How the business world can extract value from the Internet of Things (IoT) over the coming years is a broad and complex question, and there is no ‘one size fits all’ answer, new study shows.
The survey titled “Defining IoT Business Models – Monetising IoT investments, maximising IoT skills and addressing IoT security” was conducted by Canonical, a company founded by South African-born entrepreneur Mark Shuttleworth, who returned as CEO in April to shift the firm behind Ubuntu into focusing more on IoT and cloud.
There are a couple of key areas that need to be explored as a priority, such as how a business makes money, who are the right people to lead, and how to ensure security is at the heart of everything, the study concludes.
“Once these three areas are established, any business will have a far better grounding in which to benefit from IoT.”
With a current market valuation of over $900 billion, both manufacturers and those looking to adopt Internet of Things (IoT) solutions are aware of the potential of IoT.
The survey explains that in trying to leverage this potential, many businesses are still grappling with how IoT can benefit their business and the best approach to get started with their IoT initiative.
From the connected factories of Siemens and AirBus, through to smart home products of Samsung and Bosch, the IoT is providing businesses with a whole new platform upon which to build innovative products, processes, and new business models.
In South Africa, Sqwidnet is keen to enable the growth of IoT through the development of infrastructure and already has an IoT network that covers all South African cities. It is also keen to expand its IoT network to the rest of the African continent. Other firms such as Comsol and Vula Telematix are also building IoT infrastructure, while telcos are investing in NB-IoT infrastructure.
Canonical said that the internet of things is all about making connections – and that is exactly what businesses must do to monetise their investment in the IoT.
In making connections, Canonical recently commissioned a survey to looked at the views, opinions, and experiences of 361 IoT professionals regarding the past, present, and future IoT projects.
Canonical survey discovered that many organisations are struggling to understand what many would argue to be the most important question in IoT – how, exactly, will they make a return on their investments?
The survey shows that 55% of IoT professionals see their profits as coming from the sale of hardware.
And with hardware revenues continuing to go up, driven by the sheer volume of hardware required by the IoT, these hardware vendors can be confident of the fact that they will continue to make decent money for some time to come, said Canonical.
Expected monetisation methods of IoT
Services and software as potential monetisation routes for owner/operators
The survey also discovered that 78% of IoT professionals agree that the real monetisation of connected devices will lie in the creation, deployment, and maintenance of value added services, with 40% stating it will be, specifically, through the consumption of services.
With the exception of consultancy services, all the other monetisation models are from scalable productised services.
“And the only way to deliver these services is through embedded or cloud software which effectively turns a hardware product into a ‘thing as a service’.,” the company said.
Profiting from IoT apps
As a result, a versatile, IoT specific operating system such as Ubuntu Core, that can be repeatedly upgraded and can add new functionality in the form of apps plays a key role to opening the IoT to new based software business models
The survey stated that there are many additional business models at play in IoT today, including:
- Things as a platform, where businesses can generate revenue from industrial, personal insights and 3rd parties creating applications for hardware
- Things as a service and businesses can create revenue by providing support such as repairs, use of IoT devices for context-specific advertising and pay per warning.
“The opportunities that these business models present to device manufacturers are much more attractive than the old hardware opportunities,” the survey concluded.
Make money from IoT app store
Furthermore, the Canonical report says businesses can profit through IoT app stores
Through the development of an IoT app store, businesses can offer add-ons and enhancements to their existing connected devices, charging users to download and install packaged applications to build upon their existing IoT technology.
“Such stores represent an opportunity not only for vendors, but also for software vendors and system integrators to widen the market for their software and services,” Canonical explains.
Many business leaders simply don’t understand how the IoT will benefit their organisation, and as such have little incentive to take the risk of investing in a technology, particularly one that may not be 100% secure, concluded Canonical.
“If, however, organisations take significant steps to educate themselves regarding potential business models, and to grapple with the immediate challenges of building capacity and knowledge while maintaining security, there would be a far greater push towards innovation, collaboration and investment in the IoT.”