IoT technology is more than the connectivity it offers. It’s not simply a matter of creating new conveniences for businesses and consumers. It’s about the potential revenue it could generate for businesses in traditional industries and those that have yet to come.
That revenue could tally upwards of $10 trillion, according to Cisco and GE. That is, if businesses and the B2B companies that support them, develop new devices, applications or services that will help businesses leverage the IoT opportunity. One survey by Capgemini reports that 96% of business leaders said they will invest in IoT in the next three years. Yet, today, less than 30% of businesses who are leveraging IoT have generated new revenue streams from IoT.
When considering how to monetize IoT technology, consider the following:
Leverage data in new ways
Data has reigned king for several years now and as IoT comes to dominate every aspect of our lives, data will become ever more powerful. By 2020, it is predicted every person will create about 1.7 megabytes of new information every second. Much of this data will go unanalyzed and left to waste.
To bank on the data explosion, businesses need to consider how to aggregate, anonymize and sell data and the insights incurred to create new devices, applications or services. Nest, for example, uses the data collected from its Learning Thermostat to consult energy companies on utilities management.
Pull-through to new revenue streams
The limitless opportunity to monetize IoT comes not solely from developing specific applications or devices; rather it comes from innovating off-shoot applications, devices and services. These add on developments aim to support or enhance the initial product, and can spur new or additional revenue streams.
Consider monetization models
To extract the most value out of IoT technology, innovators need to consider the right monetization model to base their new revenue streams upon. This could be a one-time charge at the point of sale or a subscription model that will generate a regular flow of income. There are also pay-as-you-go options as well as pay-for-results models. In deciding the model, the focus must be on the results you want to achieve for consumers and your business.
IoT as an industry is still in its early years and will need more time to evolve and mature. This means that, at least in the short-term, there are some significant challenges to monetize the Internet of Things, including issues of compatibility security. To resolve these, developers and businesses will need to adopt a security first mindset while looking for ways to implement standards.