Where The IoT Money Will Be

Lots of ideas, but little real substance yet. What will it take to monetize the IoE down the road?

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As we get closer and closer to figuring out what the Internet of Things—or increasingly, the Internet of Everything (IoE)—will and won’t be, one of the themes that shows up regularly is exactly how to monetize it.

“A large portion of marketing dollars are wasted when the wrong offers are made to the wrong people at the wrong place and time,” notes Jon Gettinger Sr. vice president of marketing at Aria Systems. That is particularly true since there are so many visions of what the IoE will be.

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Courtesy infocus.emc.com.

It is never an easy task to try to figure out where the money is with something that is so fluid and undefined. If it was just the standard M2M segment that has been around for the last 30-plus years, and just morphing into the M2M of low-power and next-generation sensor technology, that would be one thing. But even though, technically, the IoE is still just M2M, it has assumed a whole new paradigm – intelligence. And that changes the game significantly.

Adding intelligence affects every segment of M2M; power, security, data handling, communication – everything. On top of that the fact that virtually every piece of machine hardware, from the simplest toothbrush, to motes, to satellites, will be “intelligently” linked, making the sheer volume and ubiquity of devices even more daunting to manage, let alone monetize.

Much of the discussion on how to monetize the IoE has been around just trying to identify the segments that have the potential to be monetized, and what may just be value-added, maintenance, support, or simply the cost of doing business.

There are existing cases. One only needs to turn to the logistics and warehousing segments, where M2M has proven monetization cases in product handling, inventory management and control, product organization, and transport, for example. And that segment continues to expand. Godfrey Chua, directing analyst for M2M and The Internet of Things at Infonetics Research, notes that “M2M continues to gather momentum as enterprises, in the never-ending pursuit of competitive advantage, seek to find new ways of using connected technologies to improve business agility and lower operational costs. So it is not necessarily and an elusive objective.”

The industrial IoE and B2B selling environments present the most realistic possibilities. In the business world, there is less resistance to implementing technology that can improve existing models. The IoE promises, in theory at least, optimized supply chains, potential near real-time customization, more options for business customers, and more insight into operations and manufacturing processes. All of this can lead to more revenue, higher profits, and, ultimately, enhanced shareholder value.

These are M2M/IoT applications that already exist. There is hard data on what M2M automation has done and it is quantifiable. Much of what the IoE will be does not yet exist, but below are some venues that show potential.

What does the IoE offer
Before trying to figure out how to monetize, one must determine what the IoE will offer that has or presents value that can be monetized. In that vein, there has been some discussion around the following:

  • Heightened collaboration. Collaboration has been hyped as, perhaps the pièce de résistance of today’s best practices for effective and efficient functionality of the organization and its offerings. Without a doubt, effective collaboration is a powerful tool. When it comes to the IoE, the metric is real-time data. For example, when a complex problem arises, real-time data can involve the essential entities, from anywhere, to form a virtual resolution group. This can reduce on-site costs as well as reducing the time required to resolve the issue. And, when such data is instant, online, and available to everyone, everywhere, the segments within it (sales, service, support, the supply chain, etc.) can work together, in real time, reducing costs while improving productivity and efficiency. Combine all of these metrics and the result is an improved bottom line.
  • Better products and services. Once the above objectives are met, the result will be better products and services. Pre-IoE, change came from internal self-reports of failures, shortcoming, and analysis of customer feedback. This was often and slow and clumsy process that required many iterations from many sections within the organization that eventually culminated in an assessment and redirection. With IoE-connected devices, such feedback can be timely and in parallel within all sections within the organization, and provide simultaneous data that can be collated to achieve much faster analysis. This “preemptive” data from machines and devices in the field can be used to alert potential events, such as an abnormal run of failures in a particular device, for example. And getting this information in advance enables field personnel to provide accurate solutions and have the exact procedure in place, ready to go. Such data can also be used to analyze and minimize future problems. Such analysis can then be quickly applied to the operations within the company to affect changes.
  • Business processes streamlining. This one is pretty obvious. The IoE can enable real-time M2M communications, from office machines to warehouse and production line automatons to supply chain and more. In the office environment, IoE-connected autonomous communications enable less human intervention, which, in turn, reduces errors and Opex. By eliminating the “human” factor, in many circumstances, efficiency is generally improved, margins of error reduced, and redundancy is less critical.
  • Improved asset management. The ubiquitous interconnect in the IoE is able to provide information very quickly, often in near real-time. With this, efficient asset management within production and manufacturing environment reduces down time. This enables proactive maintenance before performance suffers or costly breakdowns occur. Maintenance can be scheduled using just-in-time (JIT) parts, and at the least disruptive times and coordinate with suppliers for real-time information. Fleets can be optimally managed in real time, placing specific assets when and where they need to be.

But who is going to pay for what?
One important element of the monetization issue will be the hardware. Obviously, someone has to pay for it, and its infusion into the IoE, in whatever form that happens to be (stand-alone or embedded). And not just your basic sensors, rather, the next generation of intelligent hardware to handle the intelligence and emerging new interconnect. The answer may not be as obvious as the entity that will directly profit from deploying the hardware.

With the present IoT model, most of the benefit is to the asset owner. Therefore, they are the ones who are currently footing the hardware bill. But going forward, that model will change. There are any number of vested interests in a value chain; from the owner to the end user and anywhere in between.

In many cases, there may even be multiple interests that can end up benefiting, in one form or another. Especially with all the peripheral mechanisms (big data, security, value added, etc.) that will be part of the IoE. There will be an increasing number of intangibles that will become part of the IoE equation, as well.

What to do with all that data
Perhaps more than any other single element, the monumental amounts of data that will be expected flow across the IoE, will create a plethora of opportunities across a girth of segments.

There will be massive new business opportunities for all types of enterprises, OEMs, wireless/wireline providers, value-added service providers, software developers and third-party vendors. “The IoT will generate an enormous, truly unprecedented amount of precise information about buyers and their needs,” says Gettinger. “It’s a marketer’s dream come true.”

And each of these components will want to find a way to monetize their particular niche. (See “Rethinking Big Data,” for a drill-down on this subject. )

Big Data is an entirely radical concept that will generate billions of dollars and tens of thousands, if not hundreds of thousands, of jobs. Big Data investments in hardware, software, and professional services are expected to reach $76 billion by the end of 2020, according to ReportsnReports. Other research organizations post similar numbers.

The good thing about it is that it exists and is real, and the monetizing model is further up the food chain. One sign of that is in the education and training fields. Colleges all around the country are now offering curriculum in Big Data analytics and some of the leading companies, such as IBM are also in that game.

The exciting part is that this Big Data will come, almost exclusively from the IoE. So, at least, there is one segment of the IoE is showing monetization potential.

The Smart Home
The smart home is on the verge of exploding and may well be the first real IoE segment that will be monetized. An area within that is premise security systems. One example of that comes from a company called Helix, which has developed a hardened, UL certified, professional-grade security platform that is explicitly designed to interface with the IoT/E market. Systems integrate Ethernet and Bluetooth Smart (low-power) communications, and a long-range sensor radio with the capability to connect to cellular and Z-Wave. And, it supports legacy security sensors.

Helix system can be controlled from smart phones, tablets, and web portals. And it can be programmed to adapt to the occupant’s routines. This is a classic example of a value proposition for consumers. It presents a business model in a segment that has a solid history and can be monetized, as the next-generation security, integrated with the IoE.

Missive
Whether one calls it the IoT, or the IoE, or other creative vernacular, the bottom line is, of course, that without ways to monetize it, it will be a struggle. Few, if any entities will put IoE hardware out there for the sake of saying they have it. They will be, as is always the case, some promotional behavior, as with any new venture. But the stakes are high.

According to Capgemini Consulting, less than 30% of organizations generate service revenue directly from the IoT. And 67% of organizations have little to no infrastructure for analyzing and acting on streaming Big Data.

The truth is that the IoE is still a fuzzy vision. Some elements that will be a part of it will be easier to monetize than others. Some, such as warehousing and logistics, have solid models that show value and advancements, there will meet little resistance to spending because ROI has been proven. Nevertheless, many areas have little or no history. And some elements will have value in deployment (drones, for example) but little ability to generate revenue. Other elements will just be part of the Opex or Capex (IoE sensors in refrigerators, for example).

Still, it will be impossible to stop the IoE juggernaut. The IoT is evolving, and elements such as Big Data and will security evolve with it, so opportunities will grow. Like any other opportunity, it’s nice to be at the starting gate. But right now, it is difficult to tell exactly where that gate is.



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