IoT hardware business models: towards Hardware-as-a-Service and IoT data ecosystems

Samsung’s ARTIK Cloud Monetization service enables IoT device manufacturers and service providers to tap in new ecosystem-driven IoT data monetization models.

Developing new monetization models and revenue sources with potential innovative business model shifts is one of the more mature goals in digital transformation, Industry 4.0 and evolved IoT strategies.

Many IoT hardware companies sell products without a clear view on sustainable business models. The pressure is on to monetize IoT data.

At the center of these new revenue models often are services, developed around multiple data sources and cloud computing. In digital transformation areas where the Internet of Things plays an important role, such as Industry 4.0 and the Industrial IoT, this obviously includes a smart use of IoT data.

While many companies are still in earlier stages of Internet of Things projects and Industry 4.0 maturity, where we typically find goals such as automation, maintenance and optimization, others have designed scalable IoT-based monetization models and tapped into entirely new revenue sources, often within an ecosystem approach as the open “as a service” economy enables to find true value in IoT.

IoT vendors towards new IoT data monetization models

The need to develop IoT data and application monetization solutions is not just one of end customers, being companies that offer their partners and clients additional offerings or even develop services to expand their client base with relevant services.

ARTIK Cloud Monetization: IoT vendors and providers tap into an open IoT data ecosystem

While such offerings are typically part of the longer term IoT strategy and digital transformation strategy there are other companies that seek IoT data monetization to develop new business models by leveraging data shared by IoT devices and applications.

We’re talking about IoT device manufacturers and IoT service providers such as building management, smart energy or smart home automation vendors as you can read below. And their need to do so is high.

ARTIK cloud new monetization plan - source ARTIK Cloud Monetization press release
ARTIK cloud new monetization plan – source: ARTIK Cloud Monetization press release

To boost the IoT data economy for these companies, which are close to the source of IoT data through their products, solutions and services, Samsung launched a new service in its Samsung ARTIK Smart IoT platform portfolio.

ARTIK Cloud Monetization, announced on July 31st 2017, is specifically designed to enable IoT vendors and service providers to, quoting from the press release, “tap into an open ecosystem and create service plans that generate revenue directly from the interactions of devices and services”.

For device manufacturers, IoT shifts their operating model from selling hardware to selling hardware products connected to digital applications.

The data monetization model should enable manufacturers and service providers alike to develop the new revenue streams and new business models that are also sought by other companies in their digital transformation strategies, as mentioned.

One of the business models for IoT manufacturers and service providers which Samsung mentions is Hardware-as-a-Service, no doubt it’s the main one.

IoT hardware manufacturers moving away from the ‘sell and forget’ model

The development of ARTIK Cloud Monetization is also driven by the needs and challenges which are encountered by IoT device manufacturers.

As the graphic from Samsung’s ARTIK Cloud Monetization announcement blog post below shows IoT vendors are in a so-called “Sell and Forget” model. In other words: they sell the IoT hardware and possibly some services and then they are out of the picture. It’s the zone where no one really wants to be and price erosions, commoditization and lower margins occur first. The zone where so many other companies in entirely different markets are stuck in and try to move away from to remain relevant as well indeed. And it’s typical for a growing market with a growth in not just IoT devices as Samsung says but also for a growing market where more third party applications use these IoT devices.

From an IoT hardware sell and forget model to an ecosystem view - source Samsung ARTIK blog announcing ARTIK Cloud Monetization
From an IoT hardware sell and forget model to an ecosystem view – source: Samsung ARTIK blog announcing ARTIK Cloud Monetization

As Samsung says in the press release: “…device manufacturers often have trouble recouping data costs associated with free applications and supporting an ecosystem of third-party devices, apps and services. Manufacturers have to either absorb the data costs of operating devices in the field, or factor in anticipated data costs to the retail price of devices”.

To move from the ‘Sell and Forget’ model to one that Samsung calls ‘Connect and Improve’ and essentially is about an ecosystem approach where vendors, service providers and maybe other companies meet to build ecosystem-driven services and monetization models. And that’s where ARTIK Cloud Monetization comes in with its full brokering, metering and payments system.

IoT Hardware-as-a-Service: a model for the future of IoT vendors

With Hardware-as-a-Service as a key business model in this shift towards an ecosystem approach beyond the ‘sell and forget’, ARTIK Cloud Monetization is seen as an example of an IoT data broker and revenue generation model that solves challenges of many IoT hardware companies.

One of the companies that stepped in is French building management company Legrand that develops devices for home automation, energy management and metering, light control and so forth.

Towards IoT Hardware-as-a-Service - source Samsung ARTIK blog announcing ARTIK Cloud Monetization
Towards IoT Hardware-as-a-Service – source: Samsung ARTIK blog announcing ARTIK Cloud Monetization

Pete Horton, VP of market development at Legrand: “The new data broker model helps Legrand focus on our core competency of building market leading devices, while also allowing us to benefit from Samsung’s open ecosystem of third-party apps and services. It’s the missing piece to the IoT puzzle.”

Stefan Grosjean of Belgium-founded smart energy solutions provider Smappee puts it this way: “Increasing the reach of devices while also providing a path to monetization is key to the successful evolution of IoT.”

And the last word is for Frost & Sullivan’s Dilip Sarangan: “The problem with IoT is that many hardware companies are selling products without a clear view on sustainable business models. There’s a lot of pressure now to monetize data”.

 

Disclaimer: we are not related with Samsung in any way. All images are from Samsung’s ARTIK Cloud Monetization announcements and serve illustrative and informative purposes with regards to the new service, except the top image which belongs to Shutterstock – Copyright: PowerUp