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The Internet of Things
Entrepreneurial
Ecosystems
Challenges and
Opportunities
Edited by
James A. Cunningham
Jason Whalley
The Internet of Things Entrepreneurial Ecosystems
James A. Cunningham · Jason Whalley
Editors

The Internet
of Things
Entrepreneurial
Ecosystems
Challenges and Opportunities
Editors
James A. Cunningham Jason Whalley
Newcastle Business School Newcastle Business School
Northumbria University Northumbria University
Newcastle upon Tyne, UK Newcastle upon Tyne, UK

ISBN 978-3-030-47363-1 ISBN 978-3-030-47364-8 (eBook)

https://doi.org/10.1007/978-3-030-47364-8

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Switzerland AG 2020
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 Preface

This book is based on an interdisciplinary workshop that we organised

in London in 2018. The workshop drew together leading academics in a
number of areas to investigate complexities and promises surrounding the
Internet of Things (IoT). The workshop combined a range of different
perspectives to illustrate the scope of the IoT on the one hand and its
complex development on the other. The workshop and chapters in this
book explore a myriad of relevant industrial and societal issues that have
emerged with the growing adoption of IoT based products and services.
This complexity, coupled with its fluidity and dynamism, led us to frame
our consideration of IoT through an ecosystem perspective and viewing
IoT from the prism of individual actors in the quadruple helix.
IoT offers the potential to transform many aspects of how firms
compete, operate and sustainably engage with customers. The rapid
growth and evolution of IoT presents governments with a range of public
policy challenges, stretching from privacy on the one hand to developing
appropriate economic support and incentive for IoT start-ups on the other
hand. Universities and public research organisations are responding to and
working on publicly funded programmes that seek to provide underpin-
ning proprietary knowledge and capabilities that can be commercialized
by firms in different sectors adopting IoT. For end users, IoT opens up
the creation of products and services but also raises concerns in relation
to privacy, security and the cost of ownership.

v
vi PREFACE

Each of the chapters in the book takes a different perspective and

explores some of the macro and micro nuances of IoT as well as challenge
some of the assumptions that are made as to the easiness and readiness of
IoT adoption. The book also questions the viability of IoT deployment
through a techno-economic perspective illustrating the real challenges of
assessment and deployment. IoT generates large data volumes, so under-
standing how this can be utilised is essential for quadruple helix actors.
The book explores some of the numerous governance challenges in terms
of data, algorithms, globalised business models against current regulatory
environment and industry norms.
A key benefit of the book is that it covers a range of issues that often are
treated in isolation. This enables links to be drawn between issues, thereby
demonstrating the complexity and dynamism of the challenges and oppor-
tunities associated with IoT. Through highlighting these issues, the book
place them within their wider context and facilitates an analysis of the
dynamic and complex IoT ecosystems that is emerging from a quadruple
helix actor perspective. Finally, we hope that this book simulates further
research and debates among researchers, policymakers and end users.

Newcastle upon Tyne, UK James A. Cunningham

February 2020 Jason Whalley

Acknowledgments We wish to acknowledge the support from Northumbria

University via the MDRT Digital Living that enabled us to host a multidisci-
plinary workshop that formed the based for the book. We wish to thank all the
chapter authors for the time, effort and dedication in addressing their chapter
review comments. Finally, we wish to acknowledge and thank Srishti Gupta
Palgrave for her excellent support in preparing this book.
 Contents

1 Internet of Things: Promises and Complexities 1

James A. Cunningham and Jason Whalley

2 The Patterns of Growth in Information

and Communication Technologies: The Case
of the Emerging Internet of Things 13
Bert Sadowski, Önder Nomaler, and Jason Whalley

3 The Internet of Things in Europe: In Search

of Unicorns 31
Nikolaos Goumagias

4 The Importance of a Techno-Economic Approach

in Evaluating IoT Investment Opportunities 57
Thibault Degrande, Frederic Vannieuwenborg,
and Sofie Verbrugge

5 Big Data, Predictive Marketing and Churn

Management in the IoT Era 75
Alessia Munnia, Melita Nicotra, and Marco Romano

vii
viii CONTENTS

6 Internet of Things: Governance and Metagovernance

of Networking Everything 95
Ewan Sutherland

7 The Internet of Things: Enabling Opportunities

and Challenges 121
James A. Cunningham and Jason Whalley

Index 137
 Notes on Contributors

James A. Cunningham, Ph.D. is Professor of Strategic Management

at Newcastle Business School, Northumbria University, UK. His
research intersects the fields of strategic management, innovation and
entrepreneurship. His has published papers in leading international jour-
nals such as Research Policy, Small Business Economics, R&D Manage-
ment, Long Range Planning, Journal of Small Business Management,
Journal of Technology Transfer and the Journal of Rural Studies among
others.
Thibault Degrande received an M.Sc. degree in Business Engineering
from Ghent University in January 2017. In September 2017, he joined
the Techno-Economic research unit at the Internet and Data Lab research
group at the same university. Since then, he has been involved in
several national and international projects related to Internet of Things
and connected mobility. He is currently working towards a Ph.D. in
Engineering.
Nikolaos Goumagias is a Lecturer at Northumbria University,
Newcastle Business School. His research interests revolve around
entrepreneurial finance and the impact on technological start-ups’
strategy and growth. His current research focuses on the impact of
venture-capital syndication on the technological start-ups’ growth. He
holds a B.Sc. (Hons) in Economic Sciences from Aristotle University
of Thessaloniki, an M.Sc. in Accounting and Financial Management

ix
x NOTES ON CONTRIBUTORS

from Lancaster University and a Ph.D. in Operations Research from the

University of Macedonia, Thessaloniki.
Alessia Munnia is a graduate in business economics and carries out
research on the big data, predictive marketing and digital transformation
and innovation.
Melita Nicotra, Ph.D. is Assistant Professor and Qualified Associate
Professor of Management at the University of Catania, Department
of Economics and Management. She is author of several papers and
books in leading scholarly peer-to-peer journals and publishers. Her main
research themes are absorptive capacity, knowledge transfer, start-ups, and
entrepreneurial ecosystems.
Önder Nomaler (born in 1970, Ankara) holds a B.Sc. degree in Indus-
trial Engineering and a M.Sc. in Economics. He earned his Ph.D. in
Economics at Maastricht University in 2006. He currently works at
UNU-MERIT as a research fellow. His research interests include evolu-
tionary economics, computational economics, complexity theory, network
analysis, economics of innovation, measurement of innovation, input–
output economics, and bibliometrics, especially in patent value assessment
and (patent) citation network analysis.
Marco Romano, Ph.D. is a Full Professor of “Entrepreneurship and
Business Planning”, “Digital Innovation and Transformation Manage-
ment” and “Marketing”, Department of Economics and Business,
University of Catania. He is visiting professor with Newcastle Business
School at Northumbria University (UK). From 1998 to 2001 he was
visiting Lecturer, Department of Management, Warrington College of
Business, University of Florida (USA). He has provided strategic consul-
tancy and advice to SMEs, start-up firms, voluntary organisations and
public sector organisations.
Bert Sadowski works as an Associate Professor of the Economics of
Innovation and Technological Change at the Eindhoven University of
Technology and at Jheronimus Academy of Data Science (JADS) in Den
Bosch, The Netherlands. He is Visiting Professor at Northumbria Univer-
sity, Newcastle, UK, the University Trento, Italy and Jiangsu University,
Zhenjiang, China. In the past fifteen years, his research interest has been
in the areas of the economics of technological change and innovation,
innovation management and technology analysis.
 NOTES ON CONTRIBUTORS xi

Ewan Sutherland is an independent telecommunications policy analyst.

He has undertaken assignments in Asia, Southern Africa and Europe, for
governments, infoDev, ITU and the OECD. He was Executive Director
of the International Telecommunications Users Group (INTUG), based
in Brussels, between 1999 and 2005. He spent fifteen years as an
academic, latterly as a dean at the University of Wales. He has taught
at the Universities of Wolverhampton, Westminster, Stirling and Wales,
plus semesters as visiting faculty at Georgetown University (Washington,
DC) and GSTIT (Addis Ababa). From 2013 to 2019 he was a Visiting
Professor at the LINK Centre at the University of the Witwatersrand.
Frederic Vannieuwenborg received a M.Sc. degree in engineering,
option Industrial Engineering and Operations Research from Ghent
University (Belgium) in July 2011. He joined the Techno-Economics
research group within the Internet and Data Lab (IDLab) which is affil-
iated to imec. In 2017, he got his Ph.D. which focused on analysing
the impact of smart services via techno-economic modelling. Numerous
national and international projects have been fuelling his research interest
on techno-economic aspects such as value-network modelling, impact
analyses, cost evaluation, technology choice, barrier detection and multi-
actor analyses within the application domains of eCare and mHealth,
smart energy, smart dairy farming, Industry 4.0 and IoT in general.
Sofie Verbrugge received a M.Sc. degree and a Ph.D. in Engineering
from Ghent University (Belgium). She is the coordinator for techno-
economic research within IDLab at imec. Since October 2014 she is
appointed as an associate professor in the field of techno-economics at
Ghent University. She was selected as a member of the Young Academy of
Flanders (Belgium). Sofie’s main research interests include cost and busi-
ness modelling in a broad range of domains like smart city, smart mobility
and smart healthcare.
Jason Whalley is Professor of Digital Economy at Newcastle Business
School, Northumbria University, Newcastle, UK. His research focuses on
the telecommunications industry, exploring the interplay between tech-
nological change, market structures and regulatory regimes. Dr. Whalley
is editor of Digital Policy, Regulation & Governance and vice-chairman
of the International Telecommunications Society.
 List of Figures

Fig. 2.1 Patenting activities in ICT an IoT between 1975 and 2015 20
Fig. 3.1 Geographic distribution of European Unicorns in 2018
(Compiled by the authors from a variety of sources) 38
Fig. 3.2 Population and funding distribution of European unicorns
per sector 39
Fig. 3.3 Distribution of funding among different sub-sectors of IoT 42
Fig. 3.4 Average experience of venture capital investors of European
unicorns scaled by the population of venture capital
companies per country 50
Fig. 4.1 Generic IoT architecture 59

xiii
 List of Tables

Table 2.1 Top IoT companies in IoT technologies 1975–2015 21

Table 2.2 Major IoT companies: patenting activities 1975–2015 23
Table 2.3 Patenting activity: incumbents vs. new entrants,
1975–2000 24
Table 4.1 Requirements for use case 1 65
Table 4.2 Prioritizations from technical (L) and economic (R)
perspective 66
Table 4.3 Requirements for use case 2 67
Table 4.4 Overview of main costs, affected by the choice of
IoT-connectivity technology for use case 2 71
Table 6.1 European regulatory networks related to the Internet of
Things 103
Table 6.2 Standardisation of the Internet of Things 104
Table 6.3 IoT data breaches reported by US authorities and courts 108
Table 6.4 Networks for the Internet of Things 113

xv
 CHAPTER 1

Internet of Things: Promises and Complexities

James A. Cunningham and Jason Whalley

Abstract Over the last few years, the Internet of Things (IoT) has caught
the imagination. The number of IoT connections is expected to rapidly
grow, with some commentators forecasting 100 billion connected devices
by 2025. This chapter outlines the far-reaching scope of the IoT, in terms
of the areas where it has been adopted and potential revenues that it may
generate. But at the same, the emergence and adoption of the IoT has
generated a number of challenges. This chapter identifies a number of
such challenges, some of which emanate from the underlying technologies
associated with the IoT while others originate from the large amount of
data that it promises to generate. The chapter concludes by outlining the
structure of the remainder of the book, providing outlines of each of the
subsequent chapters.

Keywords Opportunities · Challenges · Potential · IoT · Adoption

J. A. Cunningham · J. Whalley (B)

Newcastle Business School, Northumbria University, Newcastle upon Tyne, UK
e-mail: [email protected]
J. A. Cunningham
e-mail: [email protected]

© The Author(s) 2020 1

J. A. Cunningham and J. Whalley (eds.),
The Internet of Things Entrepreneurial Ecosystems,
https://doi.org/10.1007/978-3-030-47364-8_1
2 J. A. CUNNINGHAM AND J. WHALLEY

1.1 Internet of Things

Over the last couple of years, the Internet of Things (IoT) has caught the
imagination. From smart meters that allow you to monitor your energy
consumption to tags that parents can use to monitor the movement of
their children and wearables that count your daily steps, the IoT has
begun to be widely adopted by individuals. Multiple factors have encour-
aged the of the IoT by individuals, with some appreciating its ability to
save them money while others liking the peace of mind that comes from
being able to remotely monitor their child, house or pet.
But what is the IoT? While the genesis of the idea has been variously
attributed (Ardito et al. 2018; Wang and Hsieh 2018), it is widely cred-
ited to Kevin Ashton in the late-1990s (Lee et al. 2017; Tang et al. 2018).
Numerous definitions have subsequently been proposed (Martínez-Caro
et al. 2018), and while these vary in their phrasing and exact composi-
tion, there is a degree of commonality to them. Technology is embedded
in a device, which is connected to a network over which it sends data.
This connection is typically, but not exclusively, wireless, of which several
technologies exist (OECD 2015).
Through falling costs and technological advances, it is expected that
globally the number of IoT connections will be significant, especially
when compared to the number of existing mobile subscribers or Inter-
net users. For example:

• Analysys Mason (2020)—5.3 billion by 2028

• Ericsson (2019)—24.9 billion connections by 2025
• Strategy Analytics—38.6 billion by 2025 (Business Wire 2019)
• IDC (2019)—41.4 billion by 2025
• OECD (2015)—50 billion by 2020
• Huawei (2018)—100 billion by 2025
• Cisco (2016)—500 billion connections by 2030

These connections will, in turn, generate revenues. Fortune Business

Insight (2019) forecasts global IoT revenues of $1102 billion by 2013,
while Global Data (2019) calculated that the IoT will generate revenues
of $96 billion in the Asia-Pacific region alone by 2023. Global Data
(2019) interestingly divides the forecast revenue into three sources: soft-
ware and services, devices and connectivity with the first being consider-
ably larger than the other two.
 1 INTERNET OF THINGS: PROMISES AND COMPLEXITIES 3

This is not to suggest that the selling of devices will be a small market.
Gartner (2019), focusing solely on the enterprise and automotive mar-
kets, forecasts revenues of $389 billion in 2020 from what it describes
as ‘endpoint’ electronics. More broadly, the wider economic gains asso-
ciated with the IoT, due to cost reduction, remote monitoring etc., have
been forecast to be substantial. The forecasts noted by OECD (2016)
range from an estimated gain of $10–15 trillion for global GDP over the
next 20 years to $1 trillion from the widespread adoption of smart meters
alone. McKinsey Global Institute (2015) draws attention to the sectoral
differences that occur regarding the potential value that could be created
by the IoT by 2025. The application of IoT within the home environ-
ment could generate $350 billion in value, whereas the potential value
from its application in the retail sector was forecast to be up to $1.2 tril-
lion. The application of IoT to vehicles could generate $740 billion in
value (McKinsey Global Institute 2015).
It is, however, worth offering a word of caution. Strategy Analytics,
cited by Business Wire (2019), state that many companies are assuming
that revenues will automatically flow from the devices being installed but
this may not be the case. In other words, there is a need to develop
business models that monetise the IoT devices that are being installed.
IoT connections will generate vast amounts of data. IDC (2019), for
example, forecast that by 2025 IoT will generate just under 80 zettabytes
of data. This presents both an opportunity as well as a challenge. Through
the analysis of this data, detailed insights will emerge—these insights are
wide-ranging, occurring wherever IoT is adopted and reflect the granu-
larity of the data that is generated and collected. Moreover, these insights
will occur at different levels of aggregation—individuals, households, city
etc.—but can also be constantly updated to reflect the real-time collection
and analysis of IoT generated data.
But there are also challenges with analysing and then utilising such
large amounts of data. Not only must techniques be developed that can
handle the large volume of data associated with the IoT, but these tech-
niques must also be able to accommodate its rapid accumulation as well
as be able to identify relevant insights that allow a company, doctor etc.
to take whatever appropriate action is necessary (Deetjan et al. 2015;
OECD 2013). The ability of these techniques to generate insights, and
thus value, is also shaped by context (Greengard 2015). Context means
4 J. A. CUNNINGHAM AND J. WHALLEY

that the device is able to understand its surroundings, adjusting, for exam-
ple, the time and data used on a smartphone or wearable to reflect inter-
national travel or the analysis spots something abnormal and triggers the
appropriate intervention.
The emergence of the IoT can be observed across multiple industries.
The reviews undertaken by, among others, Kim and Kim (2016) and
Lu et al. (2018), illustrate the diversity of its application with examples
including agriculture, education, home, security and tourism. Of course,
some areas are more popular than others—a large number of smart
city projects have been undertaken globally (see, for example, McKinsey
Global Institute 2018), driven by the belief that the application of IoT will
improve the city in some shape or form. Not only will the quality of life
of those living in the smart city improve through, for example, improved
transportation systems and reduced congestion (McKinsey Global Insti-
tute 2018) but the competitiveness of the cities will be enhanced (Appio
et al. 2019; Kummitha and Crutzen 2019). More widely, it has been
argued that the IoT can make a positive contribution towards achieving
the UN’s sustainable development goals (GSMA 2018; ITU 2016).
Healthcare is another area that has attracted considerable attention.
While it has been long argued that information and communication tech-
nologies (ICT) can improve patient care (Spruit and Lytras 2018), the
IoT creates a series of new opportunities in this respect (Martínez-Caro
et al. 2018). The IoT enables patients to be monitored, either in the
hospital or at home, as well as the equipment used in healthcare provi-
sion to be tracked. Individuals can also be tracked and directed to medical
resources as appropriate, allowing those who are ill to travel (Almobaideen
et al. 2017).
But the application of IoT to healthcare, as well as the other sectors,
is not without its difficulties. The technologies are still developing, with
the ecosystem of actors needed to deliver IoT being broad (Yaseen et al.
2018) and arguably in a state of flux. Not only may this frustrate the
development of IoT applications, but it gives rise to other concerns such
as privacy and security. The IoT generates large volumes of data, provid-
ing a rich and detailed insights into individuals in terms of their medical
histories, location etc. that could be misused. Devices could be turned
off, personal details disclosed to those who should not know them and
individuals subject to considerable anguish and cost as they seek to regain
control of their data (Greengard 2015; OECD 2013, 2016). There is an
emerging consensus that privacy and security are important influences on
 1 INTERNET OF THINGS: PROMISES AND COMPLEXITIES 5

IoT adoption, underlining the need for action in this area to be taken
but this made challenging by the global nature of IoT and the need to
co-ordinate across many different stakeholders.
IoT applications are, by their very nature, technological in character
but not everyone can utilise them (Ma et al. 2018). In other words, the
widespread adoption of the IoT will compound those digital divides that
already exist. These digital divides reflect whether someone has access to
the Internet in the first place, the skills to make sense of what is on the
Internet and the impact that it has on them (Scheerder et al. 2017). Quite
simply, whether someone possesses a range of relevant skills will shape
the extent to which they adopt the IoT. de Boer et al. (2019) identi-
fied a range of IoT skills, the possession of which they found encourages
individuals to adopt and use the IoT. These skills include the ability to
connect devices to the Internet as well as understanding how they are
configured, amending settings and sharing data with others.
Privacy and security on the one hand and ensuring that users have the
relevant skills to use their IoT devices and products are just two of the
challenges that need to be overcome. Addressing these challenges will
enhance the attractiveness of IoT to consumers, broadening its appeal
and ultimately its adoption. But the various elements of the ecosystem
underpinning IoT also need to collaborate, in both the development of
interoperable standards as well as ensuring end-to-end robust, reliable and
secure IoT systems. The collaboration that is necessary is made difficult
to achieve due to the disruptive nature of IoT, where lots of technologies
exist with often no single one dominating and the pace of (technological)
change is rapid (Francesco et al. 2018; Sadowski et al. 2019).
It has been suggested that the IoT lacks the appropriate governance
mechanisms needed to shape its development (WEF 2019). Whether
an organisation similar to Advanced Research Projects Agency (APRA),
which guided the development of the Internet, is needed, let alone can
be established and then accepted, is debatable. In contrast to the Internet,
which essentially developed within a single jurisdictional context, the IoT
is already global. Given the range of economic and political factors con-
tributing to the enthusiasm of governments and companies for the IoT,
establishing an overarching council that would facilitate co-ordination
across the ecosystem is likely to be fraught with difficulties.
Moreover, the relatively new nature of the IoT means that business
models are still developing (Metallo et al. 2018). The developmental
nature of the business models is reflected in the uncertainty associated
6 J. A. CUNNINGHAM AND J. WHALLEY

with the emergence of a ‘killer app’ that would encourage the adoption
of the IoT (Kim and Kim 2016), as well as the complexity of the various
choices that companies and organisations need to make to realise the value
of the IoT (McKinsey Global Institute 2015). Using the business model
canvas of Osterwalder and Pigneur (2010), a number of IoT business
models are investigated by Dijkman et al. (2015). While these inevitably
overlap, the analysis identifies three components that were felt to be more
important than the others—value proposition, revenue stream and cus-
tomer relationships. These were, however, not of equal importance, with
value proposition being considerably more important than the other two.
Notwithstanding the uncertainty that exists, use cases are beginning to
emerge that indicate the tangible benefits associated with IoT. A report
from Vodafone stated that almost all of those companies it surveyed
who were using IoT could identify benefits such as increased revenue,
lower costs, improved data accuracy and enhanced productivity (Voda-
fone 2019). Perhaps surprisingly, Vodafone (2019) found that those com-
panies using more sophisticated IoT applications saw their costs fall by
more than those using less advanced technologies. That the benefits dif-
fer by the type of IoT application adopted suggests that there is a need for
companies to be able to carefully and rigorously evaluate the choices that
they face so that the technology opted for is the most appropriate. Taking
future scenarios about the evolution of IoT into account, it can signifi-
cantly change business and society, but what remains somewhat hidden
are the complexities involved in realizing potential of IoT.

1.2 Structure of the Book

The remainder of this book is divided into six chapters. Chapters 2–6
(inclusive) were originally presented at a workshop held in June 2018
at Goodenough College, London. The objective of the workshop, like
that of the book, was to shed light on the complexities associated with
the IoT, in terms of understanding how it may develop over the next
couple of years as well as identifying relevant challenges. The Chapters
were then revised in light of the discussion, laying the foundation for
an integrative discussion of the entrepreneurial ecosystem associated with
IoT in Chapter 7.
Chapters 2, 3 and 4 are united by their focus on the commercial issues
associated with IoT. In Chapter 2—The Patterns of Growth in Information
and Communication Technologies: The Case of the Emerging Internet of
 1 INTERNET OF THINGS: PROMISES AND COMPLEXITIES 7

Things —by Bert Sadowski, Önder Nomaler, and Jason Whalley, a patent
based analysis is undertaken to investigate how the IoT has grown in
recent years on the one hand and those actors, companies and research
institutes, that are prominent holders of relevant patents. Not only does
the analysis illustrate the proportion of IoT to all ICT patents, but it also
demonstrates how the portfolio of patents held by the leading companies
changes over time. They conclude by exploring the extent to which the
leading holders of IoT can be regarded as ‘incumbents’ or ‘new entrants’
and how this explains the patent strategies of companies.
In Chapter 3—The Internet of Things in Europe: In Search of Uni-
corns —by Nikolaos Goumagias, the focus is a relatively small number of
highly valuable companies, that is, on unicorns. The presence of these
companies, which are private owned companies valued at more than $1
billion, if often taken as reflecting on the innovativeness of a particular
city or country. As relatively few such companies can be found in Europe,
policy makers have increasingly asked how their development could be
supported? This chapter investigates how the development of unicorns
within Europe could be supported, illustrating the key role played by
venture capital in terms of providing funding and other supportive activi-
ties. The chapter then continues with mapping out the unicorn landscape
in Europe, in terms of identifying which companies are actually unicorns,
how many jobs they have created and in which sectors they can be found.
The chapter concludes by suggesting a number of policy recommenda-
tions for Europe’s IoT ecosystem.
How IoT investments can be evaluated is outlined in Chapter 4—
The Importance of a Techno-Economic Approach in evaluating IoT Invest-
ment Opportunities —by Thibault Degrande, Frederic Vannieuwenborg,
and Sofie Verbrugge. After arguing why a techno-economic approach is
advantageous, the heart of the chapter is a detailing outlining of how this
occurs in practice. The use of examples highlights the data requirements
of such an analysis, and how the decision to proceed or not with an IoT
investment is multi-faceted. What the analysis clearly highlights is that,
contrary to the hype surrounding IoT, not every investment is worth-
while.
The focus shifts in Chapter 5—Big Data, Predictive Marketing and
Churn Management in the IoT Era—by Alessia Munnia, Melita Nicotra,
and Marco Romano to looking at the impact of IoT. In particular, the
chapter highlights the variety of analytical technologies that can be used
8 J. A. CUNNINGHAM AND J. WHALLEY

to analysis the large amounts of data that IoT generates. While these tech-
niques are varied in character, they are grouped into two broad categories:
predictive marketing and customer retention and churn analysis. In both
areas, the chapter draws attention to how the IoT generates large, perhaps
unprecedented amounts of data, that can be used with the established and
emerging analytical techniques. The chapter shows how the available ana-
lytical tools have changed over time, allowing fresh insights to emerge
into how individuals behave.
The IoT does not happen in isolation but instead occurs within a socio-
economic context that raises and is shaped by a number of governance
concerns. In Chapter 6—Internet of Things: Governance and Metagover-
nance of Networking Everything —by Ewan Sutherland, the complexity of
the governance structures surrounding the IoT is vividly illustrated. Gov-
ernance occurs across multiple domains at both the domestic and interna-
tional levels, with regulatory agencies interacting with standards bodies,
various parliaments and international organisations. The interaction that
occurs between all of these actors creates a governance structure that is
embryonic, reflecting the relatively recent emergence of the IoT, but also
one that is inherently dynamic and complex.
In the final chapter of the book—Internet of Things: Opportunities and
Challenges —by James Cunningham and Jason Whalley, the issues and
insights raised in the previous five chapters are drawn on to inform a
discussion of the implications of IoT for quadruple helix actors—govern-
ment, industry, academia and end users. The chapter considers some of
the enabling opportunities that IoT presents, particularly to industry such
as firm purpose reconfiguration, competitive disruption and market dom-
inance, value reconfiguration, value creation and business models. Chal-
lenges are also considered that highlight the complexities of the IoT evo-
lution such as regulation, infrastructural investment and capacity, societal
awareness and adoption and entrepreneurial ecosystem development.

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 CHAPTER 2

The Patterns of Growth in Information

and Communication Technologies: The Case
of the Emerging Internet of Things

Bert Sadowski, Önder Nomaler, and Jason Whalley

Abstract This chapter focuses on patenting activity within the context

of IoT. After outlining the technological convergence that has been facil-
itated by the emergence of the IoT, the chapter focuses on identifying
the most active patenting firms. The chapter shows how the most active
patenting firms are manufacturing firms, and that rate of patenting activi-
ties has varied considerably over time. As the factors behind the changing

B. Sadowski (B)
Department of Industrial Engineering & Innovation Sciences, Eindhoven
University of Technology (TU/e), Eindhoven, The Netherlands
e-mail: [email protected]
Ö. Nomaler
United Nations University—Maastricht Economic and Social Research Institute
on Innovation and Technology (UNU-MERIT), Maastricht, The Netherlands
J. Whalley
Newcastle Business School, Northumbria University, Newcastle upon Tyne, UK
e-mail: [email protected]

© The Author(s) 2020 13

J. A. Cunningham and J. Whalley (eds.),
The Internet of Things Entrepreneurial Ecosystems,
https://doi.org/10.1007/978-3-030-47364-8_2
14 B. SADOWSKI ET AL.

rate of patenting activity are unclear, the chapter explores why this may
be the case.

Keywords Patents · Technological disruption · Longitudinal analysis

2.1 Introduction
With the emergence of Internet of Things (IoT) technologies, conver-
gence in the information and communication technology (ICT) indus-
try is now affecting all sectors of modern economies. As convergence
mainly influenced ICT producing sectors in the mid-1990s (Katz 1996),
the effects of ICT on other sectors were less visible (Triplett 1999). In
contrast to ICT producing sectors, industries like agriculture or transport
actually lagged behind in the adoption of ICT in the 1990s (EITO 1999).
However, with the emergence of IoT, other sectors in the economy are
also expected to benefit from convergence (Rifkin 2014). Sectors being
slow to adopt ICT in the late 1990s are now at the forefront of ICT usage
with precision farming or autonomous driving providing a fresh impetus
for innovation in sectors like agriculture or logistics.
In the literature, a variety of definitions have been put forward to
address processes of convergence at the scientific, technological, market
or industry level (Karvonen and Kässi 2013). Technological convergence
refers to processes in which technologies are fusing or where technolog-
ical change leads to the fading of formerly distinct industry boundaries
(Curran et al. 2010; Karvonen and Kässi 2011, 2013). Technological
convergence takes place when advances in technologies in one industry
significantly influence or change the nature of product development,
competition or value creation in another industry (Karvonen and Kässi
2011). Technological convergence can spur industry convergence in
which new industry segments either replace traditional segments or com-
plement them at their intersection (Curran et al. 2010). As a result of
industry convergence, different forms of entry and patterns of growth of
firms can emerge. In contrast to traditional processes of path dependency
as discussed in the (Neo)-Schumpeterian literature (Arthur 1989), the
entry of companies can facilitate industry convergence. In the following,
industry convergence is defined as a process in which the emergence
of a new industrial sector is dependent on the strategies of incumbent
 2 THE PATTERNS OF GROWTH IN INFORMATION … 15

companies in a traditional industry. This definition allows for a focus not

only on incumbent but also on new entrant companies in the industry.
In the ICT industry, the blurring of market boundaries has been due
to the fact that various companies from different sectors have been able
to provide products and services with similar functions. In ICT manufac-
turing, industry convergence driven by technological progress has let to
supply substitution, i.e., an increasing number of products are based on
similar intermediate inputs and aimed at a similar product. In the cable
TV and telecommunication industries, digital transmission and switching
has replaced analog technologies in infrastructure provision (Xing et al.
2011). In contrast to supply substitution, industry convergence driven
by technological fusion has let to supply complementarity, i.e., a variety
of technologies have been combined to create new products and services
(Xing et al. 2011). For example, combining streaming and transmission
technologies from different companies to provide Internet access. In
other words, industry convergence in the ICT industry can lead to
processes of technological substitution or technological complementarity
depending on the characteristics of technological change.
Technological convergence based on IoT technologies leads to better
prediction (Agrawal et al. 2018). By using sensors to monitor and con-
trol users or machines, IoT technologies are able to generate data on a
large scale which can be transmitted via management platforms in order
to predict future developments of different systems (Zainab et al. 2015;
Trappey et al. 2017). In this way, IoT technologies can reduce uncer-
tainty and improve decision making. Based on a narrow definition, the
IoT sector can be considered as a layer accounting for search, navigation
and security activities within the ICT industry (Krafft 2010). In this lit-
erature, the focus is on the complementarity between the different layers
of the ICT industry (Krafft 2010). In focusing on the ability to better
predict developments of systems, however, a broader definition is appro-
priate that concentrates on IoT as enabling technologies for a wide range
of applications in a variety of sectors. In this respect, IoT is an emerging
industrial sector affected by technological change driven by new entrants
as well as existing incumbents in the ICT industry.
In order to examine industry convergence in the ICT sector, we focus
on the patterns of growth in the patenting of new entrant firms. In cases
where industry convergence is driven by supply substitution, patent activ-
ities will come from a variety of new entrant firms from different indus-
tries. If industry convergence is driven by supply complementarity, patent
16 B. SADOWSKI ET AL.

activities are more related to incumbent firms. An extensive literature has

emerged over the past twenty years linking patents to inventive activities
of companies (Kleinknecht et al. 2002; Hagedoorn and Cloodt 2003). By
examining the patenting activities of companies, predictions can be made
about the direction and the nature of technological change in an indus-
try (Karvonen and Kässi 2013). Patent statistics can not only be used to
examine the amount of technological knowledge generated, but also the
value of this knowledge. Despite some shortcomings of patent research,
patent data still provides an effective means of analyzing processes of tech-
nological development at the firm level.
In the following section, we first discuss processes of technological con-
vergence in the ICT industry. Section 2.2 develops a conceptual frame-
work for analyzing the industrial convergence at the firm level in terms of
entry. In Sect. 2.3, the entry levels of IoT companies in the ICT industry
are examined. Section 2.4 finishes in summarizing the main argument and
drawing some conclusion.

2.2 Technological Convergence in the ICT

Industry: the Role of IoT Technologies
Since the late 1990s, an extensive literature on convergence has emerged
focused mainly on the ICT industry (Katz 1996; European Commission
1997; Katz and Woroch 1997). Different forms of (scientific, technolog-
ical, market or industry) convergence have been distinguished according
to the stage in the innovation chain. As scientific convergence has been
based on the analysis of scientific publications, most research on tech-
nological and industry convergence has used patent data to study these
processes. Within the literature on market convergence, in contrast, the
emergence of new business models and user expectations has been central
to the study of these processes.
In general, processes of convergence occur in situations in which tech-
nological progress in one industry significantly start to influence the
nature of product development, competition and value-creating activities
in another industry. These processes are evolutionary by nature which
makes it rather difficult to distinguish whether these processes are related
to technological or industry convergence. Eventually in the process of
convergence a new industry segment will either replace traditional seg-
ments or complement it in merging with another segment. In case a new
 2 THE PATTERNS OF GROWTH IN INFORMATION … 17

industry segment will replace a traditional segment, the result of technol-

ogy substitution will be obsolescence of existing technologies and knowl-
edge. In case a new segment emerges as a result of the combination of
resources and competencies from previously separate industries comple-
mentary is the primary driver of convergence. The different types of tech-
nological convergence are affected by different forms of entry.
Firms will enter with new technologies in order to benefit from the
growth potential in markets. If convergence is based on the technology
substitution, the growth rate of incumbent firms will be low. If conver-
gence is rooted in technological complementarity, the growth rate of
entrants in the new market will be high. Convergence typically leads
to a shift of the basis for competitive advantage in terms of technolo-
gies and knowledge, as firms need to adjust their strategies depending
on the determinants influencing convergence. Traditionally technological
convergence has been addressed by using path-dependency view (Arthur
1988) which is rooted in the Schumpeterian tradition combining path-
dependency with diversification strategies of companies over time. How-
ever, technological convergence can also lead to merging of sectors as
discussed in the Schumpeterian literature on history friendly modelling
(Malerba et al. 2001, 2007).
Therefore, growing intra-industry diversity in patenting between
incumbent firms and new entrants (i.e., high growth of entrant patents)
is expected if there is technological convergence, or alternatively higher
patenting activities of incumbent firms compared to new entrants will
be observed if there is more cumulativeness in patenting (i.e., the path-
dependency view is valid). Cumulativeness or path-dependency is a funda-
mental property of innovative activities, while spillover can lead to tech-
nology diversification followed by product and market diversification. We
might expect growing intra-industry diversity in patenting, if the tech-
nological convergence hypothesis holds, or alternatively growing cumula-
tiveness in patenting, if the path-dependency view is valid.
In order to anticipate convergence, a time series of events have to be
analysed based on the definition of crucial elements of the underlying
technology. In a second step, it is important to include all relevant tech-
nological features in the distinct technological fields that cite each other.
In this way, it is possible to anticipate processes of technological conver-
gence even before full industry convergence will take place. In the follow-
ing, we use an evolutionary perspective to illustrate processes of industry
Another random document with
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glance shifted uneasily from the president to Redfern and back
again.
It was plain that the similarity between the overcoats had been the
means of losing the Colonel’s money.
After a short pause, Mr. Mosley continued:
“You made every effort to find the money which had been in your
keeping, and failed?”
“Yes, yes—but tell me—has it been recovered?” asked Redfern,
eagerly.
“Yes, I’m glad I can say that it has.”
Norman Redfern gave an exclamation of relief; his eyes sparkled
with pleasure, while Colonel Ellison stopped abruptly in his walk, and
stared down at him.
“Bully for you, Redfern!” cried Jack Lyons, enthusiastically. And
George Clayton slapped his former tutor on the shoulder, and shook
his hand warmly.
Pierre Dufour looked on in amazement, and murmured, “Ma foi,
what ees this?”
For an instant, Colonel Ellison remained silent. Then, clearing his
throat, he held out his hand.
“Redfern,” he said, frankly, “a man should always be willing to
acknowledge his mistakes. I ask your pardon for having wrongly
suspected you.”
“And I freely give it,” exclaimed the happy Redfern. “I will admit that
appearances were against me. But, Mosley, how in the world did all
this come about?”
“Well, to continue our story: I was, at the time, a professor at Ripley
and expected you, also, to join the staff. Unfortunately, President
Blackwell considered you—shall I say it?—guilty. And that ended
your chances.”
“Yes,” said Redfern, “I have been only too well aware of that.”
“But I had confidence in you; and was determined to prove that it
was well placed. I advertised freely, and——”
“You did?”
“Yes, sir! And in my spare time investigated to the best of my ability.
Nothing resulted, and I got a bit discouraged. But I don’t believe in
giving up easily. Several times, at intervals, I went back to the
restaurant, made inquiries and kept the matter fresh in their minds.
Then what should happen? A few days ago, I got a letter; and it
made me jump.”
“How can I ever thank you enough?” murmured Redfern.
“The man was a traveling salesman—only occasionally visited New
York—and did not again have a chance to go to the restaurant until
quite recently. But he was honest, and wished to find the owner of
the money. The proprietor told him to communicate with me.”
Redfern seized the other’s hand.
“Mosley,” he said, “I’ll never forget you for this.”
The president smiled.
“Well, my story is almost finished. I was about to write to Colonel
Ellison, in order that he might meet the gentleman and have his
money restored. The visit is most opportune, though I regret his
errand.”
“Think no more about it,” said Uncle Dan, hastily. “I was once a boy
myself; circumstances had a great deal to do with my feelings.”
“Uncle Dan,” put in George Clayton, “may I speak a word to you?”
“Well, young man, what is it?”
Briefly, George explained the whole story of his connection with the
house-boat expedition, and this time his guardian, in the light of
recent developments, listened and believed.
“You must understand, George,” he said, “though Redfern is not to
blame in the matter, you have acted in a most reckless and self-
willed fashion. We shall talk about it later.”
“I no comprehend, monsieur the Colonel,” exclaimed Pierre. “Ees
nobody any scamps, eh? Ma foi!”
“Shake Mr. Redfern by the hand, Pierre,” commanded the Colonel. “It
was all a misunderstanding.”
“If it hadn’t been for Pierre’s meddling, a great deal of trouble might
have been saved,” said George, half-resentfully. “He butted in, and
——”
“George—George!” cried Uncle Dan, “I must protest against the use
of such slang—such a lack of courtesy. Affairs have turned out
happily for all concerned; and this is no time for ill-feeling.”
“I guess you are right, uncle,” admitted George, frankly; and then
turning toward the chauffeur, he added, “Everything is all right.”
“All one grand mistake? Ma foi!” said the Frenchman, with the
corners of his mouth beginning to curve upward. Then, with a sly
glance at Colonel Ellison, whose stern countenance still showed a
trace of discomfiture, he extended his hand toward the former tutor.
“We shake hand, Monsieur Redfern,” he exclaimed. “I’m sorry I say I
would your face smack.”
“It’s all forgotten, Pierre,” laughed Redfern, cordially.
The Frenchman smiled broadly.
“A la bonne heure, Monsieur George!” he cried. “We are friends
again. But nevaire you say ‘fired’—‘fired’ to me.” And this time, Pierre
Dufour showed that his resentfulness was a thing of the past.
Norman Redfern presently slapped Jack Lyons on the back.
“Jack,” he said, “your house-boat trip has certainly resulted in
making a great change in the feelings of one young man.”
“And it will have a more substantial result than that,” put in Uncle
Dan, quickly. “I hope you will become George’s tutor again.”
Redfern’s features lighted up.
“Certainly—I shall be only too glad,” he began.
But President Mosley hastily interposed.
“One minute, Redfern,” he exclaimed. “Colonel Ellison’s offer is very
kind; but it might interfere with your professorship at Ripley
Academy.”
And when the true significance of his words was realized, a
tremendous volley of cheers rose on the air.
 CHAPTER XXIV
THE END OF THE CRUISE
President Mosley, accompanied by Uncle Dan, Redfern and Pierre
Dufour, entered the Academy building, while the boys wandered off
to the athletic field. The events, rapid and unexpected, and the
happy termination of the house-boat trip, had put everybody in the
best of humor.
The Ripley flag still floated proudly from the top of the pole. Bill
Stiles and his followers, hot, victorious, husky-voiced and tired,
marched around the field. They had won the second event, and
Ripley was crowned with glory.
Owen Andrews picked up his tin horn. It was now a battered and
twisted wreck.
Andrews looked at it sadly, put it to his lips, and, with a tremendous
effort, managed to draw forth a thin, dismal groan.
“Too bad it didn’t last for just one more blow,” put in George
Clayton.
“Why, Bill number one?” demanded Stiles.
“Because I intend to enter Ripley,” answered George, calmly.
The hoots, yells and jeers which this remark brought forth from the
Thorntons filled the hearts of the Ripleys with pure, unalloyed joy.
“I say, Joe Preston,” remarked Fred Winter, abruptly, “I knew it.”
“Knew what?”
“That you wouldn’t do a stroke of work on the history of our trip.”
“But I have; I wrote the heading. When I get home, I’ll finish it
sure,” laughed Joe. “Anyway, I have an idea.”
“What is it?”
“We’ll try to get the governor to put a bill through the legislature for
the state to buy the ‘Gray Gull’ and place it in a museum.”
“You silly thing! Do be serious.”
“Let’s see: there was the ‘Half-moon,’ the ‘Clermont,’ and now the
‘Gray Gull.’ I’m going to put that in my history, too.”
“One thing we came near forgetting, fellows,” put in Jack Lyons. He
seized Aleck Hunt by the shoulder. “How about that story of yours?”
“That’s so,” chorused the others.
“What story?”
“What story? Why, about Joe Archer and Battery Park, of course.”
“Oh, yes! Do you fellows really think I’m going to tell it now?”
“You bet we do.”
“Well, I put it in pickle some time ago; and the jar’s been left on the
house-boat. It won’t be taken out before I get a bite to eat—no
siree.” And Aleck backed away.
Joe Preston winked at the others; his grin grew to positively
enormous dimensions. Then he burst into a loud, long laugh.
“I wonder what we’re going to do next, Bob?”
It was Tom that asked the question.
“Well, Ramblers,” spoke up Jack Lyons, heartily, “we’ve had such a
jolly good time on this trip I should say we’d all better take another.”
“Hooray!” shouted his hearers. “That’s what we’ll do.”

Other Stories in this Series are

 THE RAMBLER CLUB AFLOAT
THE RAMBLER CLUB’S WINTER CAMP
THE RAMBLER CLUB IN THE MOUNTAINS
THE RAMBLER CLUB ON CIRCLE T RANCH
THE RAMBLER CLUB AMONG THE LUMBERJACKS
THE RAMBLER CLUB’S GOLD MINE
THE RAMBLER CLUB’S AEROPLANE
 Transcriber’s note
Minor punctuation errors have been changed
without notice. Spelling has been retained as
published.
The following printer errors have been changed.
CHANGED FROM TO
Table of “XXIII. THE “XVIII. THE
Contents: COLONEL IS” COLONEL IS”
“there was no “there was no
Page 105:
reponse” response”
“could gee “could get
Page 150:
together” together”
“assuming “assuming
Page 172:
definate shape” definite shape”
“became a “became a
Page 208:
confused blurr” confused blur”
““took their “took their
Page 302:
opponent” opponents”
*** END OF THE PROJECT GUTENBERG EBOOK THE RAMBLER
CLUB'S HOUSE-BOAT ***

Updated editions will replace the previous one—the old editions

will be renamed.

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