“Internet of Things”, if Kevin Ashton had it to do over again, he might choose a more descriptive name. It’s a vague, amorphous term that doesn’t do much to demystify a network of products equipped with embedded sensors, on-board processors and some means of communicating the data they collect with the user and or manufacturer of the product, a central system or similarly enabled products.[1] The possibilities these connected products herald correlate directly with their ability to collect and transmit data about the product, the product’s operating environment, product usage and the customer. The data facilitate a number of interesting business models the most promising of which include subscription, custom products on demand and IoT data monetisation.2
The subscription model is currently being used successfully organisations like Rolls Royce Engines with their High-Flying Platform-as-a-Service and Google Nest with their Learning Thermostat. Under this model customers pay a fee for some type of ongoing service associated with the product: typically, some form of monitoring as a service, or predictive maintenance as is the case with the Rolls Royce Engines.[3] This model allows an organisation to build ongoing relationships with their customers while collecting data about their product usage that allows for mutually beneficial future upgrades.
Custom products on demand is a service used in combination with additive manufacturing wherein product customisation and personalisation is facilitated by machine vision and other IoT sensors capturing measurement or other data and generating specs. MTailor, BMW and STYR Labs all leverage this model to provide personalised products to their customers.[4]
Finally, IoT data monetisation is essentially selling the data you collect onto a third party. Insurance companies for instance might purchase data from a car manufacturer to give them insight into driving patterns.[5]
While the
business models are promising, the technology still has some issues. Currently
there’s little or no standarisation in the industry which makes the technology
difficult to scale. [6]
There’ve even been circumstances where manufacturers have only found out after product
launch that the chipsets in their embedded sensors were incompatible and their
products couldn’t communicate with one another. There are also issues with a lack
of suitable expertise in the industry, the complex nature of most IoT projects
and the data transmission requirements and the capacity of current networks,
though that particular issue should be addressed by the rollout of 5G connectivity
later in the year. Still IoT is an exciting technology and opportunities abound
for entrepreneurs with a vision and a plan.
[1] Porter, M E & Heppelmann, J 2014, ‘How smart, connected products are transforming competition’, Harvard Business Review, November, pp. 1–23.
[2] Elizalde, D. (n.d.). IoT Strategy for Product Teams: 7 IoT Business Models That Are Transforming Industries. Retrieved 04 30, 2019, from Daniel Elizalde: https://danielelizalde.com/monetize-your-iot-product/
[3] Forbes Insights Team. (2018, June 27). How IoT Is Spawning Better Business Models. Retrieved from Forbes: https://www.forbes.com/sites/insights-inteliot/2018/06/27/how-iot-is-spawning-better-business-models/#6808d8c15984
[4] Ibid.
[5] Elizalde, D. (n.d.).
[6] Travers, J. (2018, November 14). IoT as a Service: A new business model? Retrieved 04 20, 2019, from Ericsson: https://www.ericsson.com/en/blog/2018/11/iot-as-a-service-a-new-business-model