IoT Business Models

by | Feb 26, 2020

When was the last time you played the board game, Monopoly? If your answer is: before the subsequent falling out with your friend(s) who played with you, then I think we can all agree that there’s a primal, competitive drive when playing this game! I would like to make the simile that much like the abundant 1,144 versions of the Monopoly boards, the multiple industries that are beginning to implement IoT into their processes can be dominated by a single “player” in the space. Demonstrated by Breadware’s industry analysis, there are many companies that have advanced to “Go” and collected their $200 to begin the domination of their respective boards.

These players have become successful because they are adapting their business models to incorporate IoT, also known as digital transformation. One example is Coca-Cola and its creation of the “Coca-Cola Freestyle Vending Machine”; they have seen an 8% increase in beverage servings and a 10% decrease in calories-per-serving! Let alone, their mobile app allows creativity and customization of the users’ drinks that create a personal experience to collect data and ultimately feed into their business model. To further belabor my Monopoly analogy, Coca-Cola fundamentally owns all of the “orange properties” and has put all their red, plastic hotels on top of them that it becomes basically impossible for other beverage companies to compete on their level given their robust business model.

As Breadware puts it, there are several improvements that IoT provides to business models:
  1. Higher revenue: since consumer insights are able to be collected, then companies can make better decisions on how to develop and/or pivot their products/services to meet demand such as Febreeze did.
  2. More stable revenue: instead of depending on receiving upfront, lump payments, companies can adapt to “as a service” models such as what Peloton did with their exercise equipment subscriptions.
  3. Higher profits: middlemen like retailers take a cut of sales when a product is sold; however, companies can adapt to becoming a main connection like Amazon did with the “Amazon Dash” to become the main connection to their customers.
  4. Higher bottom-line: specifically product consolidation can allow products to be sold at different price points thereby having less operational and manufacturing costs.
  5. Accessible customer insights: the product’s data collection can continuously feed into the business-model and allow for improved and/or new business conceptualization.
Continue reading Breadware’s analysis to see the top 5 new business models and their side effects in detail. (Meanwhile, I’ll probably stick to my classic, favorite board game, Scrabble.)
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