RUBINLAKE | Market Intelligence

Industrial IoT Application Store: The next big thing?

Maxim BabarinowOct 26, 202016 min read

An application marketplace is a digital distribution platform for applications, mostly used in the mobile context. All of us are familiar with Apple’s App Store and Google’s Play Store marketplaces. They show how flourishing the marketplace business is by providing a platform for developers to distribute applications to a wide audience. This potential has awakened the interest among the industrial space by combining it with the Industrial Internet of Things (IIoT), or the so-called fourth industrial revolution (Industry 4.0).

For reference, Apple’s installed base of unique devices has hit 1.4 billion, as announced by Apple CEO Tim Cook in January 2019 [1]. According to an analysis by CNBC, Apple’s App store had gross sales of around $50 billion last year [2]. Developers are assumed to have taken 70% or $35 billion of app sales, which resulted in about $15 billion in revenue for Apple. The payout to developers in 2019 was only 2.9% higher than in 2018. This indicates a significant slowdown in growth and indicates a market saturation. Apple’s market monopoly has also caused a current lawsuit brought by Epic Games in August 2020. Nevertheless, the huge amount of exclusively managed devices drives Apple revenues.

Meanwhile, industrial automation means software lifecycle management at scale. Dozens of Industrial IoT platforms with Edge Computing capabilities enter the market to provide the basis for this, reducing the number of manual tasks in the software rollout process. Companies can save the development costs of building their mechanics from scratch, and instead focus on their differentiating domain know how to create new business value. The question arises if an industry can create a cross-manufacturer open app store? Is the industrial application marketplace the next multi-billion business model or nothing else than an illusion, which will crash into marketplace silos?

In this story, I am going to present the use case “Industrial IoT App Store”, introduce a maturity level model, provide a requirements checklist, and discuss impediments that should be avoided when building an Industrial IoT application store.

Use Case “Industrial IoT Application Store”

The Industrial Internet of Things (IIoT) changes businesses and industries such as manufacturing, logistics, food and beverage, transportation, or power generation with smart technologies. The amount of IP-capable devices is constantly growing and so is the number of hardware manufacturers providing powerful edge computing capabilities. An Industrial Application Marketplace is an ecosystem that connects providers with consumers in a network economy. It has the functionality to distribute digital artifacts for industrial use cases in a consistent and secure manner to any industrial computing device, independent of the device hardware manufacturer. The marketplace generates new revenue streams for providers and gives additional business value to consumers. Consumers discover, purchase, and provision digital artifacts such as Docker images, VM images, extensions, application services, and datasets that complement and extend their application ecosystems. Application developers can sell and monetize their apps through this new sales channel, and the plant operator can buy and run them on their site to increase operational excellence.

In the mobile consumer world applications run on a specific operating system such as iOS (Apple) or Android (Google). In contrast, industrial computing devices have heterogeneous CPUs and operating systems that make it hard to provide hardware-independent applications. Edge device manufacturers often create their own tailored Linux distributions with the Yocto Project. We see devices with real-time operating systems or the Windows IoT Core. In addition to that, Docker is driving a disruption with the OS-level virtualization and “containerization” of software applications. Container images create a lightweight abstraction which isolates applications from the heterogeneous CPUs, operating systems, software versions, and environments in which they run. Docker enables software developers to run applications in the field in a modular way. They are thus independent from the OS and have IoT platforms to deploy and manage multiple distributed applications across any number of machines, physical or virtual.

Let us assume we put the Docker technology as a fundamental abstraction layer on every industrial computing device and combine it with an open-source application management engine which also communicates with the app store bi-directionally. Now we could unlock the development of a cross-manufacturer application marketplace. I expect that an open app store can generate a huge value for both producers and consumers by opening up the industrial market to new players and individual developers. This will allow innovative solutions and creative ideas to grow faster and create a diverse portfolio of apps, services, and data sets for any need.

But before we take a look at the market, I would like to introduce the three-level maturity model for industrial application marketplaces. It will help us understand and differentiate marketplace operators better. The maturity level represents the value created for producers (developers, service providers, etc.) and consumers (operators, maintenance engineers, etc.). The higher the level, the higher the total created value. The model defines the following three levels:

Level 1 | App Catalog: At this level, the marketplace provides an application catalog or the so-called “yellow pages”. The application catalog gives the consumer a searchable product catalog where products are linked to the specific vendor pages. The marketplace does not provide direct distribution of digital goods. This level requires a low investment by the marketplace operator. This approach delivers centralized discoverability with a low value for both producers and consumers of digital goods.

Level 2 | Closed App Marketplace: At this level, the marketplace directly extends the functions of a specific product family. Developers of software applications can offer their apps on the platform. Consumers can find, purchase, and distribute applications through the marketplace directly to their devices. This level requires basic functionality ranging from application discoverability, application provisioning, and up to a digital end-to-end ordering process. This creates higher value, and for some businesses, this level is enough to generate more business value.

Level 3 | Open App Marketplace: Marketplaces at level three are open ecosystems. Nowadays, the term open is often misused for ecosystems which, at a closer look, are only open to a specific company alliance, user group, or device family. At this level, the marketplace needs to be independent of the device manufacturer, the installed operating system, programming languages, or libraries used for applications. Consumers must be able to deploy applications over-the-air directly from the store onto their devices. All participants should be able to use open web services of the marketplace for end-to-end integrations with third-party systems. By meeting the requirements as discussed later in this story, marketplaces at this level can create the most value for both producers and consumers.

A Look at the Market

Volkswagen announced that it is going to open up the Industrial Cloud to other manufacturing and technology companies, working together with Amazon Web Services (AWS) and the integration partner Siemens. As a first step, it will enable eleven companies to connect with Volkswagen plants (https://www.industrialcloudhub.com) (1). Each location will be able to obtain new software for its machinery, tools, and equipment through an application marketplace [4]. BMW, another automobile manufacturer, is working with Microsoft on the Open Manufacturing Platform (OMP) and the BMW Group IoT platform [5]. There is no official information about how the app store concept plays into account at BMW yet, but we are sure that it will not go unnoticed.

Siemens, as a global player in the IIoT market, provides the Industrial Edge as an open ecosystem where in addition to Siemens, companies and developers can offer applications on the industrial store [8]. Phoenix Contact operates the PLCnext Store (https://www.plcnextstore.com) and allows developers to extend the functionality of PLCnext controllers. Festo operates the App World store with apps for the Festo Motion Terminal (https://www.festo.com/de/en/app). ADAMOS, an alliance of mechanical engineering companies, claims to release an app store in 2020 (https://www.adamos.com). Bosch Rexroth has opened its ctrlX Automation platform to support third-party apps [6], starting with 12 partners (2). Members of an another interest group, the Open Industry 4.0 Alliance are also pushing towards an application store, as the newly announced kick-off event suggests [7].

Microsoft operates the Azure Marketplace, where cloud applications can be deployed in an end-customer Azure subscription. One software category is especially interesting in the industrial context — the Azure IoT Edge Modules. The Docker-based modules enable users to deploy cloud workloads to run directly on IoT devices. The requirement is that devices operate the “IoT Edge Runtime”, which is open source. The complementary solution provided by AWS (Amazon Web Services) is called “IoT Greengrass”, and AWS also operates a marketplace with digital products to meet customer needs (https://aws.amazon.com/marketplace).

A detailed discussion of edge-computing solutions is a topic which deserves its own story. So, what we observe now is that vendors are opening up their ecosystems to third parties and starting to provide marketplace functionality.

  1. Volkswagen Industrial Cloud Partners: ABB, Amorph Systems, ASCon Systems, BearingPoint, Celonis, Cybus, Dürr, GROB-WERKE, MHP, NavVis, Siemens, SYNAOS, Teradata and WAGO.

  2. ctrlX Automation Partners: Schunk, Wittenstein, Forcam, Rhebo, Xitaso, MGA Ingenieurdienstleistungen, Future Fab, HD Vision Systems, Hucon, Mirasoft, Perfect Production.

Requirements for the Industrial App Store

In this section, I am going to provide a checklist of requirements for the implementation of an open application marketplace at maturity level three.

Requirement 1 | Device Certification: Customers need a confirmation that the applications they buy, do run on their device of choice. Device certification by the marketplace operator is required to ensure the compatibility between devices and applications. A transparent certification process with real-time communication to the manufacturers needs to be established. Manufacturers should be easily able to put their devices through the certification process and get instant feedback.

Requirement 2 | Application Certification: All applications and application updates need to pass a review process, similar to the device certification process. It is required to determine whether the provided application is robust, performant, secure, respects user privacy, and free from forbidden content. The marketplace operator should support developers with guidelines and resources to help them build quality products and go through the approval process smoothly.

Requirement 3 | Edge Device Diversity: The marketplace needs to support a broad range of devices. Devices can have various processor architectures (x86, x64, ARM, ARM64), operating systems (Custom Linux, Windows IoT, etc.), provide different connectivity interfaces or support for industry protocols (EtherCAT, PROFINET, OPC UA, Modbus, etc.).

Requirement 4 | 1-Click Deployment: The sheer amount of computing devices installed in the field requires the remote (or so-called Over-The-Air) deployment of software applications to a device fleet at scale. In contrast to the consumer world, it is not enough to install software by connecting locally to a single device. The software application should be deployable directly from the marketplace by targeting multiple devices.

Requirement 5 | Application Configuration: Applications often need a startup configuration. For example, in order to create a new container on a device, Docker needs to know which create options are applied. Running applications must be sometimes reconfigured. Therefore an application configuration needs to be supported.

Requirement 6 | Deployment and Application Monitoring: Deployments can fail across one or more devices. The App Store customer needs to know if the deployment was successful. Deployments to many devices are often long-running jobs. These jobs should give an overview of how many devices succeeded or failed the deployment. Applications can be misconfigured, contain bugs, and finally, stop working. Diagnostic logs must be captured from devices, in order to provide real-time status monitoring on thousands of hardware assets all across the world.

Requirement 7 | Application Licensing: Software development is a complex, time-consuming, and expensive process. Software piracy also results in major losses of revenue for tech companies, local governments, and it causes thousands of missed job opportunities. Intellectual property requires protection to govern its use and redistribution to eliminate illegal copies or improper usage. The marketplace operator must provide copyright protection and licensing mechanisms for applications.

Requirement 8 | Business Model Flexibility: Consumers and providers benefit from license flexibility and support of different payment methods. The marketplace must support different license models as for example, Free, Trial, Hourly Rate, Monthly Plans, Annual Plans, Promo Model, Usage-Based Licensing, or Bring Your Own License (BYOL). Another topic to consider is the re-use of licenses, only then deployments can happen without violation of the licensing agreements. Nowadays shoppers are accustomed to user-friendly payment methods like Credit Card, PayPal, or Apple Pay. Additionally, payments like invoicing or purchase on accounts are still popular in the B2B world. It is a challenge to bring both worlds together to provide a valuable user experience.

Requirement 9 | Seller’s Insights: Seller’s insights need to provide real-time sales dashboards to help sellers identify new demands, predict upcoming trends, and make better decisions. It should be easy to see the most profitable digital products, categories, or subcategories. Dashboards should not only visualize current sales, putting sales on a map, provide customer insights, but also predict the monthly or annual sales with sales analytics. The access to data needs to be instant without lacking behind a sales report. The seller must be able to view the current date, the entire week, or historical data with charts to drill-down into sales data.

Requirement 10 | Multi-Country Support: The ability to reach out to new customers through their local languages, currencies, and payment methods is essential for building meaningful experiences for a global audience and accelerating global growth. Therefore, it is required that the app store supports a multitude of languages with a possibility for store operators to translate their storefronts.

This checklist is not complete and can be easily extended with more topics for consideration: single location with an integrated and consistent experience, high discoverability, on-demand service, application deployment rollback, third-party authorization, partner management with reseller and referral options, promotions, community functionality with reviews, comments, and rankings, integration with financial accounting, and support.

Challenges to overcome when implementing an Industrial Application Store

It is important to understand the major challenges of implementation and adaption of the store initiative, in order to develop efficient strategies to cope with them proactively.

Challenge 1 | Missing Network Effect: One of the biggest challenges for a marketplace is that both buyers and sellers have to use the platform on a regular basis. The paradox is that you need a continuously new generated supply in order to have sufficient demand on the platform. At the same time, you need to create demand in order to have supply . However, when the network effect takes place, it is hard to compete with a network of buyers and sellers. The entire network becomes more valuable when more people use it because users benefit from each other.

Challenge 2 | Missing Application Licensing: The marketplace needs to support a broad range of devices built by independent manufacturers. This implies that the licensing of the software cannot depend on binding with the host operating system or hardware identifiers to ensure strong protection. Security technology providers for software protection are currently not ready to support strong Docker container licensing mechanisms.

Challenge 3 | Vendor Lock-In: Shoppers can install software on their devices directly from the store. This implies a binding between the shop service and the device itself. Additional requirements, such as application configuration and monitoring need even deeper integration with a cloud gateway, to provide a reliable bi-directional communication channel between the cloud application and the devices. Therefore, the device becomes bound to the shop system, pre-installed software agent, and internet connection.

Challenge 4 | Missing Global Cooperations: Today, cooperations typically take place between partners defined by customer/vendor relationships, enforced through market power. A central industrial app store requires global cooperation between partners to create a truly open marketplace for device manufacturers, IoT platform providers, and application developers, avoiding vendor-lock and generating the most value for all participants.

Challenge 5 | Missing Business Models: The industrial app store is s a two-sided digital business model, where two sides are participating in a transaction. In order to create enough motivation for partners to participate in the marketplace economy, the generated profits need a fair distribution. The most popular business model is based on charging commissions for every transaction. A few equipment makers are charging ahead with disruptive models offering Machine-as-Service (MaaS) models, which require the support of recurring subscriptions and usage-based billing.

Challenge 6 | Lack of Trust: Many app consumers like OEMs and Plant Operators have security, privacy, and data ownership concerns. With edge devices connected to a marketplace, there is a higher risk of data theft, a higher risk to inject malware, or to misappropriate use of data. Marketplace operators should invest a lot of effort to prove their authority. Will the marketplace participants trust you as a centralized marketplace operator?

Summary and Outlook

IT service providers, OEMs, PLC manufacturers and machine builders are working towards the open app ecosystem with over-the-air software updates for Docker-based applications. Despite the big potential, the current marketplaces seem to have a hard time bringing the app store business model to life. The number of offered applications, number of downloads, number of users, and diversity of supported hardware providers is still low.

In order to create the most value for marketplace participants, it requires an open marketplace solution at the maturity level three, which implies big investments to meet basic requirements and solve current challenges. The question is how open will these ecosystems be for device manufacturers, IoT platform operators, application types, and other market participants? There is a clear need for the global standardization of over the air updates, licensing, usage metering, and authentication interfaces in order to avoid marketplace silos. As I am very interested in all developments on this topic, I will keep you updated with the significant news on the Industrial IoT App Store topic.

References

[1] MacRumors, Apple Now Has 1.4 Billion Active Devices Worldwide, Jan. 29, 2019, https://www.macrumors.com/2019/01/29/apple-1-4-billion-active-devices

[2] CNBC, Apple’s App Store had gross sales around $50 billion last year, but growth is slowing, Jan. 8, 2020, https://www.cnbc.com/2020/01/07/apple-app-store-had-estimated-gross-sales-of-50-billion-in-2019.html

[3] TechCrunch, Epic’s latest argument in its fight against Apple keeps antitrust issues front and center, Okt. 28, 2020, https://techcrunch.com/2020/10/25/epics-latest-argument-in-its-fight-against-apple-keeps-antitrust-issues-front-and-center/

[4] Volkswagen Group News, Volkswagen brings additional partners to Industrial Cloud, Jul. 23, 2020, https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-brings-additional-partners-to-industrial-cloud-6258

[5] Microsoft News Center, Microsoft and the BMW Group launch the Open Manufacturing Platform, Apr. 2, 2019, https://news.microsoft.com/2019/04/02/microsoft-and-the-bmw-group-launch-the-open-manufacturing-platform

[6] Konstruktionspraxis, Automatisierungsplattform Ctrl X öffnet sich für Partner, Sep. 20, 2020, https://www.konstruktionspraxis.vogel.de/automatisierungsplattform-ctrl-x-oeffnet-sich-fuer-partner-a-967712/

[7] Open Industry Alliance 4.0, OWL Machienenbau, SmartFactoryOWL, Kick-off: Industrial APP Marketplace, Nov. 20, 2020, https://www.eventbrite.de/e/kick-off-industrial-app-marketplace-tickets-126375936829

[8] Siemens Industrial Edge, http://siemens.com/industrial-edge

Maxim Babarinow
Founder, CEO