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How to generate revenues using IoT?

Explore the opportunity for leveraging IoT applications to reshape your business models and increase the market recognition!

By 2025 [1], it’s expected that more than 100 billion operational devices will be connected to the Internet of Things (IoT), generating a total revenue of nearly $10 trillion USD. This trend looks set to continue for many years of unprecedented growth. For example, the sensor market alone is expected to see an average annual growth rate of 26.91 % by 2020.

Introduction

IoT technology offers many possibilities for fast and efficient delivery of applications over the Internet. The new service [1] called “Everything-as-a-Service” or “X-as-a-Service” (XaaS) is a business model that created a certain hype around itself. XaaS offers companies the opportunity to transform business models from merely selling products to the more interesting one - selling business information. Such information is generated by IoT products that are made available for a small nominal fee or in some cases, even for free. Worldwide, rapid developments in various sectors are already being made in this area. This is changing the way these services are billed, giving companies greater continuity in revenue generation. For example, the Rolls-Royce Power-By-Hour model allows airlines to pay for engine usage by the hour. The cloud-based IoT approach also enables predictive maintenance, optimising resource efficiency, and reducing disruption.

Herein, the business model that has pay-for-hardware is moving toward pay-for-information or data. This transformative shift can be made through various business offerings, about which I'll be talking in this article. It's good to note that these models enable smarter business decisions and improved cost management. Let me give you an example: In disaster management, sensor network created to monitor environmental parameters (water level, temperature, precipitation intensity, etc.) is a highly valuable information when used properly. It is estimated [2] that every €1 invested in disaster management can reduce €4-7, accordingly. Therefore, don't think only about making revenues from creating a profit; reducing operative costs, overheads, etc. are also revenue models.

Ways of creating first revenues

Herein I will put down some takeaways from the various presentations and panels held at IoT Evolution Expo [3] and gratefully written by Calum McClelland.

IoT Rapid Development Kit (RDK)

Rapid Development Kit, also named as a “swiss army knife of connectivity” can provide you with fast track development of your idea. RDK usually comes with development board, connectivity (LTE-M, NB-IoT, Sigfox, WiFi, etc.), corresponding antenna for better signal penetration, LiPo rechargeable battery, USB cable, some sensor modules (often grove) and maybe solar panel. They are an excellent choice to make, since their cost is around €150 - 300, but everything for creating a first prototype is inside the box.

Some takeaways:

  • To enable IoT applications, it needs to be easy to make a prototype and related functionality quickly and cost effectively,
  • Makers represent a significant and growing market for these kinds of products,
  • It’s important to couple these hardware dev kits with software tools. This allows Makers to not waste time on the basics of making the system work, focusing instead on testing out interesting applications,
  • “It’s all about the experience”. This holds true for any and every IoT application. You need to focus on the use case, how is this actually valuable for the end-user? 

Rapid prototyping allows individuals or organisations to test their value proposition at early stages, ultimately allowing them to get to a better finished product in less time and at a lower cost.

Smart City solutions

Alex Mateo, Industry Manager for Smart Cities at Libelium, spoke about complete smart city solutions. He delved into specific applications for smart cities, the challenges of deploying solutions, and the future of smart cities.

Some takeaways:

  • Smart cities require buy-in from multiple constituents. To get the major/city council/citizens/etc. on board with a smart city initiative, they need to understand the value, costs, and timeline,
  • The value needs to be clear for people or organisations to invest. For cities that do make the investment, as much as 26% of the costs of the city can be cut. It just takes upfront investment, then that saved money can be put towards education, public safety, etc.,
  • Smart cities are a necessity. By 2050, it’s projected that 75% of people on Earth will live in cities. Smart cities help cut costs, keep people safer, and have less impact on the environment by being more energy and resource efficient,
  • Sensors that are increasingly more accurate and cheaper will enable better insights and ultimately greater savings (be that energy, cost, etc.).

Panel: How to Generate Revenue with IoT

Steve Brumer, partner at 151 Advisors, moderated a panel with three speakers…
Tim Acker, Vice President, Mobility & Connected Solutions at SYNNEX,
Scott Scheuber, Director of Product Management at U.S. Cellular, and
Jeff Pedro, Sr. Director, IoT Business Development at Connected Development.

Some takeaways:

  • It’s not enough to have something that’s connected, there needs to be a why. Why is adding a great value to the end-user,
  • It all comes down to customer needs. Businesses need to identify what customers need and find a solution. You can’t simply address wants — you need to go further,
  • Consumer education on IoT is still lacking. Only 15 % of population understands what IoT is. This means that you either need to educate the customer yourself (through marketing of some kind) or educate re-sellers so that they can sell your product to related consumers,
  • Simplicity is the key! Since education is still lagging behind, anything too complex will encounter difficulties,
  • Verticals matter. If there’s some kind of mandate (such as regulations), businesses are forced to seek solutions and IoT can be a great answer. Such verticals might be transportation or utilities.

Conclusion

If you are in the phase of starting to develop your own solutions, high revenues are probably far away, even if you have enough staff to develop the product/service. But, there is no place for discouragement, at all! Small, but secure steps are the highway to heaven, since learning curve [4] shows that better learning comes from greater experience. Therefore, having mistakes is a normal thing in IoT development, I know it quite well by myself. If you don't give up and make sure to record those mistakes or failures into the "Lessons learned" book (or doc, note, etc.), you'll gain a precious knowledge that will generate revenues, for sure! 

 

To be noted, we are happy to cover your back with our support if you need a feedback about your idea or project, but also for hardware parts and our own Cloud.