Fragmentation == Opportunities
I reckon that I don’t need to make an introduction about the Internet of Things because there are enough resources out there to explain what it is and also the opportunities around it. Thus far the market seems highly fragmented as there are a number of players operating within the IoT space without directly competing. This condition typically appears for new business or market during its nascent stage. Competition usually heats up as the market develops and matures. However the key differentiator for a successful company is to identify the market opportunities early on by being “customer-obsessed” to the point that solutions would encompass many stages within the IoT ecosystem. Such are the opportunities that lie within the IoT value chain.
The Internet of Things (IoT) solutions are very fragmented, they are either custom and unrepeatable or incompatible with existing infrastructure, with incomplete and unprotected data access and insights. Fragmentation is both a challenge as well as an opportunity. This blog post describes how a typical IoT vendor be it a device manufacturer, solution provider or system integrator can move up the IoT value chain by taking advantage of these fragmentation opportunities and offer a proposed solution in the form of an IoT Services Platform to its customers and partners.
The goal is to ensure that your company becomes the device manufacturer or SI of choice among customers and every player within the IoT value chain. More players are anticipated along every stage in the IoT value chain. IoT players would have a healthy relationship of collaboration, competition and dependence on each other along the value chain. Customers are highly dependent on data, information and insights. The success criteria is fast time to market, repeatable IoT vertical solution that meets customers’ business objectives.
Tremendous value could be realized from the following simple chevron process:
In the following examples, I am painting the picture of how an IoT device or module manufacturer can provide value in each of the process above.
- Be the de facto module/device manufacturer by helping new entrants achieve faster time to market, be it a managed services company, a cloud platform IoT provider or a CRM/Big Data analytics company. This promotes dependence on your modules and devices. Successful partners would influence the sales of the modules and devices.
- Provide a modular approach to helping these new entrants build their customised IoT vertical solutions using your IoT Services Platform. Basically avoid reinventing the wheel and allowing more time on product and solution innovation. Overall this is all part and parcel of building a healthy IoT ecosystem.
- Upsell consulting and premium support services to System Integration partners who require help, guidance and support to integrate with the IoT Services Platform.
- Architect the IoT Services Platform as a gateway of telemetry collection being able to process large-scale telemetry data streams generated by the devices and hardware developed by yourself, but beyond that manage other devices and services too.
- Data is not the only raw material being unlocked by the IoT it is also the ability to perform command and control of devices.
As a result of taking advantage of these opportunities
- Recurring revenue through a subscription model.
o E.g., a vertical IoT software platform partner can subscribe to the IoT Services Platform to enable the ingestion of IoT device telemetry streams. This especially makes sense because of the large-scale telemetry data streams and equally high-volume of instructions that needs to be communicated to the devices in the field.
- Win-win Partnership models – solution partners pay as their business grows
- A vibrant partnership ecosystem whereby more IoT vertical solutions are launched into the market with reliance on your modules/devices or the IoT Services Platform.
- Be what’s next in “Product Relationship Management”, it’s beyond buzz words such as CRM, Big Data or BI.
What an IoT Services Platform may look like?
An IoT Services Platform offers a services & software platform to help customers and partners gain new insights, optimize business processes, make more informed decisions and identify new revenue opportunities. The platform performs the heavy-lifting and plumbing services such as IoT device management, telemetry collection, interactivity, notifications, servicing, etc. This would remove the barrier to entry for many IoT players, allowing them to just focus on IoT vertical solutions.
More importantly, having this platform allows an IoT provider to actively pursue IoT verticals such as smart metering, eHealth, Building Automation, Digital Display, Light Industrial scenarios. It allows it to customise solutions to meet individual customer requirement. It also promotes the best of breed partnerships as it continues to partner with large, established IoT players to deliver solutions in various verticals such as utilities, transportation, healthcare, government and consumer.
The business model of this platform is one that relies on the success of IoT market which is huge. Monetization is based on the following business models:
- Pay-as-you-go allows broader, wider adoption among smaller players in the IoT ecosystem
- Allows medium and bigger players to leverage the economies of scale of this platform by committing to subscription contracts.
- Provides good recurring revenue.
Premium Consulting and Support Services
- Pay per support incidents
- Support contracts with enterprises and medium to big business partners
Many existing IoT providers have the first mover advantage in the IoT ecosystem. It can continue to extend such an advantage by taking its lead in moving up the value chain. Such a move does not necessarily compete with its partners because it addresses the opportunities which could be leveraged by any player within the IoT market. By providing an IoT Services Platform whereby products, solutions and innovation from any player could thrive within the IoT market, the ecosystem becomes larger and healthier. One company getting a bigger slice of the proverbial pie is one thing. However a bigger pie is everything.
An IoT Services Platform serves as a great framework and also infrastructure for either custom or repeatable IoT vertical solutions could be engineered. This brings a two-fold benefit because it promotes dependence and loyalty on its solutions or hardware modules and devices. This bolsters its existing hardware business. The next opportunity is to take advantage of new business models described in this white paper to leverage new revenue streams which are recurring in nature.
This is all part and parcel of moving up the IoT value chain.