We’ve been talking about Digital Transformation and the Internet of Things for a long time, but we probably won’t realize the full extent of the change for another ten years or so. By then, we will see that not only has the old changed into the new, and the analog into the digital, but that completely new business models have emerged. One of the greatest opportunities of digitization is that it opens up completely new possibilities for linking formerly divided products and services.
Post by Matthias Schorer, Lead Business Development Manager, IoT, EMEA at VMware
New Business Models Through Networking
The networking of devices is an essential part of digitization. Today, we can assume that non-networked devices will have very few market opportunities in the future. How rapidly this development progresses will depend on how quickly IoT security challenges are resolved. Ultimately, acceptance by the consumer stands and falls. The Internet of Things can gain more traction and offer more opportunities for new business models once these issues are resolved.
Networking enables new links between sectors and industries that were previously separated. A good example to focus on are smart homes. Among the most important needs of a consumer in this segment is the increase in security, especially against burglaries in times of absence. Digital security concepts have been linking passive elements to each other and giving homeowners the opportunity to simulate presence even when they are on vacation. Homeowners can, for example, remotely access the images of a surveillance camera, adjust lighting and control window shutters through an app. An alarm system provider could expand its own product accordingly to an all-inclusive package by adding an additional service offer. Overall, many more smart home functions are possible when providers cooperate with other manufacturers. In the future, we will also see cooperation between partners from various backgrounds who are dedicated to a common topic.
Complement to Digital Components
New business models can also be created around existing products. “Digitally Charged Products” are physical objects that can be connected to the Internet and generate new added value. For example, a modern heating system can be optimally adjusted by data connection without the need of a heating engineer being present. Even preventive maintenance, which is not based on rigid intervals, but on the actual wear and thus reduce costs and failures, becomes possible. If a system ends up failing, then a remote diagnosis can either help directly or greatly reduce the repair time. Dispatchers will already know what to do and they will have all the necessary spare parts ready to go.
Sensor as a Service
While the consumer remains the product owner and can benefit from additional services for “Digitally Charged Products,” the “Sensor as a Service” business model provides completely new solutions. The sensors used here belong to the service providers who offer their customers real-time data-driven services or markets them. For example, a tried and tested offer revolves around “smart parking.” The parking spaces in a city are equipped with sensors so that their occupancy can be transferred in real time to parking guidance systems or mobile apps. The providers can work with the city in order to improve park management through optimal utilization, which decreases the data at a charge. The data can also feed a paid app that informs drivers about free parking.
Establishing a new business model is also fundamental to the value chain. Machine manufacturers now provide their products for a service and a usage fee. Accordingly, a manufacturer of printing presses no longer sells their equipment once, but provides the infrastructure for a printing company, which then pays per hour’s work. This model has advantages for both sides: the customer has less investment costs and can in turn charge his customers easier and more transparent consumption-related costs. The machine builder extends its added value and can use the machine data for next-generation maintenance, optimization and development.
What is really going on?
Over the next few years, we will certainly see many new business models that are based on IoT. What will prevail in the end will have yet to show. However, it is clear that anyone who manages to generate additional or new benefits with IoT technologies has a good chance of success in the IoT market of tomorrow. In addition, these benefits can be very different: more safety, comfort, information or less costs, risks, and investment.
IoT with VMware
VMware Pulse IoT Center is a secure, enterprise grade Internet of Things (IoT) infrastructure management solution that enables information technology (IT) and operational technology (OT) teams to have complete control of their IoT infrastructure and things. Released in January 2018, Pulse IoT Center is part of a new family of VMware IoT offerings that helps customers manage, operate, scale and protect their IoT projects more efficiently from the edge to the cloud. You can learn more information about VMware Pulse IoT Center and our partnership ecosystem here.