Top auto makers rely on cloud providers for IoT

For the companies looking to implement the biggest and most complex IoT setups in the world, the idea of pairing up with AWS, Google Cloud or Azure seems to be one whose time has come. Within the last two months, BMW and Volkswagen have both announced large-scale deals with Microsoft and Amazon, respectively, to help operate their extensive network of operational technology.

According to Alfonso Velosa, vice president and analyst at Gartner, part of the impetus behind those two deals is that the automotive sector fits in very well with the architecture of the public cloud. Public clouds are great at collecting and processing data from a diverse array of different sources, whether they’re in-vehicle sensors, dealerships, mechanics, production lines or anything else.

“What they’re trying to do is create a broader ecosystem. They think they can leverage the capabilities from these folks,” Velosa said.

Cloud providers as IoT partners

The idea is automated analytics for service and reliability data, manufacturing and a host of other operational functions. And while the full realization of that type of service is still very much a work in progress, it has clear-cut advantages for big companies – a skilled partner handling tricky implementation work, built-in capability for sophisticated analytics and security, and, of course, the ability to scale up in a big way.

Hence, the structure of the biggest public clouds has upside for many large-scale IoT deployments, not just the ones taking place in the auto industry. The cloud giants have vast infrastructures, with multiple points of presence all over the world.

“It’s akin to the way the phone carriers built their points of presence,” said Rohit Mehra, IDC vice president for network infrastructure.

Mobile carriers push for corporate IoT business

Not coincidentally, big mobile carriers have begun to emerge as rivals to the public cloud providers for this type of large-scale deployment, and for most of the same reasons, according to Mehra. They’re particularly good at providing high performance, low-latency network connectivity at the edge.

“If you look at the global services providers – AT&T, Vodafone – all of them have mobile footprints, and they’re trying to augment their networks, with or without partnerships to, provide that IoT capability,” he said.

Christian Renaud, IoT research vice president at 451 Research, argued that they’re not there yet, however. There’s promise there, but also a distinct lack of apparent organization on the part of the major carriers.

“What I haven’t seen yet is any network operator step forward with a really articulate plan for that,” he said.

Cloud providers move services up the stack

The basic nature of IoT deployments at this scale means that there’s no set-it-and-forget-it option. Even among companies in the same vertical, the best architectural fit is going to vary widely.

Velosa said that particularly asset-intensive industries (think oil and gas, chemical manufacturing and mining, among others) are the ones best suited for this type of deployment.

Moreover, the public-cloud providers themselves are in an unfamiliar position of having to cater to the needs of IoT-enabled businesses. They’ve functioned, essentially, as generalist IT plumbing for a long time, so the sudden need to have a lot of vertical-specific knowledge is something they’ll have to adjust to.

Partnerships with companies that already have that vertical-specific knowledge are a key piece of the puzzle, and those companies are at least as excited to have versions of their software available via AWS and Azure. The biggest customers generally have working relationships with one of the major cloud providers already, and the software vendors want to be as widely available as possible, despite how advantageous exclusive partnerships could be for the cloud providers – like smartphones that are only available on one wireless network.

For the AWS/Volkswagen partnership, one key collaborator is Siemens, whose suite of industrial-control, automation and manufacturing applications are critically important to the carmaker’s core operations, according to Marco Argenti, AWS vice president of technology for IoT.

The idea is to move up the stack, and to get away from the “dumb pipe” mindset. “We’re starting to provide higher-order services and applications … our latest pilot products provide metrics and dashboards for industrial optimization,” he said.

Renaud also points out that more prosaic concerns can sometimes dictate the choice of IoT partner. If a company’s already working with AWS or Azure or Google Cloud for more traditional public cloud use cases, it’s almost a foregone conclusion that they’ll stay with that company for an IoT deployment, he said.