11 Apr Consumer Versus Commercial IoT
Usefulness and willingness to pay — herein lies the difference
Without a doubt, the majority of media coverage about the Internet of Things has focused on consumer devices and future potential applications: your watch talks to your coffeepot, your fitness tracker reports on your vitals, your drone walks your dog (hey, you never know). But as with so many advents in technology, it’s the less exciting yet important uses in the commercial and industrial categories that are already paying for IoT adoption.
Who pays for consumer IoT?
I for one am concerned about my coffeepot conspiring with my refrigerator, wristwatch and healthcare provider to keep me from enjoying my morning lattes. I’m pretty sure that I wouldn’t pay for that. But seriously, the main question posed by all of these “interesting” consumer-facing concepts is who pays for it? The appliance manufacturer? The watchmaker? The healthcare company? The government? It’s always when you introduce the real-world issue of money that many otherwise cool technology concepts fall down. With first generations of the Internet, we got used to paying for bandwidth, and covering our use of services through advertising or subscriptions. IoT is about, well, things — which in most cases don’t have conveniently located displays, loudspeakers or some other means to convey a promotional message. Often, they’re buried deep within some other device or system, where you will never even see them. This is a real challenge for the purveyors of IoT-related tech. Google has been experimenting with messaging on the display of a Nest thermostat, or on the app that controls it. Plausible, but not likely a huge revenue driver à la Web ads. The jury’s out, and once the initial money has been made from selling the devices themselves, it’s an issue that will require some clever solutions, far more complex to solve than monetizing apps and Web on mobile.
Commercial IoT already has a business model
In the world of commerce, investments typically relate to goals that can produce tangible benefits: hence many, many sensor-laden devices have been installed in virtually every industry sector, and connected to internal networks. It’s not certain that all of these should be lumped together as IoT, since the vast majority are siloed and don’t have the ability to transmit data using Internet protocols. So to enable them validly as IoT devices, you’d need to link them with upstream units that have true Internet connectivity. The usefulness of devices interacting with other systems via wired and wireless stacks is no longer in question; it comes down to when and to what extent, as defined by utility value. Does the investment in upgrading devices and systems to become bona fide “IoT” participants fit with business objectives? If yes, and now, then it will happen as a cost of doing business, both from capital expenditure and recurring cost perspectives.
The new new thing: Commercial IoT as a service
As is traditional for any burgeoning area of information technology, there are many companies already out there, and more cropping up seemingly by the minute, offering platforms and support for various aspects of a hot new category, in this case IoT. Some will thrive, some will dive. Most will have to hunt for their true, long-term business models and revenue streams, whereas the commercial end users themselves have good reasons for making IoT-related investments. So when we’re discussing business models surrounding IoT, we’re mostly talking about vendors and not enduser organizations. Mostly. Some large companies, and for completeness, government agencies in many countries, are still thinking about it, mostly in terms of whether they can become more efficient and agile through the analysis of sensor data, implementing advanced control systems, and the like.
Back to the consumer question
So how do we answer the elephant-in-the-room question of who pays for the nifty new IoT-enabled services that are supposed to enrich our lives? It seems like having an endless array of subscriptions to individual services will get old fast. They could get tacked onto services that we’re already paying for, but it sure gets murky when you add in serious issues of liability and responsibility. For example, if the coffeepot does talk to my watch, fitness tracker and healthcare provider, from which of those do I get information, decisions and whom do I pay for that? And if something goes sideways, whom do I call for help, or in the worst case, hit with legal action? Look no further than self-driving cars for a heavy-duty example: Whose problem is it when the car that I technically own but am not driving rams into something? Do I blame mechanical issues, software, decision signals sent to it by a third-party network or the city that I’m traveling in, data from other vehicles? Gosh, whom do I pay for all of that data, and is it a one-time fee when I purchase the vehicle, or a monthly subscription? Or is it based on the number of miles my vehicle accumulates, or how much data it uses? Note that all of these issues apply, in some form, to major appliances, health monitoring, home energy systems, and numerous other consumer areas.
Watch this space
With so much pressure from big companies to chase the IoT opportunity, these issues will undoubtedly get solved, albeit after many battle scars are inflicted. Entrepreneurs who come up with solid business models for consumer and/or commercial sectors have the potential to do very, very well. And if you’re inside of a major corporation or governmental entity, the opportunity to hang your hat on a solidly planned and executed IoT implementation that takes your organization into new realms of operational efficiency is real.