The Math behind IoT Network Success (or Failure!)
Internet of Things Math
To get everyone excited about the IoT, we’re going to do a little math. In a few paragraphs that is; first, let’s talk about profitability for IoT networks. Each connected device pays some nominal fee to be connected. The higher capacity per tower, the greater the profitability of that expensive resource.
Capacity becomes the limiting factor for profitability of public IoT networks.
Simply put, sufficient capacity per tower is essential because it allows for the tower to be profitable. Each device brings in a certain amount of revenue. Each tower or access point (AP) can only serve a certain number of devices because the data throughput at any given time is divided up amongst the devices according to their data needs. So, multiply the number of devices the AP can serve times the amount of revenue each device brings in, and you have the AP’s revenue. Aggregate the tower profitability across the entire network, and you have the network profitability.
It could take a few years before this becomes apparent in actual networks. But it will happen and when it does, it will leave devices stranded. This is the first longevity nightmare scenario: to have an entire network simply shutdown due to bankruptcy.
Luckily, capacity can be calculated pretty handily with sufficient information for a given technology. What’s particularly painful about this issue (for the devices on the provider’s network) is that it cannot be addressed through afterthought, bolt-on approaches. Unluckily for these technologies, the only way to address such low capacity per device is to design an entirely new technology (which is the cellular approach, but the issue there is the continual technology sunsetting cycles).
Success to Failure Scenario #1: Towers are filled to capacity, but that capacity isn’t sufficient in number of devices to profitably support the towers. This lack of capacity per access point leads to business failure and stranded devices.
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