One of the things that's needed for the Internet of Things to take off is for companies to be able to profit from it. So monetization is an important topic. Here are some tips.
An October 2013 report from the Economist Intelligence Unit, commissioned by ARM, found that three out of ten business executives think that the Internet of Things will be able to give their companies new revenue opportunities even when they are working with existing services and products. More than two out of every ten think that the IoT will bring them innovation. Around the same number of respondents think the IoT will force them to revise their existing business models and strategies.
The Economist study involved more than 750 senior-level business leaders, close to 50% of them C-level. These respondents know what they are talking about. The report shows that not only are business leaders expecting that the IoT be monetized, they also expect it to bring in new products and services to the current ones they are offering. Also, it is not only changing their business strategies, but also becoming more and more pervasive as far as daily conversations are concerned. In fact, the study has found that around 40% have at least monthly meetings that touch on the IoT, and another 32% are talking about it every six months.
It is expected that the IoT will be worth billions in the next few years. For example, connected cars are seen to grow into a $54 billion industry by 2018, and the smart lighting market will be a $6.7 billion industry that same year. Home automation will represent a $45.6 billion industry in 2016, while smart appliances will comprise a $5.4 billion market in 2015. By 2020, the number of Internet-connected devices will range from 24 billion to 50 billion.
And this is where the problem lies with monetizing the Internet of Things. Because of the potential to hit big, a lot of companies are coming out with products and services that are admittedly not a great example of usefulness and innovation. Some are copying what others have stumbled upon. For example, wearable tech is churning out copycat after copycat of smartwatches that basically offer nothing new when compared to the first companies to come out with their own smartwatches. This, while others are coming up with products that simply do not have practical use beyond wowing their potential customers. In short, these products are riding on the popularity of the IoT without really having any value.
Another problem that plagues IoT, in general, is that it includes a wide range of technologies where it is difficult to identify ways to use and monetize them with current products. Also, the IoT is not meant to be an all-encompassing solution that would solve a variety of problems; instead, it works really well for focused solutions, solving one business process or problem at a time.
So how do you go about monetizing the Internet of Things?
Make sure that your product is interoperable. Without making sure that your product is compatible with what's already out there, you might as well operate in a silo. Think of it as an island where you are the only person. If an IoT product or service is narrowly focused to solve a specific problem, that could mean that you would have a product of limited functionality and use. But by ensuring that your product is compatible with other systems, you would be able to use these to extend the usefulness of your own product.
Make use of the data you have gathered. All sensors and devices will be able to gather data that could give you a lot of insights as to how your customers are using the IoT. That can tell you more about the features they use, or the types of data they are more interested in. But all of that data is useless if you do not provide a meaningful way for your customers to digest it. For example, sensors in a fitness device will be able record the number of minutes and intensity of your exercise, steps taken, and everything relevant to fitness. Users, however, will not be able to make use of these if you do not provide them with apps that could effectively process this data and give them the information they need in a convenient and easy way. If you want to monetize the Internet of Things, it is not enough that you come up with an idea for a product that sells, but you also need a way to give customers and users the information they want without having to work too hard for it.
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