but that they would start to control. They would make the decision themselves without any human involvement; they would decide what to do and sort of how to react to stimuli. That’s the creepy part.

                                    I don’t think we are there and in fact I don’t ever think we’re going to exclude the human mind from this sort of Internet of Things work.

Nate:                       Yeah, I hope not.

Steve:                      I don’t think it’s going to happen. But there are cases and good uses to allow machines to make some of the decisions, that the machines if set up properly and sort of with the correct algorithms, do a better job than we do, we are prone to errors. We get a little tired. A machine doesn’t get tired; it may break but it will always execute according to the rules that are set up. So I think that is part of the creepy world.

                                    The other part that I always point to a sort of the world of security; we’ve heard in the press about connected devices being hacked into for bad purposes. MSP’s that have had a lot of experience in the security realm are going to be extremely in high demand in this Internet of Things work and making sure that that hacking into these devices and hacking into IOT systems doesn’t happen.

Nate:                       Yeah. I mean those MSP’s are already in high demand so I would imagine that would only get stronger as this trend continues.

                                    So Steve, we are coming up close to the end of our show here and just wanted to ask you one last question and I’m sure you get this question a lot but where do you see this going in the next few years? I mean just in general, the whole Internet of Things, what are your predictions for how the Internet of Things will change technologies and change the way we do things as humans?

Steve:                      A couple of things. I think firstly where just going to see this I guess you could call it “mashing up of technology” a lot more; the combining of infrastructure and devices and platforms with applications, with connectivity and a bunch of services surrounding them. So there’s going to be incredible confluence of technology that’s going to continue in the Internet of Things word. So I think that’s one thing.

                                    I think we are also going to see, as I describe it earlier, it takes 4-7 vendors to bring one Internet of things solutions live for a customer and that’s going to change. So we developed a web app to help enterprises figure out who to go to to buy those solutions.

                                    I think in five years is going to be a lot easier to buy the solutions. You will be able to go to one service provider and by an end-to-end solution so that’s going to be a big change also.

                                    And I think also in five years, this going to be a lot more of the word connected, not only in the developed world in places like Western Europe and the US and developed Asia in specific but also the emerging world. And that’s going to make a big change on things like the environment, on water conservation, on pollution and in particular, emerging world countries where pollution is a huge issue.

                                    We’re going to be able to bring the Internet of things and the Internet of everything to those parts of the world and make a real difference on the environment.

Nate:                       Yeah, all very interesting stuff and I am definitely excited to see where it goes.

                                    So Steve, thank you very much for joining me here on MSP Radio today.

Steve:                      Yeah, it’s been my pleasure Nate. Thanks again for having me.

Nate:                       Yeah, it’s been great talking with you and I think it’s a very interesting subject and hopefully our audience all thought so as well.

                                    Is our audience was to learn more about you and MachNation, where can they go?

Steve:                      Www.MachNation.com.

Nate:                       Great. And are you on twitter too?

Steve:                      I am. You can find me on Steve Hilton on Twitter.

Nate:                       Great. So look for Steve on twitter. Visit his website MachNation. He’s got some awesome content there and great insight on the Internet of Things and what you can do to prepare for it and take advantage of it.

                                    So thank you everyone for tuning into MSP Radio this week. Don’t forget to subscribe to our podcast, get episode straight to your iTunes account.

                                    Follow us on Twitter, follow Steve on twitter, you guys know the drill and thank you again for tuning into MSP Radio.