Monetizing the Internet of Things
I recently discovered, and love my new Jawbone UP. From tracking my sleep patterns (erratic) to the activity levels (low), its giving me a fresh insight into my ever-expanding mid-section.
What is more interesting is the explosion of devices with IP addresses such as the UP – called the Internet of Things (IoT) by the industry pundits. And its not just the tablets, smartphones and PCs which are growing as well, but this entire new category of contextual systems (local, social, sensors, wearables) that are going to revolutionize big data collection, analytics and improve our understanding of some core issues that affect health, fitness and other human issues.
But what about monetization? In other words, is a one-time sale transaction enough?
Let’s face it – hardware these days has become an excuse to sell services. It is no longer about a “PC in every home” but a set of “continuous services” per Microsoft. (But not really for this guy). Smart companies have realized that they can participate in the IoT phenomenon by turning traditional sales paradigms on its head – give away the hardware, and sell the service contracts instead.
This strategy also exposes a fundamental weakness of the traditional hardware manufacturers - their lack of, or weak capability in developing, distributing and updating software.
New models such as subscriptions, free trials, bundles are becoming the norm. Services are easily upgradeable, much more amenable to ecosystems that are constructed around the hardware, and provide better revenue opportunities rather than a one-time sale. In addition, constant updates ensure a level of obsolescence insurance of the hardware device, made possible with the constant internet connectivity. The M2M (machine-to-machine) connectivity is yet another channel of interaction, another touchpoint that needs to be supported.
With the explosion of these newer customer touch points, companies are struggling to figure out how they can provide the ability to charge the customer for value – in a transparent, secure and easy manner. Keeping track of prior sales for upsells, stored credit cards, entitlements, usage tracking and customer management become critical.
In addition, new markets such as BRIC put pressure on traditional pricing models, currency support, need for new payments and of course, local languages. Not to mention, all of the back office implications of payment processor relationships, tax compliance and regulatory filing, financial reconciliation and risk/fraud management.
So is there a way that one can launch new IoT devices and not have to worry about all these aspects that slow down go-to-market, and take away core product focus?
Luckily, commerce platforms are also evolving with the market and providing not only the transactional piece, but also insights into the customer’s journey across channels, integration with a ecosystem of partners, all looking at improving the customer experience in order to create a solid foundation on which you can earn the right to monetize.
Avangate’s customer-centric commerce offers all this, and more. With a compressive platform, Avangate lets IoT companies focus on the market, and not on the plumbing. With advanced features for commerce, subscription billing and in-app purchasing APIs, IoT companies can rest assured that their transition to new business models such as subscriptions is easy and convenient.
Bottomline, IoT is a fantastic new space that is emerging, with the opportunity to serve many new customers, monetize in new ways and unlocking new revenue streams.
And my UP band just buzzed, conveniently reminding me that its been over an hour I sat at my desk and I now need to move. Perhaps you should too!
Tags: analytics, Avangate customer centric solutions, big data, billing, commerce, commerce platforms, customer centric commerce solution, customer touch points, customer's journey across channels, Customer-Centric Commerce, free trials, improving the customer experience, integration with a ecosystem of partners, Internet of Things, IoT, monetization, monetizing the internet of things, software channels, software subscriptions, subscription