The Internet of Things (IoT) is bringing massive opportunities and threats to almost every business. Business models are being totally disrupted by IoT-enabled products and services coming to the market. We have all seen examples of Market Disruption such as Uber or Airbnb, but many companies do not recognise that this disruption can come to them as a result of IoT and that it can either have a positive or negative impact on their business. So what are these potential changes ? :
Changing Business Models
Let's take the example of desktop printers that cost, say, $100 to design, manufacture and sell but where the retail price to the customer is only $75 due to the company's expectation that the customer will need to buy $200+ of printer cartridges from them each per year. It's a very profitable model. IoT is allowing hardware companies to develop the same type of business model to increase margins and grow revenue - at the same time as killing off some of their competitors. Imagine you are a traditional product manufacturer with no concept of having a consumables sales line. For the past 20 years you had been selling your machines at "Cost plus 50%" ($150). All of a sudden, your main competitor is selling a similar product for $15. How do you compete ? You could go out of business in weeks. This is what IoT is enabling - as hardware companies switch from being "product companies" to "service companies". They are now selling the overall solution to their customers rather than just the product.
You would not buy a mobile phone now without Bluetooth. Soon it will be the same with all sorts of hardware - it will simply be unsellable without IoT functionality. Right now, the cost of sensors may make adding IoT to your product too expensive but as the sensor costs reduce, there will soon be a point at which it becomes viable. At that moment, you need your product to have IoT functionality or your sales may quickly dry up. For that reason, companies are developing IoT-enabled versions of their products and building pilot runs so that they are ready to switch production to the IoT version as soon as it is needed. Need an example ? Hospitals in US believe that they will soon need to prove that the nurses always use the hand sanitiser when coming into a room to treat a patient. This could be achieved by using IoT. Even though the addition of IoT added cost to each hand sanitiser unit, it will save the hospital from the high cost of being sued by a patient who claimed that the nurse brought an infection into the room via dirty hands. Those who continue to try to sell a cheaper, non-IoT version of the sanitiser will find that their product is not even considered once this capability is seen as the "norm" in US hospitals. In addition, the hospitals have the added benefit of receiving a warning message from the sanitiser when the liquid is running low - so reducing the number of occasions when it runs our completely at a key moment and reducing the number of times that it needs to be manually checked.
Changing Service Models
Maybe a few years ago, no company would dare to sign up to penalty clauses for downtime on a piece of standard industry equipment - such terms were confined to the Automotive and Aerospace sectors. However, IoT can now enable customers to far better predict field failures through, for example, the use of sensors to assess when a bearing is likely to fail. The sensor detects the first signs of noise or vibration and sends an alert via IoT to the service team - who plan to swap out that bearing before it fails. This allows the company to sign up to strict uptime targets with associated penalties, whereas their competitor (who has no IoT) sees the penalties as potentially crippling and so declines the business. Many companies in the Security, Industrial and Commercial sectors are starting to see these kind of changes in their markets and need to adapt their products to comply. Even where penalties are not the norm, a product without IoT will soon be seen as having a poor uptime performance compared to those from IoT-enabled competitors - resulting in lost sales and reputation.
Similarly, customers now expect a "first time fix" when an engineer is called out. Having IoT on the machine allows a company to know exactly what spare part it needs to be taken to site in order to undertake the repair. Their competitor, on the other hand, has no IoT and either has to take a risk and "guess" at the likely fault (and hence the spare part needed) or needs to take a huge number of spares to the repair location in order to ensure the same level of first time fix as their IoT-enabled competitor.
All of these changes are taking place in companies that typically have no experience of IoT or maybe even in electronics. Take the example above of the Hand Sanitiser. A company may be the best in the market with non-IoT product and its design team could be wizards in designing plastics. However, they have never had a need for an electronics designer, let alone one that understands the latest developments in the IoT market. Choosing the wrong wireless system can give a good technical solution but can be far too expensive. And the "right" solution in 2020 may not be the best option for now. Should you choose LoRa, Bluetooth, Zigbee, WiFi, Cellular, UWB or other solution ? They need help - and they need it so quickly that they do not have the time to develop the in-house solution.
It is also not just about the hardware design - elements of the overall solution such as the cloud services, network and such like. Therefore we work closely with a global Full-Stack IoT Solutions provider to assist companies in the IoT field. If you are wondering how IoT may affect you, or you know what you need but don't know who could undertake the full-stack service, then give us a call.