How to benefit from IoT solutions:business models, monetization, and use cases
Along with artificial intelligence and machine learning, the Internet of Things (IoT) is another rapidly growing technology. In this article, we will discuss what IoT solutions are, how businesses can benefit from IoT, and what IoT strategy to use to monetize it successfully.
Why will IoT be successful in the coming years?
IoT applications are making not so much a technological revolution but a business revolution. There are more than 20 billion connected "things" in 2020, so the future of IoT is coming right now. Ignoring this technology inevitably means falling behind. Moreover, integrating IoT strategy brings clear benefits to businesses. IoT enables companies to automate processes and reduce labor costs. This reduces the volume of waste, improves the quality of services provided, and makes the production process and logistics cheaper.
45% of entrepreneurs reported that IoT has helped boost profits by 1% to 5%, and another 41% say the impact has boosted them by 5% to 15% annually. Over the coming year, nearly all, 94%, anticipate a profit boost of at least 5% to 15% as a result of IoT
This is a technology that can transform a business and generate new ideas and ways of doing business that will improve efficiency.
Who can capitalize on IoT solutions?
To monetize IoT applications, you need to understand IoT use cases and the main groups of people who use them.
Consumers The main areas of application are smart homes and transportation. Research done by Gartner expects there to be 250 million connected cars on the roads by 2020. IoT use cases in B2C are also seen in wearables, smart clothes, smart devices, smart applications for animals, and more.
Government This includes IoT applications that help the government operate more efficiently and to ensure the safety of its residents. The main areas of use are security, the infrastructure of cities and municipalities, and health care.
Business The largest share is attributed to the use of IoT solutions in the business. IoT affects all industries: production, infrastructure, logistics, transport, agro, trade, including retail, banking, and others.
“In the branch of manufacturing, 35% of organizations are already taking advantage of smart sensors. The other 18% are going to start using them this year or during the next three years.”
IoT solutions have definitely influenced the way that businesses function. Statistics show that 36% of companies are considering implementing IoT solutions in their work.
Cost reduction IoT provides businesses with the opportunity to gain a competitive advantage by reducing costs and developing new sources of income. For example, the automation of several processes can enable systems to run faster and more efficiently.
Customer experience Financial services, technology, and consumer products executives expect better customer service. IoT is a powerful data source that, when combined with analytics, can provide a comprehensive view of the customer, their preferences, and even predict requests. It also allows you to respond quickly and provide contextually relevant answers and suggestions.
Business opportunities The introduction of IoT will help companies in various industries create new products and services that will open up new opportunities, both for SMBs and for end consumers. A company that uses new technologies typically offers a high-quality product. For example, John Deere produces unmanned tractors for agriculture that are equipped with sensors that monitor the condition of the soil. These tractors are able to apply any necessary fertilizers automatically and in the appropriate amount. There are only a few products on the market with this level of technological sophistication, and they are very much in demand.
Efficiency & productivity Business owners receive data from IoT devices in real-time and can immediately adjust business processes and boost business productivity (and therefore revenue). By monitoring devices in real-time, it is possible to evaluate assets in a completely different way and understand their impact on business efficiency. For example, you can optimize resource-intensive and repetitive tasks or examine the performance of employees to determine the factors that have influences on their success.
IoT implementation scenarios
Scenario 1: Design products and experiences In this scenario, we use the technology itself in developing new products. This includes the so-called “smart” products enhanced with IoT sensors and data that are directly consumed by the customer. As an example, BeerBrew applied an IoT solution into beer brewing equipment for home brewers and microbreweries.
Scenario 2: Operate business enterprise processes IoT helps to streamline business processes. The business owner receives data from IoT devices in real-time and can immediately adjust business processes. For example, a taxi service can analyze the number of cars on the route and the number of potential riders. If there are more riders than cars, IoT automatically raises the cost of the trip. This algorithm is already used in many taxi services, such as Uber or Maxim.
Scenario 3: Consume insights The data collected by smart gadgets help to push a business in the right direction. This information helps to control and correctly allocate a company's resources. Examples include monitoring the safety, well-being, and health status of people in different contexts, as well as the operation of production equipment, or tracking supply chains.
Best IoT startup examples
Armis Security The startup aims to enable businesses to connect new devices without the fear of cyberattacks. The enterprise-grade security platform designed by Armis Security is capable of discovering devices inside and outside the network as it constantly analyzes endpoints.
Den4Dogs This startup’s goal is to provide safe zones for dogs and people outside of stores because although dogs like to spend time with their owners, there are places where dogs need to wait outside unless they are service dogs.
PoLTE Cloud Location Services Platform is a proprietary alternative to conventional GPS technology, using 4G and 5G cellular networks and cloud computing to provide highly accurate indoor and outdoor location data. The technology helps save money in areas such as logistics, manufacturing, transportation, automobiles, energy, and it’s the focus of PoLTE.
SPAN.IO This company develops products that enable the rapid adoption of renewable energy sources and provide an intuitive interface for customers using the product at home.
Petnet This IoT startup sells devices with Wi-Fi connectivity for feeding pets by automatically giving them food when it runs out.
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How to monetize IoT solutions
There are 4 ways to monetize your IoT solutions:
Connect features to a product
The simplest form of IoT monetization, most commonly seen in the consumer market, is selling IoT-connected equipment. This form implies that device manufacturers charge for their plug-in products (compared to their earlier and less “modern” offering).
This can be seen in household items such as washing machines, televisions, smartwatches, light bulbs, smart sockets, etc. Their cost is justified by the ability to remotely monitor, control, and, in some cases, automate the operation of devices.
Many organizations embarking on an IoT project will find that implementing digital IoT services requires significant financial investments. Businesses can be provided with IoT solutions that are used on a subscription basis.
For example, OnStar company is a subsidiary of General Motors that provides vehicle drivers with a variety of connected services such as emergency assistance, safety, navigation, connectivity, and remote diagnostics.
According to a study by ABI Research, by 2018, revenue from sales of value-added services to the IoT segment could reach up to $120 billion.
In addition to automation, IoT shows very high efficiency in the cost of collecting information and controlling its quality. The era of knowledge has already arrived, therefore, high-quality data is already a commodity in itself, which means it can turn into profit.
For example, "smart" refrigerators track their contents and study the consumption habits of family members. This information about the dynamics of consumption is of interest to both the manufacturer of products and the distributors of it, and both groups are willing to pay for it. It turns out that the same device can generate a stream of money from different sources, even from different markets.
Ecosystem monetization enables organizations to create a platform and marketplace where they can also generate additional revenue. The more products are connected to the system, the more valuable the ecosystem becomes for both partners and customers. But interestingly, the founder of the platform can benefit from both platform members and customers.
For example, a startup called SmartThings offers a centralized hub with many of its own IoT applications and ones created by third parties (switches, alarms, locks, environmental sensors, etc).
So as you can see, IoT solutions can radically affect the development of the modern world and will significantly transform businesses and even entire industries. The future of IoT promises great business and investment opportunities. We hope that we have helped you with understanding the benefits of IoT, its use cases, and ways to monetize IoT applications with working business models.
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