Manufacturers – Strategies for Connected Devices

//Manufacturers – Strategies for Connected Devices

Manufacturers – Strategies for Connected Devices

Manufacturers are racing to enable their devices to work in a connected world but it presents challenges.

In the B2B space, the IoT market is already well advanced. The majority of new commercial buildings are ‘smart’; systems are connected to make buildings safer, more energy efficient, easier to manage and the cost of operation is significantly reduced. Even in agriculture, the IoT is well advanced. John Deere uses connectivity on their fleet of combined harvesters to remotely monitor and maintain machinery as well as provide real-time analysis of the quality of the grain in each part of the field and use the data to create a tailored plan for fertilizer.  They moved from simply selling tractors and maintenance contracts to grow revenues by using data from their products to provide new leasing models and value-added services.

Although many manufacturers are working hard to add connectivity to their devices, consumer channels are lagging when it comes to exploiting the IoT.

The initial wave of innovation in the smart devices has been what could be considered Point to Point (P2P) devices; a single device managed through an app. Nest is probably the most obvious example. Nest used the IoT and connectivity to reinvent the thermostat and rapidly stole market share from the traditional thermostat manufacturers.  They secured a mindboggling exit and instantly created a business model that startups like Ring emulated with similar success.

Unfortunately, there is a fundamental problem with the P2P business model and both Nest and Ring are proof that the P2P business model has its’ limitations. In a connected world, consumers do not want to stand on the doorstep and open the door with one app, control the thermostat with another, light switches with another, and so on.  Both Nest and Ring were quick to recognize that they needed to expand their device eco-system to grow.

Consumer facing industries need to recognize that the killer app in the smart home space is aggregation; getting as many devices and services pulled together into a single service offering. Consumers quickly bore with the limitations of P2P and want an offering through which they can monitor and control all the devices in the home to receive a wider bundle of value added services from channel partners.  Simple applications that show the value of aggregation today are water leak sensors that trigger the shut-off of the water supply and trigger a call from a plumber offering support or fire sensors linked to monitoring services at low cost.

In the B2B IoT applications, industries worked together to deliver comprehensive solutions to companies like John Deere and farmers. Tractor manufacturers worked with mapping services, fertilizer companies and other groups to deliver more value to their customers.  Pricing of services can be easily justified by proven ROI.

Unfortunately, in the consumer space none of the traditional channels are organized or structured to act as aggregators. In many cases, channels compete and want to herd consumers in a particular direction with their preferred product set and business models.  Moreover, the ROI is not so obvious for consumers.

In the consumer markets, device manufacturers need to look at how they can ensure their devices can work in an open ecosystem so that channel partners can use them to create product/service bundles to support their particular needs.  This presents interesting new challenges.

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By | 2018-11-13T20:47:51+00:00 September 8th, 2018|Manufacturing|0 Comments

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