As tech giants such as Amazon and Google close in on development of the Internet of things, leaders in world hardware hub Taiwan will want a share. Their odds are not that high at the moment, one venerable industry insider says.
According to Markets and Markets, total smart home market revenue is expected to grow from $46.97 billion in 2015 to $121.73 billion in 2022. Amazon has its voice control smart assistant Alexa and launched a series of products such as Amazon Echo. Google has also integrated its Google Now to the new product Google Home, which functions almost the same as Amazon Echo.
Taiwan started doing OEM contract for chips in the 1970s. Today in Taiwan’s LED Industry, some companies have mastered chip development and assembly.
Chien Lee-feng, managing director and engineering site director at Google Taiwan, thinks the next big IoT market opportunity for Taiwanese companies lies in B2B services for enterprises and manufacturers. Competition in the consumer market is fierce, he said, and for relatively small Taiwanese companies, it won't be easy to compete with the industry giants.
Taiwan should shift its focus to Industry Internet of Things (IIoT), which is use of IoT technologies in manufacturing, rather than competing in the mass market, Chien said.
Taiwan has built up its tech industry with OEM in consumer electronics. But shrinking profits for hardware manufacturers have made survival more difficult and refocused attention on services.
In traditional IoT work, companies that create services hold the power to make decisions such as setting prices, Chien said. But most hardware manufacturers can only follow orders from big firms.
Expect the opposite dynamic in IIoT, he said. Internet companies such as Google and Uber rely on car manufacturers to develop connected and self-driving cars. They won't produce physical cars by themselves. And, this characteristic might open another opportunity for Taiwanese OEM companies in the IIoT market.
Through the integration of hardware, software and cloud platforms, a hub like the central kitchen in a chain of restaurants connects with customers across different branches. The PC supply chain in Taiwan has a chance to develop such a system for the industry, Chien said. “From this point of view, we have great potential everywhere on this island,” he said.
Machine learning now has become another focus for creating services in the near future. Virtual assistants and chatting bots are both basedt on this technique. Taiwanese companies should start to use skills such as machine learning to create complementary software, Chien said.