How to Make Money Off the Internet of Things: Clients, Reasons, and Success Stories
December 8th, 2016
For a technology that was created in 2009, the Internet of Things is growing exponentially. Numerous studies and research point out that the IoT market will continue to skyrocket in the coming years. How to join the ride and capitalize on this trend?
According to Gartner research, 43% of companies and organizations are planning to implement the Internet of Things by the end of 2016. 64% plan to follow the suit eventually. A Cisco report says that 95% of CEOs surveyed plan to implement IoT in their business within 3 years.
The report presented by BI Intelligence says that by 2020, there will be 34 billion connected devices. To put things into perspective, the market will more than triple since 2015 (when there were 10 billion devices). As you can see on the image below, 71% (24 billion) devices will be IoT devices, while traditional computing devices will only amount to 29% (10 billion).
Keep in mind that IoT systems are not just the traditional “smart home” platforms that usually come to mind when one hears the phrase “Internet of Things.” This technology encompasses a much wider spectrum of businesses including traffic control systems, water and electricity management, numerous agricultural uses as well as such areas as manufacturing, marketing, and medicine.
Check out the heat map of key IoT opportunities by industry and application below.
At the moment, 70% of the companies are not monetizing IoT and the remaining 30% do so, mainly by selling control functions or data obtained via the Internet of Things devices. Nevertheless, examples of successful monetization are known and several large and small companies have already capitalized on IoT solutions.
How to make money from the Internet of Things solutions
The main question to be asked here, same as with any other business: what do the people want or need? In other words, businesses should understand what problems or needs can the Internet of Things solve for the end customer that they are willing to pay for it.
Two types of customers can be distinguished today for IoT companies:
Corporate: these are the clients who are willing to significantly change their traditional way of doing business by taking advantage of the Internet of Things and creating new revenue models.
Consumer: those who wish to receive certain personal benefits from the Internet of Things. For example, such users would be interested in purchasing a connected treadmill that offers video playback and in real time compares the user’s results with those of his friends or other users. Another example of a connected device, for which people are willing to pay is IoT gadget to track the activity or location of one’s pet.
Evrythng - Digital Sensors
A UK company called Evrythng creates digital sensors and software for them. Evrythng apps can read special bar codes and assign numeric IDs to ordinary things.
Such giants as Coca-Cola, Nike, and Diageo use Evrythng to get information about their consumers’ behavior.
For example, with Coca-Cola, Evrythng solution allows understanding exactly where the person bought the Coke bottle, how often that person buys it, etc. This helps the manufacturer to provide unique personalized offers to customers.
Diageo company uses Evrythng sensors to track each client’s activity to create a custom online video message once the person buys a bottle of whiskey.
In future, Evrythng company plans to use their digital IDs on household appliances and possibly even cars. Logistics and delivery of goods that are equipped with sensors give an opportunity to get a fresh look at familiar things.
Digital IDs can also be used to distinguish the original from the fake. This is exactly the purpose that Nike uses Evrythng for - ensuring that the clients are getting the real thing. The company plans to simplify the ordering of new clothes via the smartphone app, using just a couple of clicks.
Chips with embedded digital sensors get even more uses in agriculture. For example, French MEDRIA Technologies and Deutsche Telekom worked on creating a system for monitoring the real-time state of cows, used by more that 4,000 farms in Europe.
Sensors, connected to each animal, can notify farmers via text messages or push notification about the special status of the cows, for example when a certain cow is ready to give birth of offspring.
Thanks to this type of monitoring, farms require much less time for examination and care for the animals since it is done much more efficiently. It is clear that farmers are willing to pay for such solutions since it allows them to reduce the number of staff while maintaining the size of the farm.
Smart Elevators, Gas Stations, and Oil Rigs
Using sensors, cloud computing, and data analysis tools helped increase income in non-agricultural companies as well.
The major elevators manufacturer ThyssenKrupp has been equipping all their new products with sensors. The data obtained from these sensors is transmitted automatically to the cloud storage and the company can use it to analyze the engine temperature, cab speeds, door functions state, breakdowns, etc. Using this data and machine learning algorithms for analysis made it possible to create fault prediction system for elevators.
Autolib company that specializes on car-sharing equipped their cars and gas stations network with IoT-sensors. The system analyzes the routes of the cars, determines the most active ones, offers the drivers a list of nearby gas stations at the right time. Personalization settings for each driver may even include the radio stations that this particular user has listened to before.
Sensors, cloud storage, and data analysis algorithms are also used by Rockwell Automation to help oil companies predict possible failures in equipment that is used for oil and gas extractions. This helps the company to solve the rising issues without interrupting the process, monitor the work of all rigs, and prevent problems before they cause trouble.
Internet of Things: What Can You Monetize?
Internet of Things goods and services allow to get a number of advantages and solve a number of tasks that can be capitalized on by offering these solutions in B2B and B2C segments.
IoT devices simplify maintenance of the equipment, preventing damage or notifying about possible problems in almost real-time. Insurance companies can greatly benefit from these types of sensors.
Internet of Things sensors allows monitoring the devices and equipment operations as well as people’s activities, helping with HR & project management, for example.
Internet of Things for marketing will help to find out more information about how to use the product, making advertising and promotions more targeted and effective.
While a completely interconnected world that we sometimes might see in the futuristic movies is still a few years away, the reality is that we are living in the times of science fiction becoming reality.
Are you going to use it to your advantage?
Have an idea you want to develop into a product?
Have an idea you want to develop into a product?