The latest generation of innovation in Taiwan's IT industry has been focused on the Internet of Things (IoT) and it is safe to say that IoT is the most popular term in Taiwan's IT industry currently. First-tier chip players, software platform designers and solution startups have all invested enormous resources to participate in the trend.
Taiwan's information communication industry has a strong foundation, while its electronics ODM abilities are also well known around the world; therefore, it is hard to imaging Taiwan IT players being absent from the new world of IoT that is marked by everything being connected. Look at any IoT-related industry alliances and you are sure to find a host of Taiwan IT players, an example showing the high passion local Taiwan maker have for taking the lead in the IoT market and keeping up with the latest IoT trends.
However, from the perspective of leading international technology giants, IoT is valued from the perspective of big data analysis, new business models and brand power instead of ODM ability, which is the area where Taiwan IT players are at their best. Although these first-tier players still seek assistance from Taiwan ODM/OEM service providers, as they need to satisfy time-to-market demand. But after outsourcing their orders to Taiwan makers, they tend to give the follow up orders to China-based OEM makers in Shenzhen, China, as working with the China makers helps further lower overall costs. In the IoT era, pure hardware manufacturers can be easily replaced.
Cloud Computing Technologies and Smart Applications: Two keystones for Taiwan IT players to achieve success
Microsoft established the Microsoft IoT Innovation Center in Taiwan in 2016. In a recent interview, Cathy Yeh, principal PM Manager of Microsoft Cloud + Enterprise Product Group and Internet of Things Innovation Center, pointed out the dilemma that Taiwan IT players have been facing. Yeh further noted that the IoT era focuses mainly on small-to-medium-volume production, but in a variety of manufacturing processes and design ability that create differentiation and therefore, Taiwan IT players will need to have high customization and integration abilities or they will not stand a chance in the new competition.
Yeh pointed out that success can be achieved through key partnerships and she is rather optimistic about the combination of Taiwan's ICT players with Microsoft and its core technologies including for cloud computing, data analysis platform and cognitive service solutions. Yeh believe this integration will become an important keystone for Taiwan's IT industry to cross into the IoT arena and take a leadership position. She noted that the most urgent areas where Taiwan IT players require support is for extending their coverage of cloud computing technologies and increased diversity in their business models through the development of unique new solutions. To put it simply, Taiwan players need to be connected with the latest developments in cloud computing technologies and need help to deploy smart applications. Microsoft's IoT Innovation Center in Taiwan is able to provide core technologies and services covering cloud computing, big data analysis and deep learning areas.
Currently, Taiwan IT players including OEMs, ODMs, embedded device players, system integrators, independent software designers, startups and R&D institutions, have all expanded their cooperation with Microsoft to build open IoT platforms and application solutions, noted Yeh, while adding that her observation showed that Taiwan's IT players have been aggressively investing in IoT technology development in the past two years. But players are having a hard time controlling the pace of product development and lack knowledge of the end user experience and market familiarity. As a result, they have seen a practical return far weaker than expected. These players are already used to the strong performance and growth generated by the large-volume OEM/ODM business model, which has created a mindset that is not willing to accept of the new business model required for success in the IoT area, resulting in weak returns for their IoT business and raising concerns throughout the local industry.
Service-oriented design model to become road to success
Among Taiwan's IT players, industrial PC (IPC) makers are participants that had performed rather well under the wave of IoT industry development as they are used to focusing on small volume production, but the variety of design has always been the business model for the IPC industry. However, to avoid fierce competition from hurting their high margin advantage, IPC makers need to have support from Microsoft when it comes to software. Using Microsoft's advantages in cloud computing for smoothly connecting various devices, especially when it comes to the large-volume of terminal device, IPC makers will be able to place their cloud computing management system at any of Microsoft's cloud computing centers worldwide to satisfy their needs over regional integration and overseas lineup planning, allowing their products to be sold worldwide.
It does not matter if it is an Industrial IoT or automotive-use IoT application, through Microsoft's cloud computing and smart services - integrated with big data analysis such as data buildup - IPC makers have been establishing their own vertical-integrated IoT platforms, which are solution-based platforms tailored to their own unique architecture. After adding more value-added service modules into the platform, they can quickly create services that satisfy all kind of requests from clients. The software-hardware-integrated solution will be able to produce even more new sales services in the future with a business model that combines hardware bundled with software, and this not only will become a product chain with unique value, it also makes it difficult for competitors of IPC makers to copy their success, thus increasing their core competitiveness.
Yeh further pointed out that IPC makers are developing IoT product packages to provide a service-oriented design model based on cloud computing management combined with terminal devices, but assisted by the diversification and customization of value-added services. This will ensure the profitability of the solution and is a demonstration of a successful business model for Taiwan's ICT industry.
As for Taiwan's small-to-medium-size enterprises, Microsoft has adopted another business method. Since these enterprises may not even have the most basic automation but still have an urgent need to transform due to increasing labor costs, most of them have then adopted smart manufacturing business model. To help these enterprises quickly enter into the IoT application sector, Microsoft has integrated partners from areas including smart machinery, ERP vendors, the IoT ecosystem and industry consultants, to create an alternative version of its service-oriented design model and product packaging. The same business model can also be extended to applications such as smart shopping marts.
Microsoft hosting IoT Expo, building a bridge connecting application technology and worldwide market expansion
Yeh noted that Microsoft's establishment of the IoT Innovation Center in Taiwan in 2016 was not only meant to encourage the ecosystem to make IoT devices that are certified by Microsoft, but also looking to participate more aggressively in integrating the ecosystem, helping connect enterprises and creating business opportunities.
On October 13 and 14, at Taipei's Hua Nan Commercial Bank Corporate Plaza's International conference hall on the second floor, Microsoft will host the Microsoft IoT Expo 2016 in Taiwan, inviting its IoT partners from different countries and regions to visit Taiwan.
Using the opportunity of the Expo and through sharing and demonstration of new technologies in practical applications, Microsoft is hoping to bring Taiwan's ecosystem in touch with viewpoints from other markets and realize the business opportunities from the worldwide market for fields including smart city, smart manufacturing, smart retailing and smart life (family and medical).
MIT x Microsoft x Institute for Information Industry driving infinite possibility when cognitive technology meets Smart Cities
In this Expo event, Taiwan's Institute for Information Industry has co-developed with MIT Media Lab to demonstrate the application of persuasive electric vehicle (PEV), a future personal transportation vehicle designed using Microsoft's artificial intelligence-related technologies. With its advanced innovative service design and application, Microsoft's cognitive services and different application programing interfaces (APIs) to provide the system with computer vision, emotion, face detection and video processing standards, the PEV is able to process the smart personnel transportation application in a populated metropolis area. Since the project has been benefited from Taiwan's strong manufacturing advantage, even the key member of PEV projects Mr. Michael Lin is also a Taiwanese Ph.D. student at the MIT Media Lab, it is a successful example of Taiwan IT players' entry into the smart transportation field to strife for future transportation vehicle business opportunities.
While Taiwan is aggressively seeking a land of theirs in applications such as car-use IoT, smart transportation or smart city, the example of PEV combining with Microsoft's technologies will provide the country an even wider future and infinite possibilities.
The innovations we see from the IoT application are like IoT pioneer Kevin Ashton's book in 2015 said that are not relaying on the arrival of the Eureka moments. Creating innovations has no shortcut and what it needs is the repeated process of finding problems and solving the problems. Taiwan's ICT players during the process of creating IoT innovations need to find the road of success by adopting an angle of "learn while in the process" and if they wish to observer how international technology giants' interactions with industries and how they establish technology and business bridge, they are welcome to visit The Microsoft IoT Expo 2016 hosted by Microsoft IoT Innovation Center in Taiwan.
Hector Garcia Tellado, Microsoft senior program manager, describes the IoT certification program for Taiwan partners.
The brand new office of the Microsoft IoT Innovation Center is located in the Taiwan Cathay Landmark Tower. With several research labs established, Microsoft is speeding up Taiwan's IoT development.
