The Internet of Things (IoT) has brought significant connectivity that facilitates the development of several new technologies in every industry. IoT is transforming products, technologies and the way businesses are operated today. The advancements in IoT and other new technologies have given us the capability to design business models in a more versatile and scalable manner. And this has given rise to an IoT-as-a-Service model.
IoT-as-a-Service (IoTaaS) helps companies in implementing IoT technologies without deploying complex in-house software stacks in their existing enterprise architecture. IoTaaS helps enterprises in reducing their expenditure into software, staff and infrastructure. Also, this IoT business model enables your products to maintain connectivity, transmit data and help to manage them securely. Here the value lies in applications and analytics that eventually improve operational efficiency using actionable insights.
Rolls-Royce Motor Cars Limited, a luxury automobile maker has come up with a TotalCare program. Through this program, it basically rents its jet engines using a model known as “power by the hour.”
This model leverages IoT for monitoring the usage of jet engines with the help of sensors integrated in the products. These sensors collect data and send it to the cloud-based platform for continuous analysis. This helps in keeping track of the performance and health of the product in real-time.
Rolls-Royce charges the airlines on a fixed dollar-per-flying-hour basis. Rolls-Royce retains its ownership of the engine and takes care of its maintenance throughout its life cycle.
Peloton’s base product is its high-end, indoor bicycle. It is equipped with a 22-inch touchscreen and Wi-Fi-enabled tablet. Peloton also streams live and offers on-demand classes. Users can connect and avail these services from home via Peloton’s servers.
Peloton charges an annual fee for the streamed and on-demand content. In this way, the bike is not just sold, but it produces recurring revenue that exceeds the sale of the physical product.
Big players in the industry are already successful in making the most of IoT by incorporating the different layers of sensors/devices and network into their product lines. Through this model, customers only pay for the services that they avail.
This model is transforming the association between sellers and buyers from a one-time transaction to recurring business. Furthermore, it also creates opportunities for cross-selling. Selling different items like products and services together as a package generate better profits. But, service providers must make sure that they improve their solution providing capabilities to make the most of this opportunity.
IoT business models are disrupting the way companies are doing business these days. More and more products are being connected and being offered as-a-service. Companies are preparing themselves for wireless, low-power and 5G-enabled networks too. IoT-as-a-Service model yields great profits and facilitates a high margin, recurring revenue along with customized products. If you have any queries regarding IoT-as- a-Service business models or you are looking to adopt it, then talk to our experts.
With the increase in adoption of the Internet of Things (IoT), companies from all industries now have a question – which IoT business model and application is right for them? Check out this whitepaper to know what, why and how of IoT business models.
In this whitepaper, we have covered some important elements you should consider when looking to transforming your business model.