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Business Creation: How to grab yor share of IoT?

Everything is connected

 

Whilst the Internet of Things has been widely hyped in the past few years and organizations have been actively launching programs on utilizing this phenomenon, still the commercial value is widely underachieved. According to a research by Capgemini, 70% of organizations do not generate service revenue from their IoT solutions.

Cisco has estimated that IoT has a potential to generate $19 trillion of value over the next decade. It is no wonder that companies are prioritizing their efforts on grabbing a chunk of that price.

In a survey of senior business leaders, 68% said that their companies have already invested budgets on IoT utilization, while 96% stated that they will be charting IoT advantages and possibilities in the next 3 years.

As we all know, there are major business opportunities in IoT.

BUT, how can we really grab a hold and make money out of it?

 

“Put a chip in it, obviously”

The most basic monetizing model lies within the connectivity. A trend to offer hardware with premium functionality has been rising in last few years, as smartphones and tablets have become increasingly more popular. One of the latest “big-buck” products in IoT is Nike’s new self-lacing shoes, which are controlled via mobile app. Additionally, they have actually limited the product only for app-users.

Another example could be Phillips with their premium, remote-controllable light bulbs. These bulbs require the use of a freely available mobile app, through which the user can change the hue and brightness of the light remotely.

These products come of course, with premium prices and can be easily 10 times more expensive than their “dumb” counterparts.

 

Connected services = Customer engagement

To sell a service along with the product will create recurring revenue stream as well as long-term customer relationship, even after purchasing the product itself. For example, Audi offers subscription billing based service for new car owners, which provides all kinds of delicacies to users. From WiFi hotspot and Google Street View to fuel prices and car locating.

Nexia Home offers its users peace of mind by providing security and monitoring services, once again, through mobile app. With the company’s products the user will be able to lock or open doors, monitor thermostats, adjust lights, even stream from security cameras. The service is based on monthly fee plus intelligent connector purchases.

 

Knowledge is power, and in this case, money!

Data acquisition opens opportunities for a scale of companies. The ability to gather, sort and sell the vast amounts of generated sensor data opens up a potential monetization model. Once the data created by the IoT devices has been aggregated and anonymized, organizations can benefit from it by package insights or just by utilizing it for advertising. For example, Michelin generates insights by sensors embedded to customers vehicles, and companies can buy this data to achieve various goals including cost and carbon reduction.

 

Ecosystemization

The devices and things in IoT aren’t really working by just connecting them with each other. The Internet of Things only exists in the ecosystem to which it has been connected. And obviously, the bigger the ecosystem, the bigger the possible value derived. When thinking of ecosystem, the objective is not to sell a product or a service – but to provide shared platform to the players in the field, such as manufacturers, service providers and software developers. The ideal situation with this kind of model is to achieve revenue from customers and platform users.

As an example, one could view software marketplaces. The marketplace users would pay for listing and the promoter would additionally get a share of sold copy or share of the monthly fee, in case of SaaS.

Even though the battle for the kingdom of IoT has already started and new competitors are established to the field continuously, only a fraction of the business models have been utilized so far. The IoT is a fertile ground from which also traditional organizations can find unprecedented opportunities. But what will become out of this huge wilderness presented to us by connectivity?

 

Once companies start to fully exploit the possibilities, the rewards can be phenomenal and truly worth the wait. To make sure your business is prepared for the opportunities, it is extremely beneficial to have a professional digital services growth platform, to enable satisfactory end-to-end (self-)service with immediate response, robustness and scalability - in both service activation and monetizing. 

 

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