Internet Of Things: Emerging Business Models and Battlegrounds
Before IOT Business Models, our understanding of Internet of Things
Internet of Things, at its very basic, is a process of communication that happens between any device that could connect to internet: as the name suggests, it is the pathway through which various appliances and devices connect to each other in order to share information for various reasons. Communication through IoT could could be of three natures: human to human, human to device or device to device.
While understanding IoT it is important to recognize two main types of IoT: Consumer IoT and Industrial IoT. At the core, both these types have the same features and almost the same operations and use, but perform very different tasks with different outcomes. Consumer IoT basically focuses on making mundane life, not just easier for humans but also, efficient and effective in terms of saving money and time: but it has also very critical applications, like remote health monitoring, telemedicine and self-initiated emergency calls. Consumer IoT does this through a process of communication and connectivity between various sensors, appliances and devices, which share information with each other, while triggering actions on other devices, through local hubs or SaaS applications like IFTTT. On the other hand, Industrial IoT serves the same purpose but in a much advanced and technical way. iIoT comes handy in order to promote automation as machines are able to communicate with each other and perform automated tasks depending on the previous tasks and triggers.
While its existence dates back to 1983, thanks to wireless internet connectivity and other wireless connection systems, IoT has become more accessible and practical in order to perform tasks on an infinite number of possibilities. And while the technological part is already here, there is a certain lack of clarity on which are the winning business models of IoT.
IOT Business Models
There are various emerging IOT business models at the moment, yet there is no clear winner. Among those:
- The Bluetooth Model, in which consumers/ industrial customers acquire the infrastructure of IoT, and then operate the whole ecosystem on their own. Players build the pieces of the puzzle, which they provide to their customers. Customers assemble the puzzle to the best of their ability. The limitation of this model is the reach within the population: not only many will not dare to cross this chasm, but many late adopters will be put off by the critical infrastructure updates that make many of their devices obsolete very fast.
- The Wi-Fi model, where industrial customers and consumers are expected to buy a service not a product, and therefore they will be provided the whole infrastructure and all the operations will be managed by a professional operator, relieving users from the task of managing things themselves. Of course this models suppose the emergence of modular platforms or verticals which support own devices as well as third party ones, take care of interconnectivity, analytics, security and cloud storage: these are the areas where Apple, Google and Amazon are the most active on the consumer side.
- The Cellular Operator Model, which is similar to the previous one, but removes the locality of the spot, and introduces the notion of IoT Mobility, just like cell operators did for telephony. Although, for this model to become successful 5G type of connectivity will be required, this model, as the previous one, is strongly dependent on the emergence of platforms and verticals. But the key difference from Cellular Operator to Wi-Fi business model lays in the shift from an infrastructure driven to an application driven business model.
It will not just be a competition between companies and firms within an industry but it will grow up to be a competition between the IoT systems of different companies. Easier to explain in terms of Consumer IOT: iOS vs. Android, Siri vs. Alexa, Google Home vs. Amazon Echo vs. Apple HomePod, these are just few of battlegrounds of this emerging platform war. And considering that the winning platforms will include Cloud services, algorithm based on-line shopping, media consumption, and extend to as far as Wearable devices and Connected Cars, clearly the stakes are very high. And of course the winning platform(s) will play a key role in the future of consumers: first and foremost for privacy reasons. But also for their ability to collect and mine data on habits, consumption and our own health: data that your healthcare provider, utility company, insurance broker, sneaker brand, appliance manufacturer, bank and/ or lender, will go to an extreme length to get. And of course our security and safety will depend on the ability of the platforms to prevent and warn us in case of hacking and/ or intrusions in the platform as well.