For generations, technology adoption has developed in a consistent manner:
- A product is introduced.
- Early adopters pay a premium to be first to use it.
- More of the market sees the value and pays a high price for access to the technology.
- The product hits mainstream, enabling manufacturers to lower the price, due to high volume sales.
It was that way with the first PCs, the first VCRs, the first cell phones, you name it.
It’s ultimately a matter of supply and demand. The more people want the technology, the lower it can be priced.
Along comes the Internet of Things, and for some reason, the pundits begin to talk about the importance of introducing low-cost modules as an enabler for the market to take off.
Why? Why does that make sense, given the long and storied track record of the business laws surrounding supply and demand?
Their thinking is that if the infrastructure costs are low enough, the market will take off. Their intentions are praiseworthy, given that they are thinking of ways to catalyze the market. People have been waiting a long time for the IoT to arrive.
But IoT is a complicated market with complicated business models all around. IoT is happening. And it will be growing exponentially in the near future, but it’s not something that can be rushed by shaving a few dollars off of module prices.
That would be like offering a discount on driverless car software packages, even though there are so many aspects of the driverless car ecosystem that have yet to be worked out.
I guess what I’m saying is that cellular IoT, like every other successful technology development, needs time to evolve organically. Each of the ecosystem components – operators, module makers, device manufacturers, software vendors and customers – must develop apace, and slashing the price of modules will not in and of itself push the market forward. There are simply too many pieces in the IoT puzzle.
It is happening. IoT is arriving. And it absolutely will transform how we all live. But we must make sure to play by the rules, and the rules dictate that prices go down after mass adoption, not before.