It is predicted that there will be over 80 billion sensors in connected devices by 2020. There also will be 100 million viral connections added per minute. Both the explosion of connected devices and the interactions created will result in massive data streams and new opportunities for brands and organizations from the Internet of Things (IoT). More importantly, IoT trends will greatly affect companies and their supply chains, adding efficiencies to a wide array of processes as well as creating new business models.
From hardware to software and even networks, IoT plays a major role in business model transformation. Market leaders see IoT as a means of enabling devices to provide insight and improve context in interactions. The goal is to take the real-time data stream and apply right-time contextual relevancy.
From the last article, we looked into another five best practices (which combines to ten best practices) to form partnerships in IoT which are:
- Define and Prioritize Specific Partnership Outcomes Upfront
- Drive Accountability Across All Levels
- Build and Maintain Relationships at All Levels
- Align Solution Releases with Each Other
- Continuously Invest in the Partnership
- Finding and creating joint value
- Planning ahead of changes
- Striving for quality
- Prioritize new market opportunities
- Developing “ecosystems thinking”
In this article, we look into the Five Interconnected Internet of Things Business Models which providers of IoT products and services are expected to enter the market in one (or multiple) of the following business models. CXOs entering the IoT should start solidifying the partnerships required for their businesses to thrive in IoT.
Level 1: Sensors and connectors provide the hardware required to start the revolution
IoT requires a layer of hardware to actually connect devices and data sources. Large capital expenditures and traditional manufacturing processes characterize this space. The connected vehicle space is anticipated to drive demand in this area of IoT.
Level 2: Engineered stacks emerge as the norm
Moving forward, companies will design their products with IoT connectivity embedded. Stacks inclusive of all the technology required for a product to operate in IoT will emerge. Think of the smart vehicle and all the technology required to operate in IoT as a “stack.” The biggest challenge for these stacks will be creating alliances and partnerships between the network service providers and the vertical technology providers.
Level 3: Insight platforms bring relevant context to IoT
The much of value of IoT derives from the ability to connect data sources. Insight platforms will deliver insights derived from data pools. Working alliances must be forged across different data sources in order to provide customers with a complete analysis.
Level 4: Brokers create new markets for IoT insights
IoT data merchants will soon emerge to sell data derived from IoT much in the same way Bloomberg, Thompson Reuters, and Nielsen sell data about information such as point-of-sale data.
Level 5: Networked ecosystems bring diverse stacks together to create massive opportunities
Large corporations such as General Electric and Siemens are striving to create and monetize large ecosystems built on IoT. Think of a connected city where the power grid, water, roads, communications, and public services are all connected.
This is the zenith of the IoT business model ecosystem as the feasibility of the networked ecosystem relies on the successful operation of the four other IoT business models. Players in this space are most probably to be large corporations that align closely with governments.
Software-based Business Models and Solutions for Success in IoT
A bevy of technologies is moving at warp speed to rewire how businesses are structured and operate, altering business models. Cloud computing, embedded and mobile applications, and streamlined financial processing are just the beginning. Companies will increasingly turn to device manufacturers and software developers because success will increasingly rely on software-based business models and solutions.