“Internet of Things” – Opportunities ahead for Intelligent Device Makers?
Creating Internet-connected smart devices offers many benefits, including:
1. Product Life Extension. It extends the life of the manufactured device. Much of the functionality of devices is managed and controlled using embedded software, instead of being hard-coded into the device’s physical components. As a result, product upgrades and enhancements can be delivered using software commands communicated to the device over the internet.
This enables the customer to derive more value from the device over a longer period of time with minimal disruption. It’s good for the manufacturer too because it offers more up-sell opportunities for new functionality at minimal expense and effort. Finally, it’s good for the environment, as less physical machinery needs to be manufactured and disposed.
2. Automated Support. The Internet of Things provides enhanced support experience to customers, at significantly reduced costs to device manufacturers. Manufactured goods have the ability to monitor operations and report back malfunctions and their causes –drastically streamlining the troubleshooting process. Potential problems get flagged by monitoring for trouble signs and patterns, and then resolved by the system by anticipating malfunctions before they actually occur and suggesting preventative remedies. Many of these problems are addressable remotely through software commands, fixes and upgrades, thus eliminating the need to send personnel onsite to fix the problem.
3. Reduced Manufacturing and Distribution Costs. Internet-connected devices controlled by embedded software significantly reduce manufacturing costs. Companies reduce the number of models they must manufacture by controlling features, capacity, configurations and throughput via software and software entitlements – allowing them to build once and “package” functionality in any number of formats. Configuration of the products can be postponed until the exact requirements of the customer are determined. This manufacturing flexibility means that producers, distributors, and resellers require fewer inventories – greatly streamlining the supply chain.
4. New Markets & Revenue Streams. The Internet of Things enables the creation of entirely new revenue streams as well as opportunities to grow the customer base. Using a software licensing model, manufacturers can easily offer product enhancements through software updates, and charge for the enhanced functionality based on a software maintenance and update model. There are opportunities to charge for new levels of software support while simultaneously delivering a better customer experience.
And because embedded software allows for flexible product configurations – manufacturers can quickly, easily and inexpensively package and price their devices to uniquely address new, emerging or niche markets that would previously have been impractical or prohibitive due to costs. The additional data generated by intelligent, connected devices can also be turned into intelligence and used to identify new potential markets and opportunities.
For instance, rapid uptake of a unique product configuration in a particular geographical market might signal a trend that can be marketed more explicitly and then leveraged for other regions. With the flexibility to run additional software on the intelligent device, there is also the option of selling loosely related products and services, developed by the same manufacturer or by partners. In essence, connected devices controlled by embedded software become highly flexible platforms delivering unprecedented value to customers and revenue to manufacturers.
Each of these benefits is a natural result when manufacturers combine the benefits of an embedded software model with the connectivity of the Internet. And they are often realised in the sequence presented here, as manufacturers ascend the maturity model.
And while the first two benefit points are most often associated with the “Internet of Things” or “M2M”, the true magnitude and promise of this technology is realised as companies move up the maturity model shown below to the third and fourth benefit points. As shown in Figure 1 below, this maturity model consists of the following goals: Stage 1- Product focus; Stage 2 - Product and service focus; Stage 3 - Solution management and Stage 4 - Ecosystem management.
Click on image to enlarge.
As shown, embedding licensing and entitlement management software is the enabling technology that helps intelligent device manufacturers make their products ready to leverage an all-pervasive Internet environment. Embedded licensing and entitlement software offers capabilities that allow manufacturers to personalise offerings without having to manufacture multiple models.
Simple changes to the embedded software in the device enables manufacturers to customise the product based on customer needs by managing how it behaves – i.e. by activating or deactivating features, setting device capacity and otherwise controlling the behavior of the product. This greatly simplifies product lifecycle management, and facilitates supply chain management.
The usage data provided by the embedded software offers insight into how customers are using hardware, what software they use most often and new services that could potentially be created. Further, product usage information enables manufacturers to make conscious choices pertaining to trade-offs between cost and value of service when packaging products and services for customers and markets.
Already, there are sophisticated embedded licensing and entitlement management solutions available that enable intelligent device manufacturers to tailor their approach to product development and business to meet the demands of a highly competitive and connected marketplace.
In a world where the number of connected devices already outnumber people, anticipating an all-pervasive Internet landscape is reasonable. Intelligent device manufacturers must transition to the concept of the “Internet of Things” by thinking and acting like software companies, not simply product manufacturers. Key to their success will be their ability to understand and adopt a software-centric approach to manufacturing and selling hardware.
Loading comments... Write a comment