The Internet of Things and Networks of Everything

The Internet of Things (IoT) has been a hot topic for several months now, and there are new stories about it in the business and technology press on a daily basis. While it’s easy to view these as hype at worst and vision at best, there is no denying that purveyors of hardware, software and services are dedicating and creating the resources they will use to capitalize on the IoT. Last week alone, there were three announcements that show just how quickly the IoT market is progressing and how big of a business opportunity it is.
On Monday, September 14th, IBM formally launched a distinct IoT business unit and named former Thomas Cook Group CEO Harriet Green as its leader. The new IoT unit is the first significant step by IBM toward delivering on the $3 billion commitment it made to IoT in March. IBM signaled in Monday’s press release that the unit will “soon” number about 2,000 consultants, researchers and developers, who will use IBM’s assets to help customers get up and running on the IoT. Those assets will likely include the Bluemix platform-as-a-service (PaaS), Watson and other analytics software, as well as the MQTT messaging protocol standard for machine-to-machine communication that IBM submitted to OASIS in 2013.
The next day, Salesforce.com used its annual Dreamforce conference as the grand stage on which to unveil its IoT Cloud. This offering has at its core a new “massively scalable”, real-time event processing engine named ‘Thunder’ (to complement Salesforce’s ‘Lightening’ UI framework). IoT Cloud connects IoT resources and Thunder rules-based workflow to route data between them, triggering pre-defined actions. For example, when an individual enters a retail store, a beacon can offer them discounts based on qualification criterion such as loyalty program status and in-store inventory levels. Scenarios such as this will be possible because of IoT Cloud’s integration with the Salesforce Sales, Marketing and Analytics Clouds. IoT Cloud is currently in pilot and is expected to be generally available sometime in the second half of 2016.
While these two announcements are important milestones in the respective organizations ability to help customers connect to and use the IoT, they do not enable them to do so immediately and risk being labeled as more IoT hype. The sheer magnitude of resources assembled for each of these vendors initiatives signals that they believe that the IoT will be both real and profitable in the not-so-distant future.
The final piece of related news from last week underscores that smaller, pure-play vendors are delivering tools that help their customers get on the IoT now. Build.io announced that Flow, its integration PaaS that had been beta released in March, is now generally available. Flow features a drag-and-drop interface that is used to connect IoT elements ─ sensors and other intelligent devices, backend systems, mobile applications and other software ─ into an integrated system. Connections are made at the API level. Like Salesforce’s Thunder, Flow uses rules-based event processing to trigger actions from IoT data. In essence, Build.io is delivering today a critical part of what Salesforce intends to make generally available later this year.

Current State of the Internet of Things and Networks of Everything

These announcements, taken together, mean that the IoT is poised for takeoff. The first sets of user-friendly tools that organizations need to connect IoT nodes, transmit their data and use it to drive business processes are available now, in some cases, or will be coming to market within a year. We are on the cusp of a rapid acceleration in the growth of the market for software underpinning the IoT, as well as the network itself.
This latest batch of IoT announcements from software vendors underscores another thing: the IoT will initially be built separately from enterprise social networks (ESNs). Many organizations, particularly large enterprises, have experimented with ESNs and a few have managed to build ones that are operating at scale and creating value. Those businesses will be turning their attention to IoT development now, if they haven’t already. They will pilot, then scale, their efforts there, just as they did with ESNs.
Eventually, organizations will realize that it is more efficient and effective to build Networks of Everything (NoE), in which humans and machines communicate and collaborate with one another using not only the Internet, but also cellular, Bluetooth, NFC, RFID and other types of networks. This construct is just beginning to enter reality, and it will take a few years before NoE get the market attention that ESNs did five years ago and the IoT is now.
At some future point, when NoE have become a fixture of networked business, we will look back at this month (Sept. 2015) and declare that it was a watershed moment in the development of the IoT. We’ll also laugh at how obvious it seems, in hindsight, that we should have just built NoE in the first place.

Good BlackBerry Picking: BlackBerry Acquires Good Technology

BlackBerry Limited (NASDAQ: BBRY; TSX: BB) announced this morning that it has entered into a definitive agreement to acquire Good Technology for $425 million in cash. This move immediately strengthens the reinvented BlackBerry’s position as a provider of cross-platform mobile security services for enterprises. For Good, this acquisition was a logical, inevitable exit.


Back in the early days of enterprise mobility, BlackBerry ruled the market with its BlackBerry Enterprise Server (BES) and BlackBerry Messenger (BBM) offerings. However, those products were tied to the company’s hardware offerings. When BlackBerry’s share of the mobile phone market plummeted after the introduction of the iPhone and Android-based handsets, demand for BES and BBM also took a big hit, despite their technical strength.
Recently, BlackBerry has been reinventing itself as a provider of cross-platform mobile security services for enterprises. While the company has demonstrated some success in executing on that position, the market has remained skeptical. As Fortune’s Jeff Reeve’s pointed out this morning, BlackBerry is unprofitable with a lot of negativity priced into its stock. The company is currently valued at less than 1.3 times next year’s sales and only slightly above the cash on its books.
Clearly, BlackBerry needed to do something to bolster the credibility of its strategic market positioning. Today’s acquisition of Good Technology immediately strengthens both BlackBerry’s technical ability and street cred as a provider of cross-platform mobile security services for enterprises. Good’s portfolio of Enterprise Mobility Management (EMM) offerings was one of the best available and highly complementary to BlackBerry’s, as noted in the latter’s press release:

“Good has expertise in multi-OS management with 64 percent of activations from iOS devices, followed by a broad Android and Windows customer base. This experience combined with BlackBerry’s strength in BlackBerry 10 and Android management – including Samsung KNOX-enabled devices – will provide customers with increased choice for securely deploying any leading operating system in their organization.”

For Good Technology, this acquisition was a logical, if not inevitable, exit. As I wrote in A market overview of the mobile content management landscape  (summary only; subscription required for full text) just over a year ago,

“Many platform vendors have already acquired MDM and MAM capabilities, so the viability of the numerous, remaining pure-play vendors of those technologies looks increasingly dim. Instead, future acquisitions by platform vendors are more likely to echo VMware’s recent (January 2014) purchase of AirWatch and its well-rounded suite of EMM technologies. MobileIron launched a successful IPO earlier this month and looks to remain independent for the time being. Good Technologies recently filed its own IPO registration paperwork but could be acquired either before or after the actual IPO.”

And so it is. MobileIron remains the last major independent EMM vendor standing and Good has been acquired. It seems that Good really had little choice. They were $24 million in debt when their filed their S-1 (16 months ago) and never completed the intended IPO. It is very likely that they continued to lose money since then. According to CrunchBase, Good had taken on an undisclosed amount of secondary market funding a month after the S-1 filing and received an $80M private equity investment in September, 2014.  It’s highly likely that a combination of slowing revenue growth and a non-existent road to profitability led Good’s management and investors to take BlackBerry’s acquisition offer.
The looming question is will its newly-expanded portfolio of enterprise mobile security capabilities be enough for BlackBerry to accelerate its turnaround? Investors are reacting positively to the news. BlackBerry’s stock is currently up 1.54% while the broader NASDAQ is down -1.04%. Of course, only time will tell. Success will depend on how quickly BlackBerry can integrate Good’s technology into its own and how well they can sell the combined platform.

Has Snapchat peaked? Comscore numbers suggest flat growth in 2014

Snapchat’s user growth seems to have stalled toward the end of 2014, according to new Comscore numbers I obtained on Friday. As you can see from the below graph, Snapchat hit a peak around March 2014 and has slowly declined in unique visitors since then. I’ve reached out to Snapchat for comment and will update this if I hear back.

One caveat: Comscore only reports numbers from the 18 and over user group for legal reasons. Companies like Snapchat and Kik have big teen bases, so the Comscore numbers aren’t 100 percent representative. At the same time, given that Snapchat has saturated the teen audience at this point, the slow growth from the 18+ demographic is troubling.

The trend graph comes from a Comscore Mobile Metrix report that charts the number of monthly active users aged 18 and over in the United States. It looked at five messaging applications from October 2013 to October 2014 — Snapchat, Kik, WhatsApp, Line, and WeChat. It tracked “total unique app visitors,” but Comscore confirmed to me that’s the same as MAUs.

Comscore’s numbers are notoriously fickle and publishers frequently report more traffic than Comscore says they have, but in terms of overall growth trends the company is usually pretty accurate.

Comscore's Mobile Media Matrix 2015

Comscore’s Mobile Media Matrix (shows growth 2013-2014)

It’s not just Snapchat that has flatlined. Other messaging apps are seeing similar stagnation, with Kik hovering near the 15 to 16 million mark since April, WhatsApp at 7 million since March, and Line around 4 million since August. WeChat has been below 1 million since January.

So have we hit peak messaging app overload?

The Comscore graph also shows us where the most popular apps stack up against each other in the U.S. market. Snapchat is in the clear lead, despite flatlining. Kik is a not too distant second, which might surprise some. We also get a sense of WhatsApp’s American user base. The company hasn’t shared its U.S. metrics before, which led many to believe they were low.

But the fact that WhatsApp’s US monthly active users are this low — near Japanese-based Line — is new information.

 

This story has been updated since publishing to highlight the 18+ caveat higher in the post.

Here’s how Sidecar took the lead in the carpool race

It’s been four months since Uber, Lyft, and Sidecar officially launched their carpool features. And although all three rideshare companies have marketed their new carpool feature to the masses, one of them is pulling ahead: Sidecar.

It has expanded its carpool option to the most cities and seen record-breaking use in the process. The company trotted out a host of statistics and facts during a recent interview with me. The overall picture was clear: Sidecar’s carpooling feature is now its main source of growth, and a welcome injection.

Sidecar’s Shared Rides feature is now available in five cities, compared to three for both Lyft and Uber. In the cities where it launched the feature, 40 percent of the rides Sidecar offers are carpool. Uber wouldn’t disclose its percentage of UberPool rides. Lyft told me that as of a few months ago, 30 percent of its rides in San Francisco were Lyft Line, but it declined to share more up-to-date figures or the percentages of other cities.

It’s worth noting that since Lyft does a higher volume of rides than Sidecar, 30 percent of its total is likely far greater in absolute number of rides than 40 percent of Sidecar’s total.

For those who don’t track every change in the transportation industry: This carpooling option is different from these companies’ original “ridesharing” services. Instead of traveling alone with a driver (as with original ridesharing), in carpooling you get matched with another passenger going the same direction, making it cheaper to get across town than if you were traveling solo.

You might be surprised to hear that Sidecar has expanded its carpooling feature more quickly than Uber or Lyft. After all, it’s the company which I have previously referred to as the forgotten stepsister of ridesharing. It’s the smallest, with far less passengers and far less venture capital funding ($35 million) than Uber ($3.3 billion) and Lyft ($332.5 million).

But the company’s smaller size may actually be the reason for its fast carpool expansion. It has been able to focus its resources on the carpooling part of the business, making it a priority above all else. The company raised its latest round, a comparably paltry $15 million, solely on the premise of expanding Shared Rides.

Since introducing Shared Rides, Sidecar’s business has grown in multiples. It had a record week last week, with rides up 60 percent from the average prior weeks, despite the fact that there wasn’t a holiday like New Years or Halloween to propel the growth. The number of rides it offered in Chicago increased 10 times since it launched Shared Rides there in early November.

Contrary to outward appearances, Sidecar was first to market with the carpool feature, giving it a head start on Uber and Lyft. The media narrative around carpooling originally went: Lyft was the creatorUber upstaged Lyft’s big launch with a preemptive release, and Sidecar belatedly chased the pack.

But as this June article shows, Sidecar had actually been doing shared rides months before its competitors — it just hadn’t made much fanfare announcing it. The company claims it started testing Shared Rides in May. It had months of time to hone its operations, and as Uber and Lyft were just launching their SF markets, Sidecar had already tried out its feature with 13,000 passengers.

It has by no means won that war though. Sidecar may have gotten a head start, but its rivals are still far better funded. All it takes is Lyft or Uber placing a priority on carpooling — making it their main raison d’être — for them to take over.

What’s happening with Secret?

Secret, the anonymous messaging app that captured the attention of Silicon Valley in the months after its January launch, is struggling.

Almost a year later, download rates at home and abroad have plummeted. Its web visitor and mobile app user numbers are so low Comscore doesn’t track them. Stories about it have dropped off, taking the app from the top percentile of Google’s search rankings in the United States to the bottom half. And a key early employee has quietly departed.

It’s not looking good for the company, which has raised $35 million in venture funding in its short lifespan. Data suggests that around the time Secret tamped down on cyberbullying, its user growth slowed. After criticism about harassment on the app, the company started making changes to the way it moderated posts. It introduced new restrictions — like no posting names — and its US iOS rankings dovetailed at exactly that time.

It looks like Secret will be majorly overhauling its product soon. The company did not want to share more information, but CEO and co-founder David Byttow told me “dramatic” changes would be coming next week.

Secret has been working on this update for a long time. Byttow told me back in October the company was evolving the product “heavily” so that it will be more “addictive,” “contextual,” and “useful.” It sounds like a turning point for Secret.

A change is certainly in order.

What would you do to reboot Secret?

I’m a Secret power user, on the app nearly every day despite the fact that it started to fall out of fashion. From the beginning I was entranced by the posts, little nuggets of vulnerability, vitriol, and humor.

But in the last few months, posts have dropped off dramatically. I used to be able to scroll infinitely through new secrets, if not from my circle than from general users. For Secret newbies: The app connects to your social media accounts and phone contacts to show you posts from your network.

I have 119 friends on the app, a number that hasn’t changed for the past few months. Lately I’m lucky if there’s a few new posts at all by the end of the day.

Screenshots of a few Secrets from my feed, complaining about the lack of activity

Screenshots of a few Secrets from my feed, complaining about the lack of activity

Statistics from App Annie bear that out. After its coming-out party in January, Secret hovered on iOS App Store download charts for a few months. But once it started to crack down on harassment in late August, it plummeted, disappearing entirely for U.S. iOS apps overall (App Annie doesn’t track below #1,500). The last day it appears – September 13th – it was ranked #1,401.

It’s still on the charts in its specific category, social networking, where it appears as #173. But that’s in stark contrast to the nosebleed rankings of its competitors – Whisper at #27 and Yik Yak at #9. I couldn’t find the Google Play statistics, but will update this once I hear from App Annie.

Secret highlighted

App Annie’s data isn’t rock solid because it’s based on download rankings. Most apps will eventually flatline after reaching the majority of their market. But in the case of Secret, the company hasn’t exactly become a mainstream success. And competitors Whisper and Yik Yak have only grown in the ranks.

The trash talk allure

With the company keeping quiet, it’s not entirely clear what has happened. We can look to the problems plaguing Secret over the last few months though. The privacy concerns, as demonstrated by Fortune’s Secret experiment and Wired’s white hat hacker story, may have scared off people. The introduction of polls – which Secret has since quietly revoked – might have annoyed people enough to avoid using it.

There are also sustainability questions with confessional apps. Outside of the teenage group, are secrets a big enough draw to keep users around long term? People told me they grew bored of the content after awhile. The novelty of anonymity wore off.

I spoke with a source familiar with the company, who asked not to be named, who said the tension with the app’s development was around how much control Secret should exert on content. “For someone who wants to build a successful company and sell it for a couple hundred million dollars, it’s all about growth,” this person told me. “Obviously [gossip] creates engagement and people like it, but is it right?”

A few kids at a high school would download it, and within a week most of the school would be on it. Teens would take pictures of other people, and commenters would discuss their weight or appearance. The virality of the “friend” model, while great for expansion, was fertile grounds for harassment. Secret’s founders were nervous to tamp down on such content though, lest their growth slow.

It looks like they may have been right.

Eventually the cyberbullying issue caught up to Secret via a media firestorm. It instituted new restrictions — like forbidding the use of real names and uploading of camera images — on the app at the end of August, right around the time its download rankings tanked. Another long time Secret user told me he loved the gossip, and when it disappeared he stopped using the app. It might have been a cesspool, but that was its value for many.

The troubles continue

Secret’s biggest markets were abroad – it blew up in Israel and Brazil, among other places. But then the Brazilian government banned the app in August because of cyberbullying concerns. Just like in the U.S., App Annie data shows Secret captured people’s interest initially abroad, causing a spike in downloads, but couldn’t sustain it.

The company’s head of communications, long time tech PR professional SJ Sacchetti, was recruited in May to help manage media relationships. Having formerly run communications for anonymous site Formspring.me, Sacchetti had the experience to help Secret navigate the PR minefields of confessional applications.

But four months after joining, Sacchetti quietly left Secret, around the time of the Brazil ban. When I asked her about it last month, she wouldn’t give me details as to why, aside from saying that although she originally thought she’d be at Secret a long time, it wasn’t “a culture fit.”

In the months that followed, Secret released Ping – an app created from a company hackathon. Ping was a notification system for things like weather and Twitter trends, completely unrelated from the core Secret app itself. Understandably, it led people to wonder, “Should we read anything into how things are going with Secret with this release?”

Government obstruction and privacy issues can all be overcome with the strength of a product (see: Uber). The real problem of Secret might be that anonymity, at least in the “confessional” form, isn’t quite the consumer draw people thought it would be. It’s hard to know if Secret’s growth would have continued if it hadn’t taken a stand against cyberbullying.

In this market, a conscience may be bad for business.

Facebook’s Messenger app hits half a billion monthly active users

Facebook’s Messenger app has grown in popularity — no doubt because the company forced people to install it — and now 500 million people use it every month. By comparison, 600 million people use WhatsApp, reportedly 100 million use Snapchat and 400 million use China’s WeChat. At last week’s public Q & A, Mark Zuckerberg said, “We believe that messaging is one of the few things that people actually do more than social networking.”