Business Models, Internet of Things
Your biggest competitor: Do nothing
The internet has transformed the communications business, the media landscape, retailing, and the music industry. Digitization and new technological developments have made big, unprepared players disappear – even market leaders and long-standing companies. As consumers, we have all seen how quickly things change, and how new technologies appear that challenge well-established products and standards. Nobody carries a Walkman and cassettes these days; instead, we stream music with our smartphones.
Three major challenges for existing business models and business functions
For many companies, the mere prospect of remaking traditional products into smart and connected ones is daunting. But embedding them into the digital world using services-based business models is much more fundamentally challenging. The new business models impact core processes such as product management, operations, and production, as well as sales and channel management.
1) Product and lifecycle management:
For manufacturers in particular, the overall challenge in the IoT is securing and extending their existing hardware business: This means first IP-enabling their products and then providing new services based on these connected products. The industrially manufactured product is no longer the focus, but rather the web-based services that users access through the device itself or by using smartphones and tablets. The focus is also on developing solutions that enhance the quality of life instead of providing pure technology.
2) Competition and sales channels:
Imagine an arena full of new competitors, all jostling for position and attempting to shape the future, and of course, trying to win over the same customers. Well established producers in traditional industrial fields – whether they make coffee machines, cars, air conditioners or home fitness equipment, or run big vehicle fleets or even electric utilities – are suddenly not only competing with companies like themselves but are also confronted with players the likes of which they have never seen before.
3) Customer interaction:
The points where customers and companies come together change. Instead of ‘meeting at the point of sales, ’ it becomes a continuous interaction as long as the customer uses a product or services. When a product becomes an agent interacting with humans and providing multiple services over a lifetime, it provides a new perspective on business.
Market size and number of devices
Based on the Machina Research database, we are expecting approximately 14 billion connected devices worldwide by the end of year 2022. These numbers are based on the assumption that a device connected directly or indirectly with the internet is a connected device.
That means a connected car is one connected device, which can itself consist of numerous connected things such as sensors, entertainment or navigation units and so on. Furthermore, the number is based on the assumption that smartphones and tablets are not connected devices. Even if smartphones and tablets are connected to the internet, they are interfaces integrating the user into the IoT ecosystem. Based on this evaluation, we assume that the highest amount of connected devices will be concentrated in four industries in 2022 – intelligent buildings, automotive, healthcare, and utilities.