This is an edited version of similar articles I have posted on LinkedIn and Medium previously. If you have read those than no need to re-read this one but I am happy if you share it.
The starting point for this piece was trying to apply disruption theory forward looking. Because, the strength of a theory is its ability to forecast the future.
What is the internet of things?
At the core of the Internet of Things lies the challenge of getting information from sensors to the internet. The requirements for the underlying communication technologies vary widely on the common criteria of power consumption, latency, throughput, distance covered and resiliency.
However, one thing is clear: wireless technologies are leading the charge both in the retrofit market as well as the integrated market.
This article seeks to apply disruption theory to the competing connectivity technologies in the internet of things. I look at the competition between active RFID (typically the frequency bands 865–868 or 902–928 MHz) and Bluetooth Smart (or Bluetooth Low Energy) — both means of transferring information wirelessly. Active RFID has been around since the nineties, and Bluetooth Low Energy has been part of the Bluetooth Standard since 2010.
Conceptual frame: jobs to be done
The frame of analysis: jobs to be done
In order to frame the analysis appropriately, the realm of evaluation is described using a “jobs to be done” approach.
Job one: Knowing where things are at what time. Tags (for Bluetooth, these are often “beacons”) built on either technology send out a signal that allows the reader to estimate where the tag is. This is done by comparing the strength of a signal received with the strength of which it was sent out and using the difference to approximate distance. For example, if a tag is stuck on a forklift and the forklift enters an area with a receiver — say, a loading dock — the location of the forklift can be approximated.
Job two: Transmitting sensor data from a tag to the receiver. For example, a tag attached to a conveyer belt with a temperature and vibration sensor that transmits the information to a receiver. From this, valuable conclusions could be drawn: for example, whether the conveyer belt is overheating or running at an inappropriate time.
Different types of disruption
Disruptive technologies are divided into two: “low end disruption” and “new market disruption.”
Low end disruptions work in a similar pattern. The initial entry point is a group of underserved customers, typically at a low price point that makes these customers unattractive for incumbents. That is why these customers are typically underserved in the first place.
Then, as the technology continuously improves, it moves to more complex and higher value applications replacing the incumbents. Classic Clay Christensen examples include the Mini-Steel Mill or the Digital Synthesiser. The same effect Mahatma Gandhi describes in “first they ignore you, then they laugh at you, then they fight you, then you win.”
Since RFID and other technologies which do comparable or similar jobs to Bluetooth Low Energy and have been around for quite some time, this is not “new market disruption.” For the sake of argument, we’ll exclude the technological advancement of a wireless technology working natively with the ubiquitous smartphone.
Does Bluetooth Low Energy fit the low-end disruption theory?
As the Disruption Theory suggests, initially Bluetooth Low Energy served customers that have not been served by incumbent technologies. Indoor wayfinding is possible with RFID tags and dedicated handsets. Consumer applications like Bluetooth key fobs are similarly functionally possible with existing solutions. But both are on the bottom of technology applications and not profitable.
The key question is whether Bluetooth Low Energy will move up the performance stack and endanger incumbent technologies, in this case active RFID.
Job to be done 1: Location
Arguably, the current performance of active RFID and Bluetooth Low Energy is relatively similar. The question is whether and if Bluetooth Low Energy will improve significantly and move up the stack. Today, from a technological perspective, this seems very likely for the following reasons:
First, integrating additional sensors like acceleration and inertia at a low battery cost will enable much better contextual interpretation of the Bluetooth signal, resulting in higher functional accuracy.
Second, Bluetooth 5 is mesh ready which means that the cost of receiver nodes drastically drops. The mechanism is this: Bluetooth nodes can act as both a receiver and a broadcaster of a signal. As the cost of Bluetooth hardware is extremely low given the economies of scale of the smartphone supply chain, it is possible to find affordable (sub-50 USD) battery powered receivers capable of forwarding information to a central hub via mesh networks.
Job to be done 2: Sensor data
Transferring information from a sensor to a receiver is a commodity job. In the large majority of use cases, latency requirements and throughput volumes are low. Bluetooth Low Energy boasts a convenient entry point due to the low costs of the sending device. This is accentuated by its integration into smart phones.
First of all, this means that data retrieval from sensors can be handled through smartphones without the need of an external infrastructure, further reducing costs.
Second, lower energy consumption per data volume transferred increases the potential for sensors.
Finally, sensor information and location information can be easily combined in use cases where the receivers are mobile devices.
Starting at the low-end, will BLE move up the stack?
Right now, there is no question that Bluetooth is still far from the advanced industrial solutions offered by RFID across verticals and specialised use cases.
The key question is: why should Bluetooth Low Energy not move up the stack and disrupt the incumbents? Given the affordability, capability and growing popularity, the only unknown factor for Bluetooth’s disruption in the Industrial IoT is time.
About me: formerly core technology lead, now a strategic advisor to Kontakt.io. In the past, I have worn many hats including growth manager, advisor, and board member.