The IoT Files – Business Models
do we really think that IoT will work in the current business model environment?
Well I have to tell you, probably it would not.
The key factor of IoT will be if it will be able to generate revenue? the problem of revenue is related to the fact they should cover the infrastructure costs, in order to do so, since we already seen that infrastructure costs will be big, as well as security, privacy implication that have, also, a cost, selling devices will not be enough.
And selling the device, per se, could not justify the costs the user will have to deal with for connection.
So to make IoT an attractive success, and not a marketing bubble, we should rethink our business models and various levels.
Old Telco model is out
The first to pay for the revolution will be the telco provider. Telephone companies are struggling even now in the effort to survive digitalization. the expensive infrastructure created to teal with voice communications are becoming rapidly obsolete. New digital provider are eroding the classi telco area. Think of the digital company that go through data (wechat, skype, whatsapp, line just to name few) and offer also voice services.
But telco model has been created in years, and now generation of managers that grown up there have great resistance to rethink their role.
The New Data Paradigma.
The truth is that the new business model should start form the new data paradigma. It is data that matter, and the rest is just a companion.
We keep calling them phones, but smartphone are used 99% to transmit data, digital data, every day less and less to make voice communication. the reason is that voice communication can’t provide the same level of experience that data can.
So data will be more and more important, in terms of quantity and quality. this is already a reason to concerns, but we should start to learn how to deal with it.
A big mistake would be to consider data as a gray amount of bits all the same, in this model (an old model) we can simply make to pay you the bandwidth you consume. But in IoT the data are not all the same, and we will not be able to justify to pay (and offer the same service level) to medical data and chat.
As well as in critical segment as automotive, or scada control we can’t think we can just reason in terms of amount of data.
So Data will require a new approach, because all data are important, but some data are more important than other.
From Product to services
as well as data is nothing if not associated with a service. In the IoT environment services that manipulate data will replace products.
If data will be the object of our interest, than product will be just a media to obtain the service, the cultural shifting is to a box moving environment to a service one.
But this require a different approach on selling, measuring, marketing all this. Isn’t it a big change of the business model?
The Big Marketing Imperative
Marketing will become way more important, because it will be mandatory to understand the mood of the customers to offer and modify services accordingly.
But at the same time marketing will be the most interested entity to collect and analyze data, so marketing will become more important even than finance guys, something would really see, a Marketing manager shouting a CFO in a board meeting….
Roaming, connectivity and other hidden costs
meanwhile in the transition to the IoT we will have to face how hidden cost could impact the new world.
Think, as an example, to roaming costs: I travel a lot, and when abroad I can be asked to pay till 18 euros for 1 MB of data when abroad…. this will be not possible in IoT, and basically unthinkable right now.
I do what all the other do in this case, don’t use roaming for data and try to find wifi hotspots able to provide me data connectivity I need.
Or buying a new sim card in the place where I am.
But if I will use dozen of different devices this could become impractical. a cost is not just the money you have to pay, but also the value you lose for some reason. so basically every time I can’t use my devices the way i want, it is a cost, an hidden cost, that sooner or later will be taken into consideration.
All those hidden cost have to be taken into account in a new IoT business model.
B2B, B2C and more?
This could lead us to say hello to the old B2B and B2C characterization. IoT will require a different approach where the interaction between consumer and business will be more complicated. we will probably have to go beyond B2B and B2C for a X4Y and something more ….
Who Pay all this?
Everything change, so business models, but every change create reactions and costs. As for infrastructures we should ask ourselves who will pay for this?
the biggest problem is that at the moment we have a lack of knowledge on what we will face, and using the standard metrics can drive us into wrong conclusion.
But this is the object of the last post for this introductory analysis of IoT. the Cultural impact of IoT.
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