New Business Models That IoT Opens Up For Your Company

The economic revolution brought about by the Internet of Things is changing entire industries. Agriculture delivers more crops, retail incurs fewer losses and increases profits, and healthcare becomes more efficient and improves our quality of life! With the widespread adoption of the IoT, business models are also changing. The following is a summary of the new business models that the Internet of Things is opening up for your company.

Some examples of IoT business model

Previously, we discussed IoT business models and the importance of choosing a suitable option for an Internet of Things startup on the 2Smart Cloud platform blog. Let's recall which IoT startup business models we described:

• subscription,
• outcome-based IoT business model,
• sell devices,
• razor blade,
• data monetization,
• pay-per-usage.

You can find the details of each listed IoT business model and how it helps in IoT product commercialization in the 2Smart IoT development platform blog.

Below we will look at how the IoT world is changing the economy as a whole, perfecting existing economic models and creating new ones.

How IoT business models are changing the economy

When choosing a business model for IoT, companies rarely think about such global phenomena as the Fourth Industrial Revolution. However, the Internet of Things is one of the technologies that provide the transition to a future in which the physical, digital, and biological worlds will be organically combined into one. Below we provide five examples of IoT business model and show how new technologies are transforming the economy right before our eyes.

Everything is personalized

Everyone's personal preferences matter. The Internet of Things will help businesses to please every customer. Let's start with a simple one - a smart home can adapt to its residents. The nursery will be warmer than the parents' bedroom, and the living room will always automatically turn on a night light to navigate it comfortably.

Let's complicate the task, and the smart home will recognize each tenant in person — for example, thanks to their personal fitness tracker. A smart speaker in the dining room will play business news, music podcasts, or children's programs, depending on who's in for a cup of tea.

If we complicate the task more, each person's tastes will be considered in public spaces. A ticker on a public display will show news on topics that are of interest to everyone who is nearby. And even advertising will be helpful and will not be annoying.

Thus, the Internet of Things opens up endless possibilities for developing a business model that will be as personalized as possible for each customer with their unique tastes and interests.

However, personalization doesn't necessarily only apply to consumers. It is used in precision farming, which allows farmers to increase their yields and reduce waste. Smart traffic lights minimize traffic congestion and prioritize pedestrians only when someone really wants to cross the road.

Therefore, IoT business model examples based on personalization are endless, and your company certainly has something to offer the world.

The ubiquitous "as-a-service"

The "as-a-service" business model is excellent in benefiting both the service provider and the consumer. Businesses are increasingly interested in moving away from a discrete, one-time sales model towards a subscription-based, ongoing service model. A subscription allows you to build a long-term relationship with clients by selling them a value-added product and service. As a result, your company's income stream becomes more stable and regular.

The client also benefits because they are spared from a one-time capital investment and can plan their regular expenses for a subscription to a quality product they need. Moreover, many products allow customers to increase or decrease their power usage with a couple of browser clicks or mobile app taps.

This powerful business model originated in software sales but is also a more than appropriate business model for IoT. As a result, the use of "as-a-service" is becoming more and more ubiquitous. Many companies initially focus on the subscription model when building IoT products, and some manufacturers surprise with unexpected IoT business ideas when the subscription is implemented in traditional and familiar products.

Smart speakers are distributed by subscription, the value of which is paid access to musical, educational, and other content. Since 2020, BMW has begun selling such car options as heated seats and steering wheels, recording frames from an external camera, and more under the "as-a-service" model. Tesla also uses a subscription model, and its Premium Connectivity package includes access to additional services like Live Traffic Visualization, Satellite-View Maps, and more.

Incorporating accurate, low-cost, always-on IoT sensors and monitoring devices into the products you sell and install increases the range of services you can provide to the end customer. The set of data that you will receive will allow you to carry out preventive maintenance more efficiently and notice emerging problems in the operation of a device instance in time. For example, SmartHeat heat pump manufacturers have taken this path, and we have helped improve support by turning pumps into IoT devices.

The circular business model in its perfection

The "as-a-service" model is one of the possible embodiments of a sustainable circular economy, which has been made possible, among other things, by the Internet of Things.

Let's remember what the classical linear model of the economy looks like. Resources in it enter the economy in the form of raw materials, which are transformed into a finished product through the efforts of one or more companies. The consumer receives the product, operates it during the period of use, and then transfers it for disposal. As a rule, removal does not involve reusing the raw materials from which the product is made and is reduced to incineration or landfill.

The circular economy is fundamentally different. It implies a careful attitude to resources at all production, sale, and disposal stages. Resources in such an economy circulate over and over again through repair, reuse, remanufacturing, and recycling.

The role of the IoT in business that strives to adhere to a circular economy is enormous. This technology allows you to learn in time about the need to repair or restore components. The inventory of viable waste and its reintegration into the value chain becomes possible.

The Internet of Things allows the introduction of the principles of a circular economy, including in sectors such as agriculture. "Intelligent" agriculture is based on automated decision-making systems, integrated automation and robotization of production, and ecosystem design and modeling technologies. The experience of the 2Smart team in the application of IoT in agriculture lies in deploying a smart greenhouse control system that allows using the minimum amount of external resources and reduces harmful emissions into the environment.

Context-driven Internet of Things business

Companies spend millions of dollars on market research to understand their customers' context. Understanding how consumers live and work, their habits, and how they use your product helps to sell your product or service better and strengthen customer relationships after the sale.

The Internet of Things can answer many business questions better and more accurately than the most successful marketers. And most importantly, information will be cheaper for businesses to obtain.

With this information, you can develop customized offers for clients and adjust your business strategy based on audience segments that you can define very precisely.

Another significant achievement of the Internet of Things in your context awareness is that IoT sensors allow you to monitor compliance. For example, the storage and transportation of some medicines or dangerous goods are associated with the need for strict control of temperature, humidity, lighting, and other parameters. Use it wisely in your IoT business model to become successful in the market!

Sharing economy

Sharing is a philosophy that is taking over new areas. Inaccessible a few years ago, the idea that it is unnecessary to own a thing to use it actively has already become commonplace. Today there are many non-IoT and IoT business models examples based on sharing, many of which everyone knows.

Online services like Airbnb allow you to share houses and apartments instead of using expensive hotel services. Smart batteries make it possible to sell excess electricity to the grid when the consumer does not need it. One car-sharing vehicle from Uber or its competitors replaces 15 private cars, according to estimates in the US.

The term “uberization”, born thanks to Uber, means providing on-demand services for as many needs as possible.

Uberization can take such forms as using common software to manage products from different manufacturers. For example, the 2Smart Cloud mobile application is common for all devices connected to the IoT platform of the same name, so manufacturers do not need to bear the costs of developing and maintaining their applications.

The sharing economy has a great future, as saving consumers money is its essential but not the only benefit. Such an economy significantly reduces the burden on the environment, makes consumers' lifestyles more flexible, and makes goods and services more affordable.

The Internet of Things allows the most unexpected areas to be involved in the sharing economy, as in the smart battery case described above. Think about what sharing-based examples of IoT business model you could implement in the sector of the economy where your business belongs.

Finally

We have given just a few examples of the importance of the IoT for businesses, describing how it is transforming today's economy and what new disruptive business models are replacing the classic ones. In 2023, it is clear that ignoring IoT as a technology is leading firms to fall behind competitors. At the same time, the Internet of Things makes it possible not only to enter new market niches but even to create them by offering unexpected revolutionary solutions.

You can turn to 2Smart for help implementing your Internet of Things business strategies. Our team will provide full support with connecting devices and sensors and give you the software tools to manage the IoT system.