Recent conversations with SMB vendors have raised the question of Apple Watch and whether it presents an opportunity for them. I thought I would capture some of the key points of our discussion in a quick blog post.
IoT is Big…
The Internet of Things (IoT) is everywhere – at the peak of inflated expectations on the Gartner Hype Cycle; in (some of our) refrigerators, drinking glasses, and smart cars; and now in Apple Watch. Though it represents a $7 trillion–plus market according to IDC, IoT is about much more than the money. It’s about being able to find, access and use the products and services we need from anywhere and breaking down barriers between information and devices.
It’s Not Really About The “Things”
As IoT products become differentiated by connectivity and services, its role will evolve. In the IoT, the device itself matters less than its ability to connect to useful information and services. Smart devices that don’t communicate with smartphones or other devices are, by definition, not so smart. And even the most exciting new device is likely perceived by consumers as a one-time buy or something to upgrade every few years.
Products Are An Excuse To Sell Services
This deemphasis on devices and increasing emphasis on services shifts the value of connected IoT devices to the software and services that surround those devices, and increases the incentive for companies to sell services. With a new emphasis on services comes an emphasis on growing the customer relationship over time: think Jawbone deemphasizing hardware and encouraging use of its software and services.
In the realm of services, the opportunity becomes creating contextual data with new avenues to engagement. Nike+, for example, has become far more than just a device for tracking runs – a whole online community has grown around its services. When you think about it, what will you have more of a long-term relationship with – your latest pair of running shoes, or the personalized running service providing your daily training regimen that has two years of your running history and the virtual community that you participate in? Thanks to the IoT, we are in the age of the New Services Economy, which is based on relationships, not transactions.
The Playing Field Gets Leveled, Opening The Way For SMBs
The New Services Economy levels the playing field for small businesses, providing avenues for both discovery by a wider swath of prospective customers, as well as in new micro-markets.
As it grows, IoT introduces new intermediaries and new marketplaces. Where will we buy apps for our refrigerators or smart cups, or even add-ons to help me with my store inventory management? How will we discover and learn more about these connected apps and services? So far, the internet has enhanced discoverability well beyond the big corporations or even the producers of the things in IoT. And soon, the IoT space will be no different.
As IoT opens a platform for data, as with almost any tech wave, a raft of micro-vertical applications will rise. The flow of data provides the opportunity for process management, alerting and notification, and ultimately, more opportunities to engage and potentially monetize atop these platforms. For example, self-registration of inventory “things” in a store will give rise to tools for convenience stores, coffee shops, through to specialty crafts shops.
3 Recommendations for SMBs
First, get online. Doing so levels the playing field, moves you across borders (assuming you have the platform to easily manage global payments), and allows you to leverage the new intermediaries like marketplaces and affiliates who can multiply your marketing reach and distribution.
Second, launch continuously and unclip from the traditional pace of ERP. In most companies, it takes weeks, if not months, to get a new product defined, let alone included in accounting and financial reporting so you can launch it. In the world of digital goods and services, your business needs the flexibility to define the product catalog not only by modular entitlements, but also using associated rate plans that are not merely single price points, but freemium, subscription, or usage-based pricing.
According to our latest survey, customers not only demand to have freemium options, but expect to be able add on modules on their terms using self-service. It’s a new world and you need the tools that will allow you to rapidly define, launch, test and grow what have become long-term relationships that go well beyond the single-point transactions of the past.
Third, leverage the cloud to get there fast, stay focused, and grow profitably. As the IoT dominates, companies must rethink commerce – and not only because of new payment systems or currencies like Apple Pay or Bitcoin. Companies must rethink commerce because the IoT is changing how we interact with products and services, emphasizing the service part of the equation and turning what were isolated transactions (the mainstay of old eCommerce and payment-centric approaches) into pay-as-you-go and other longer-term business relationships.
Fortunately, easy-to-implement cloud-based tools from Sitecore, Optimizely, Marketizator, Ve Interactive, Amazon Web Services and Avangate commerce platform exist to empower small businesses to enter this New Service Economy easily and grow at their own pace, without having to build it all yourself or consume your cash ahead of achieving your own growth. With any luck, your growth will create the funds to buy an Apple Watch for each member of your team, so you can all look cool and stay connected to the IoT.