Nokia announces 'Data Marketplace' for IoT data exchange

Omdia view

A new IoT data exchange offering

On 5 May 2021, Nokia announced its 'Data Marketplace,' comprising a blockchain-enabled IoT data exchange as-a-Service offering. The service is intended for both enterprise and connectivity service provider (CSP) customers. Nokia’s customers can either use the capabilities of the Data Marketplace for their internal use (with partners and ecosystem stakeholders), or white label the Data Marketplace from Nokia and offer it as a service to their own customers. The Data Marketplace enables key use cases including increasing operational efficiency and ecosystem coordination, monetizing enterprise data assets safely, and training AI/ML algorithms using Data Marketplace-supplied data sets.

Data exchange is the next stage of IoT market evolution

A data exchange primarily enables two or more organizations to exchange data with each other. (This exchange could also be internal, however; for example, between two units of a large corporation.) Key functions of a data exchange are data exposure, discovery, entitlement, and, potentially, monetization.

Data exchanges are used today in diverse, non-IoT markets such as online ad exchanges, credit scoring exchanges, and in the travel booking industry. Data exchanges are at a nascent stage of development in the IoT market, but Omdia regards data exchanges as the next logical step in IoT market evolution.

The current model of IoT application deployment typically involves an enterprise deploying its own sensors into the field and arranging for the communications infrastructure needed to bring data from those sensors into compute infrastructure for analysis and action. This model is inherently hard to scale. It’s as if, in the mobile app industry, every app developer had to sell its own phones. Widespread use of data exchanges would enable much easier market entry by IoT application developers and enterprise adopters, who could leverage data coming from a variety of third-party sources, rather than having to rely only on the IoT data they could generate and gather directly.

Nokia’s announcement underscores principal use cases for an IoT data exchange: increasing operational efficiency and ecosystem coordination, and monetizing enterprise data assets safely. However, Nokia also highlights what has, heretofore, been a niche use case: the supply of training data sets for AI/ML algorithms. (Current deep learning methodologies require very large data sets to train the algorithm to develop the desired functionality.) While Nokia is not the only data exchange provider to surface this capability, the announcement shows the growing confluence between IoT and AI.

Nokia joins a growing list of major ICT providers entering the IoT data exchange market

Nokia is joining a relatively small but growing market of IoT data exchange providers. Many current providers are smaller startups focused on the IoT data exchange opportunity. Many other providers are major ICT solution vendors. Among the latter are AWS, Deutsche Telekom, HERE Technologies, HPE, SAP, and Schneider Electric.

The IoT data exchange market is developing along both specialist and generalist tracks. For example, some providers, like Caruso Dataplace, HPE, IMS, and Otonomo, focus on the automotive data exchange market, which appears to be a key market gaining near-term traction for data exchange. Other providers, including Nokia, take a more generalist approach in enabling IoT data exchange across many different vertical markets and applications.

While vertical-specific IoT data exchange is gaining traction, specifically for connected car, smart city, industrial automation, and smart agricultural use cases, more generalist uses for IoT data exchange are at an extremely early stage of development. Important questions regarding standardization and provider business models remain to be answered for data exchange outside of narrow, specialist markets.

Blockchain and other distributed ledger technologies (DLT) are emerging as a preferred technical approach to decentralizing generalist exchanges and facilitating smart contracts and automated micropayments for data. While not all providers have joined Nokia in taking this approach, Omdia does expect blockchain/DLTs to feature prominently in IoT data exchanges in the future.

IoT data exchange providers should start from a defensible niche, and grow from there

IoT data exchange is complex, from both a technical and business model perspective. Providers should identify a defensible niche position from which to start and grow from there. A niche position might be a focus on one of the specialist areas mentioned above (connected cars, smart cities, industrial automation, and smart agriculture), or it could be in facilitating the adoption of IoT data exchange functionality by a specific segment of the IoT value chain.

Nokia is very well-positioned particularly for this second approach, specifically with respect to its deep relationships with the global CSP community. Most CSPs are trying to move up the value stack and avoid becoming commoditized as proverbial “dumb pipes”. Given CSPs’ central role in facilitating the movement of data, it stands to reason they could carve out a position for themselves as exchange providers and data market makers. Nokia’s Data Marketplace could be a welcome white label solution to address this strategy.

From an IoT value chain segment competitive standpoint, it’s not yet clear that CSPs will be better positioned than cloud hyperscalers as the natural providers of IoT data marketplaces. While CSPs fill a natural role in moving data, hyperscalers like AWS, Google Cloud, and Microsoft Azure, are growing increasingly important as the data repositories and compute infrastructure of the world. If most data are flowing into the cloud, it’s logical to assume data exchange could happen easily here, and this may be an even better solution than relying on CSPs to move exchanged data around.

Regardless of how these trends evolve, Nokia’s announcement is an important marker in the ground of IoT data exchange and a sign of the growing importance of data exchange for IoT applications.

Appendix

Further reading

IoT Application Enablement Platforms Report – 2020 (December 2020)

Author

Sam Lucero, Chief Analyst, IoT Services & Technologies

[email protected]