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Monetizing
the Internetof
Things
Perspectives from the front lines
Jon Gettinger Jeff Kaplan
Adam Hanft Ariane Lindblom
Bob Harden Brendan O'Brien
Brian James Parker Trewin
CONTENT
1 Foreword 02
2 What Makes the ‘Internet of Things’ is Important 04
3 Taking Aim in the IoT World 06
4 Two Ways the Internet of Things Will Unlock Your Customers’ Revenue Potential 08
5 The ‘Not So Simple’ Truth of the IoT 12
6 Disruption of Capitalism and Other Challenges 14
7 Pitfalls and Perils on the Road to IoT Nirvana 19
8 Personalizing the Internet of Things 23
9 The ‘Reach Out and Touch Everything’ Era 26
10 Will Connected Devices Disconnect the Family? 28
11 What the IoT Can Learn from Nordstrom 31
01
Foreword
The Arab Spring movement of 2011 grabbed something new (e.g., the commoditization of RFID
the world’s attention and was made possible by and TCP/IP hardware, the prevalence of internet-
the pervasive use of social media. The “Twitter ready wireless networks, etc.). More importantly,
Revolution”, as it has been called by some, the IoT is enabling new business models that will
fueled the rapid inclusion of participants in eventually cause societal shifts just as big as the
protests, allowed the immediate dissemination of internet and the smartphone did.
information to the outside world, and thwarted
outdated suppression efforts. At Aria Systems we spend a lot of time
thinking about the ways in which our technology
It was fundamentally different from any contributes to businesses seeking to capitalize
previous uprising in human history and it was on the ever-changing ways to engage with
made possible by a confluence of technological customers. Our collective interest in the IoT and
advances that included the internet itself, the its organic overlay with a long list of monetization
smart phone and, of course, Twitter. models should be self-evident if you’ve been
reading this Internet of Things anthology series.
No one could have predicted how these
technologies would end up serving as the As We embarked upon this effort it quickly
foundation for such seminal changes in global became obvious that it would be a disservice
human behavior. to our readers not to elevate our thinking. We
needed to go beyond what was strictly relevant
The Internet of Things (IoT) represents to the IoT’s capacity for monetization and include
a similar example of how technologies can perspectives that looked at the IoT from other
come together in unpredictable ways to create angles.
02
Foreword
The IoT is far more than just the promise of Seeing the colors laid out upon an artists’
new ways to make money. It will usher in new palettes is not enough to predict what they will
ways that humanity can become socially richer. paint, not even for the artists themselves. The
And, like any major societal advance, it will also only thing we do know is that many “artists”
usher in new challenges to be met and overcome. will avail themselves of the IoT “pallet”, and
masterpieces will be born. It’s only a matter of
Just as no one was able to predict the Twitter time. Like you, we can’t wait to be there when
Revolution in 2011, no one today can tell us what those masterpieces are unveiled.
the IoT will ultimately bring to the world. In this
IoT anthology, the best thinkers among Aria’s In the meantime, we must quickly prepare
experts drew upon their respective experience ourselves for a world that will be radically
and gazed into their crystal balls to offer food for different from the one we occupy today.
thought.
03
Monetizing the Internet of Things
What Makes the ‘Internet of
Things’ is Important
By Brendan O’Brien
H
ere at Aria Systems, we live and In general, the IoT promotes a heightened
breathe all things related to level of awareness about our world, and a
monetization via customer care platform from which to monitor the reactions
and relationships. We live in a to the changing conditions that said awareness
world where recurring revenue exposes us to. And, like the advent of the
management is becoming a dominant theme. internet itself, the IoT enables a myriad of “… the IoT
Lately there’s been a natural gravitation to
the Internet of Things/Internet of Everything,
applications ranging from the micro to the
macro, and from the trivial to the critical. enables a myriad
and the synchronicity between the business
models the IoT produces and how Aria is
Since we’re focusing here on why the IoT
is important, let’s turn our attention to the
of applications
serendipitously designed to support all of it.
Simply put, we want people to think a lot about
“macro” and the “critical” first, and look at
some provocative ideas that are already in
ranging from
the new age the IoT heralds. To that end, this development across the globe. the micro to the
post is the first in a series intended to explore
the monetization of the IoT in some depth; i.e., Smarter Natural Disaster Management macro, and from
the Monetization of ThingsTM. The ability to accurately predict the onset of
conditions that promote forest fires before
the trivial to the
We thought it wise to begin by discussing
something that, while arguably quite basic, is
they get out of control (or even begin), allowing critical.”
containment teams to respond more quickly
such fertile ground for idea generation that it and first responders to rapidly manage targeted
almost can’t be discussed enough: Why is the evacuations. This same concept applies equally
Internet of Things important? to the smarter detection of and reaction to
04
Monetizing the Internet of Things
mudslides, avalanches, earthquakes and other
natural disasters.
and immediately administer life-saving drugs
or deploy emergency responders with detailed
“… the IoT
Smarter Urban Management
information placed instantly in their hands or
alert family members as-needed.
promotes a
Cities and counties automating traffic heightened level of
The ideas above barely skim the surface
management that effectively notices and
governs the flow of traffic based on ever- of the deep sea of possibilities afforded awareness about
changing conditions; parking applications
that intelligently guide cars to open spots,
by the coming IoT age, and they all share
a common (and not accidental) adjective our world, and
eliminating wasted time and energy and here: “smarter”. If “smart” is defined by the
confluence of access to information and the
a platform from
dramatically cutting back on emissions;
automating utility consumption, generation ability to utilize that information in meaningful
and appropriate ways, then the promise
which to monitor
and distribution on a grand scale, all with an
eye to the mitigation of waste that far exceeds of the Internet of Things is, simply, a much the reactions to
“smarter” planet that keeps us safer, balances
the capabilities of existing systems.
the personal good with the greater good, and the changing
Smarter Healthcare
improves humankind’s chances at providing a
more sustainable legacy for future generations. conditions that
Wearable devices that detect a host of health
problems, potentially before they even occur, said awareness
exposes us to.”
Author Bio
Brendan O’Brien , Co-founder and Chief Evangelist at Aria Systems, has been in the
subscription services business for over 20 years, and is recognized as a pioneer and
thought leader. In 2002 he introduced the world to Cloud billing, and has innovated
database-driven, enterprise-grade web applications for companies ranging from
Medical Manager to Wright Express, and LaserLink. All this before the concept of
“Cloud” was even on the horizon.
05
Monetizing the Internet of Things
Taking Aim in the IoT World
By Jon Gettinger
W
e are at the beginning have begun laying the Cloud foundation for
of another explosion in the impending gold rush. For me, I like to think
information applications. This about the IoT combined with powerful mobile
one is being driven by small, devices and fast, anytime/anywhere networks.
intelligent sensors that can Now that is a platform that can cause some
precisely measure and communicate stuff like serious economic disruption across many
temperature, position, movement, light and
chemical traces. These connectable sensors
industries! “...the loT will
are reliable, manageable and affordable
enough to be within reach of both businesses
Some businesses are delivering solutions
that are much closer to what their customers
continue to drive
and consumers. actually want. For example, rather than sell the growth of
This entire sensor universe (and its
you an air conditioner, I can now sell you a
service that keeps your building between 68 recurring revenue
associated infrastructure) is referred to as the
Internet of Things, or IoT. It is, in essence, a
and 72 degrees year-round, or warn you of an
impending heart attack. Other businesses are
businesses
new type of platform with astounding breadth
and complexity. According to industry research
using the IoT platform to become dramatically
more efficient. Why stockpile unnecessary
across multiple
firm Gartner, by 2020 there will be a staggering material when my partners can now precisely industries.”
26 billion of these connected objects, more monitor my consumption and increase or
than three times the number of smart phones, decrease delivery as required? Turbo-charged
tablets and PCs combined. supply chains. The possibilities are astounding.
Early adopters are already using the IoT to The effect on marketing will be staggering.
deliver valuable new services. Major vendors Let’s take a look at just one important activity:
seeing another internet-sized opportunity connecting with qualified buyers, what is
06
Monetizing the Internet of Things
referred to in marketing as “targeting”. A large
portion of marketing dollars is wasted when the
problems IoT entrepreneurs will go after will
be recurring in nature, so I expect the IoT “According to
wrong offers are made to the wrong people at
the wrong place and time. Better information
will continue to drive the growth of recurring
revenue businesses across multiple industries.
industry research
about the buyer fixes this problem and gives
businesses like Facebook and Google, with their
Better targeting also gives vendors the ability
to more precisely price and package their
firm Gartner, by
vast warehouses of user data, the ability to wares. More agile vendors will take advantage 2020 there will be
command top-dollar for their advertisements. of this to expand into new markets, or steal
The IoT will generate an enormous, truly market share from competitors. a staggering 26
unprecedented amount of precise information
about buyers and their needs. This is great news for us at Aria, as we are billion of these
It’s a marketer’s dream come true. And it is
focused on helping customers implement
sophisticated monetization strategies and
connected objects,
easy to see how, with all this additional data,
the IoT will have a dramatic impact on both the
adapt them to go after new opportunities. As
we have seen with past technology waves,
more than three
economics and performance of targeting. there will be many new options for marketers. times the number
Better targeting means new market
The next few years should be very exciting
indeed! I’m looking forward to the ride. of smart phones,
opportunities for services. Many of the
tablets and PCs
Author Bio
combined.”
Jon Gettinger, Senior Vice President of Marketing at Aria, has over twenty
years experience working in the software industry with more than a decade in
executive roles. He has been involved with the SaaS business since the very
beginning when in 1998 he founded a company that delivered SaaS testing
solutions for web businesses. Most recently, he was the head of marketing at
Fortify Software prior to their acquisition by Hewlett Packard. He believes in the
transformative power of IT, the genius of molecular gastronomists, and in the
mysterious force that is the Rule of Three.
07
Monetizing the Internet of Things
Show Me the Money:
Two Ways the Internet of Things
Will Unlock Your Customers’
Revenue Potential
By Ariane Lindblom
“With the rise of
O
ver the past few years, there’s reality paints a very different picture: Most of the Cloud and big
been a lot of hype about the the IoT use cases today are focused on cost
Internet of Things (IoT) and its reduction and efficiency – and only 13% data, we are now
massive potential to change
how we live, work and conduct
of IoT use cases between 2009 and 2013
targeted revenue growth or innovation. able to collect and
business. From wearable devices to smart
appliances that share information via sensors, So, how will companies drive future revenue
aggregate more
it seems that every company is embarking
on a bold Internet of Things strategy. In fact,
growth from the Internet of Things? information about
nearly three-fourths of enterprises believe While we are still in the early stages of the customers than
that IoT solutions will create new business
opportunities and bolster existing offerings.
IoT, many compelling use cases are emerging
across various industries. Several of these ever before.”
By 2020 the IoT will produce an estimated 50 use cases create new ways to drive growth
billion connected devices, and IoT solutions and profitability from existing customers.
will generate $7.1 trillion. Yet the current How? The Internet of Things simply
08Monetizing the Internet of Things
represents another “smart” endpoint to
better understand customer behavior, value
selling complete “outcomes”, or Outcomes
as a Service (OaaS). Think of OaaS as simply “The Internet of
sentiments and product consumption. a product wrapped in a service-based SLA or
goal.
Things simply
With the rise of the Cloud and big data,
we are now able to collect and aggregate
One great example of OaaS is a leading
commercial air conditioning company that’s
represents
more information about customers than ever leveraging usage analytics and the IoT to another “smart”
before. Once companies have reliable real-
time, context-aware data feeds from multiple
charge for and deliver outcome-based air
conditioning that focuses on specific energy endpoint to
product sources collected over time, they will
shift how they do business with customers
consumption targets and temperature SLAs.
The days of selling an air conditioning unit
better understand
even more rapidly. and simply hoping that the customer will
have the desired experience are now long
customer
Ultimately, the IoT will change how gone. Other OaaS examples include behavior, value
companies bring new “value” to products preventative maintenance services, such as
and services, engage their customers and anticipating the wear-and-tear of a device, sentiments
drive future growth strategies. or creating product education services based
upon usage and adoption patterns. and product
To make this shift, companies need to take
a different approach – think differently – and The healthcare and medical device
consumption.”
focus on services rather than products. Using industries are key verticals that stand to
specific use cases, here are two primary ways benefit tremendously from the IoT. Even
the IoT will help drive customer growth: today, a number of medical device companies
are developing greater connectivity in order
1. Moving from Products to Outcomes to improve communications between health
Combined with the Cloud, the Internet of care providers and patients while also
Things is already changing business models providing real-time monitoring of patient
and related product offerings. One of the health through bedside diagnostics.
biggest shifts has been the move from selling
discrete products with attached services to The list of new business models enabled
09Monetizing the Internet of Things
by the IoT is endless – asset sharing,
verticalization, advanced telematics and
relationships and loyalty:
“Ultimately,
connected cars, home automation and more.
Net-net: With new insight into how customers
1. Combine usage behavior with other
customer history to predict and prevent
the IoT will help
are using a product or service, combined
with other data sources in the Cloud,
churn
2. Recognize buying behavior to adjust
companies create
businesses have new ways to deliver value to merchandising and align with local more sustained
customers and monetize solutions. preferences
3. Deliver customized offers at the perfect value by moving
2. Deepening Customer Relationships
By bolstering traditional sales acquisitions
moment (e.g., when a customer enters a
store)
from a one-time
and customer support, the Internet of Things
has become a new frontier for CRM. In order
4. Manage inventory volume based upon
demand and purchases (Amazon does this
“initial sale” focus
to minimize churn and create life-long today!) to an ongoing
customers, the IoT places a greater emphasis 5. Understand product usage and trends
on ensuring that customers derive ongoing to improve future product development relationship with
value from a product or service across the
customer lifecycle (onboarding, adoption,
efforts
customers.”
renewals and expansion). The first sale What’s next for the IoT in today’s enterprise?
initiated by CRM is now the starting point for
the IoT across the customer lifecycle. While the IoT holds broad appeal across
every branch of enterprise, its effect on
By connecting the dots and aggregating how companies manage their customer
data from the IoT with other valuable relationships will be priceless. Ultimately,
customer data in the Cloud, companies are the IoT will help companies create more
better equipped to engage customers. Here sustained value by moving from a one-time
are some use cases that demonstrate how the “initial sale” focus to an ongoing relationship
IoT can be leveraged to drive deeper customer with customers. The specific effects will
10Monetizing the Internet of Things
be felt in how companies go to market and
leverage their CRM systems and other data to
How will you integrate IoT processes and
information into your front office systems to “With new
better understand and engage with existing
customers.
deliver a more compelling experience?
insight into how
How will your company leverage the IoT to
If your business is customer-centric, it’s
time to incorporate the IoT into your long-term
customers are
better engage your existing customers? strategy. Your viability may depend on it. using a product or
service, combined
with other data
sources in the
Cloud, businesses
Author Bio have new ways
Vice President of Solution Marketing at ServiceSource, Ariane Lindblom is to deliver value
to customers
an experienced global manager, strategist and marketer practiced in all
aspects of customer acquisition, including segmentation, sales strategy,
solution selling, product marketing, lead generation, sales enablement
and account management.
and monetize
solutions.”
11Monetizing the Internet of Things
The ‘Not So Simple’ Truth of the IoT
By Brian James
T
he Internet of Things is exciting. had any collective consciousness. CellNet has
By connecting machines, objects, been acquired multiple times, and finally,
agents (aka “things”) via the electronic meter reading is now commonplace.
internet so that systems work more But CellNet struggled for years, and I still don’t
effectively, people will have the have an app that enables me to engage my
information they need to make better decisions family in reducing electricity usage. We do
and improve their quality of life. Sign me up. have far fewer meter readers.
“It’s anyone’s
But with such a big promise one thing
is clear: the IoT will be anything but simple.
Last week Nike launched its IoT device, the
FuelBand App for Android, to the headline, guess how the IoT
The IoT will be more complicated and chaotic
than we expect. Innovation and competition
“Pigs Fly, Still Can’t Put Their Flaps Toward
NikeFuel”. But wait – didn’t Nike throw in the
will ultimately be
will play out across devices, services, apps,
platforms, standards, monetization models,
towel on its FuelBand device in April of this
year, having not achieved its ambitious goals?
used to effectively
geographies and users to name just a few. Is Nike in or out? Or just doing it? Is Nike selling connect an
devices, apps or an experience? It’s unclear.
The fact is, the IoT is kind of like the pony unbelievably
express was when it was first launched: it
worked better than what we had, it underwent
For consumers the IoT is about better;
for businesses the IoT is more complicated. broad range of
a lot of changes, and consumers won while
business fortunes rose and fell. It’s anyone’s
Each needs to identify how it will deliver
competitive advantage – which may mean
devices.”
guess how the IoT will ultimately be used to more or less consumer choice. For example,
effectively connect an unbelievably broad I’m still waiting for Sirius XM to offer traffic
range of devices. For example, CellNet, a updates on demand. I don’t want to pay a
Silicon Valley darling back in the late 90’s, monthly fee for stuff I don’t use regularly. But
did “electronic meter reading” before the IoT is paid-on-demand traffic viable when free
12Monetizing the Internet of Things
traffic maps are available on your smartphone?
Or will “distracted driving” laws favor one form
I recently came across the “Air Quality Egg”
which monitors air quality wherever you put it. “By connecting
of distribution over another? For businesses
the IoT is anything but simple, even after the
Great idea, but what happens when I put my
“Egg” in a box along with some car exhaust and
machines, objects,
technology challenges. smoldering leaves? That action would skew
the data and therefore skew Air Quality Egg’s
agents (aka
Apple just launched the HomeKit to learning. So it’s important that companies not “things”) via the
connect “home things” including thermostats, only collect the data, but understand what it
door sensors and cameras together. They are means to their market now and in the future. internet so that
one of a myriad of companies vying to be the
new standard, and have entered the fight for If companies are going to take advantage of systems work
one or more standard connecting platforms.
Prepare yourselves for dizzying competition
the biggest market opportunity we may see in
this lifetime, they will need a well-thought-out
more effectively,
and rapid innovation. plan for how and with whom they will compete.
They’ll need to decide whether they will compete
people will have
One thing is clear: The IoT vendors who with the device, the service(s), the app(s), the the information
have clarity of purpose and unprecedented
flexibility, agility and speed are going to be
platform(s), the standard(s), the monetization
model(s) or combinations of these. they need to make
more effective at establishing an IoT presence.
Why? Because they will be more responsive The simple truth of the IoT is that it isn’t so better decisions
to the needs and desires of their market and
customers. Period.
simple. But it will be big, it will be exciting, and
anyone can be a part of it.
and improve their
quality of life.”
Author Bio
At Aria, as the Sr. Product Marketing Director, Brian James packages platform capabilities
and helps customers understand the power of recurring revenue and how it can effectively
drive innovation, efficiency, and greater revenue growth. Brian has been helping companies
use technology to drive innovation and efficiency for over 20 years at small and large
companies including Accenture and Oracle. With leadership roles in product management,
marketing, consulting, strategy, and implementation Brian brings a wealth of experience to
Aria Systems and its customers.
13Monetizing the Internet of Things
The ‘Internet of Things’ (IoT):
Disruption of Capitalism and
Other Challenges
By Brendan O’Brien
I
In all systems, great change is always The good news is that the mere expectation
preceded by great disequilibrium. of impending “squirelliness” (okay... I’ve
officially used that non-word enough…) is the
“No technological
For the past 20 years or so, everyone who most important tool in overcoming it. shift we have ever
knows me has eventually heard me spout
the line above. It’s something in which I firmly So as the Internet of Things, the greatest witnessed will
believe, and it doesn’t take much pondering
to come up with anecdotes that support the
technological and social shift since the
adoption of the World Wide Web, gets
bring as much
claim. underway, let’s talk a bit about what we
can reasonably expect if we want to find
disruption with it
Whether it’s a toddler going through potty stability and success on the other side. Keep as the IoT…”
training, the behaviors of subatomic particles in mind my assertion that the IoT is both a
during nuclear fission, a society shifting to a technological and a social shift. As such its
new social norm, the widespread adoption of pitfalls and dangers will be both technological
a new technology, or the arrival of a new boss and social in nature, and the point is not to
at your company... it’s all the same: As systems presume to tell you exactly how to solve these
undergo the shift from old model to new, the problems. Solutions will arise from the minds
transitional period is fraught with instabilities of individuals smarter than I, and from the
and unforeseen disruptions. Put more plainly, adoption of standards both imposed and de
things get “squirrely”. facto which do not yet exist.
14Monetizing the Internet of Things
Data Volume
A Boeing 777 jet on a transatlantic flight from
experiences consumers and businesses
will expect. Additionally, demand will more “The IoT is about
JFK to Heathrow has four engines, and during
that flight each of those engines generates
certainly grow for democratized sharing of IoT
data in order to deliver “cross-platform” value.
nothing if not
one terabyte of data. It’s admittedly a grand For example, the idea of your American market
Volvo’s embedded IoT sensors being able to
incredible volumes
example, but should act as a wake-up call
for anyone planning their IoT strategy. Data seamlessly find and pay for parking during of data, and those
your weekend trip to Toronto? Please! But it
volumes are going to far exceed anything
we’ve ever seen. Not only will “Big Data” will require data sharing. So, when I ponder who succeed will
immediately become “Massive Data”, but for
the full promise of the IoT strategy to come
the manifold increase in data volume, the high
sensitivity of the data within, and the market be those who
to fruition, there will need to be significant necessity to allow disparate entities to share
data from disparate sources (and in the blink
begin by investing
upgrades in infrastructure, broader acceptance
of the necessity for a massive data strategy of an eye... did I mention that?), I ask myself
whether the level of security currently afforded
heavily in a robust
by businesses of all kinds, and major leaps
forward in the technologies and protocols used by today’s protocols and practices can handle massive data
in the storage, transmission and parsing of the
coming data flood. The IoT is about nothing if
it, and I get worried. Very worried.
strategy.”
not incredible volumes of data, and those who Standards
succeed will be those who begin by investing The World Wide Web only began to fulfill
heavily in a robust massive data strategy. its true promise when standards for TCP/
IP (and its all-important child HTTP), HTML,
Security JavaScript, CSS and SSL were established
Embedded in the flood of data discussed and widely adopted. The IoT will initially be
above will be all kinds of personally able to “ride” on pre-existing standards and
identifiable information (PII). Whether that protocols (in fact, it already is doing so), but as
data is directly present in any given data data volume and data security needs morph
transmission or obfuscated to some degree, and increase, it is safe to assume that existing
for the IoT to “deliver” to consumers, this PII standards will not scale. The IoT is demanding
(or more likely the indirect pointers to it) must new standards of its own for communication
be present or IoT devices and services will and data formatting and rapid development/
be unable to provide the highly personalized deployment. Luckily plenty of bright people
15Monetizing the Internet of Things
are busy at work trying to tackle the problem,
although no one yet can say which standards
that number increases to 100 or more and
their ability to effectively manage a personal “The IoT is
will do the job most effectively and will
“win” - be it those being created by large
budget becomes ever more unwieldy. I call
this anticipated swing of the pendulum
demanding
corporate alliances like the Industrial Internet
Consortium, or those by community/open-
“subscription fatigue”, and believe it will be
best mitigated by players who offer means
new standards
source style entities like the AllJoyn Alliance for consolidation of heterogeneous services, of its own for
(or combinations of both). All we can say for services offered by different providers, onto a
certain now is that what we currently have in single monthly bill. communication
the way of internet standards is highly unlikely
to scale and extend in the ways the IoT will Instead of getting 100 “hits” against my and data
demand. credit or debit card spread arbitrarily across
the month, wouldn’t it be cool if I was given the
formatting
Subscription Fatigue option at the time of signing up for IoT-enabled
service number 101 to be able to simply add
and rapid
The shift to recurring revenue was well
underway before we all started talking about it as a new line item to a bill I already get on, development/
the IoT, and when we here at Aria look at the
myriad services we expect to arise from the
say, the 15th of every month? Sounds like
it might be attractive to many people, and deployment.”
wide adoption of IoT technologies, we see an it sounds fairly simple, doesn’t it? But this
even larger wave approaching the shore: a idea fundamentally challenges the direct
wave of service offerings that lend themselves relationship consumers have with providers
perfectly to recurring revenue models that as it necessitates the introduction of an
we already know are desirable to consumers, intermediary entity that to some degree must
businesses and investors. stand between a consumer and a provider, an
entity that would essentially be responsible
Taken at face value, that’s great news for for “floating” monies for some number of days
a company like ours that offers a platform for that consumer each month. This could be
for managing recurring revenue businesses. quite challenging for many merchants who
But taken to its logical extreme, one must are understandably very motivated to “own”
presume that the average consumer paying their own customers, not to mention the
for 10-20 subscription/recurring services today intermediaries responsible for this “float” who
may very well have a different mindset when are assuming some amount of risk themselves.
16Monetizing the Internet of Things
But it is doable, and one need look no further
than business models like PayPal or LevelUp to
that must be accommodated in order
for consumers to see the full value in the “All we can say for
see rudimentary examples of what I’m talking
about.
connected devices and services enabled by
the IoT. Remember my example above of the
certain now is that
American market, IoT-ready Volvo parking in
IoT-ready Toronto? In a traditional business
what we currently
A Fundamentally New
Business Paradigm partnership model, that example would have in the way of
have only worked if Toronto’s city planners
Okay, here’s the part of this essay where I
recognize I’m inviting many readers to believe
had taken the time to directly or indirectly internet standards
I might be a little crazy. That’s alright... I’m
establish a partnership with Volvo. But what
if our example driver was trying to park an is highly unlikely to
used to it; but stay with me. If we take all of
the (admittedly predictive) assertions I’ve
Audi instead? Or visiting Montreal instead
of Toronto? Is it reasonable to assume
scale and extend
made above, what I personally see coming is
a fundamental challenge to the very nature
that every IoT-ready municipality will pre-
establish relationships with every conceivable
in the ways the IoT
of capitalism and the merchant/customer
relationship as we know it.
automobile manufacturer? It’s not, and this will demand.”
example of an interaction between an IoT-
enabled car and an IoT-enabled municipal
When you go to the supermarket today
parking system is a simplistic and relatively
and fill up your cart, you are purchasing
predictable one. With the IoT, we must begin
goods that were provided by a wide array of
our planning with the assumption that we
manufacturers and producers. You pay the
cannot foresee every service it will enable,
cashier at checkout, and at some point the
much less the complex web of potential
store remits appropriate payment to all of
interactions between disparate services
those individual providers. Simple enough,
that smart people will dream up and that
but keep in mind this important fact: The
consumers will ultimately demand.
supermarket itself, prior to you walking
through its doors, made a whole bunch of
What I’m suggesting here is that there
decisions beforehand about exactly which
will be a demand for a “bottom-up”, more
producers’ goods to make available to you.
democratized version of capitalism driven by
But the IoT’s full promise is centered
users of services themselves. They will expect
on the fact that there is an unforeseen and
an ever-more seamless set of interactions
unforeseeable “web” of provider interactions
17Monetizing the Internet of Things
of these services among a host of providers
that isn’t encumbered by having to wait for
There you have it, and while I admit that
I am most certainly not 100% prescient on all “… the IoT’s
these providers to pre-establish business
partnerships in advance. While it may be
of the points above, I believe a few core points
are absolutely undeniable. No technological
full promise is
acceptable in these early days of the IoT
for a car buyer to learn in advance the list
shift we have ever witnessed will bring as
much disruption with it as the IoT, and those
centered on the
of municipal parking systems with which a disruptions will run the gamut from the purely fact that there is
Volvo or an Audi interacts in order to influence technological to the most fundamental ways
their car-buying decision, the infinitely more in which commerce operates and the ways an unforeseen
powerful selling tool is obviously being
able to tell that buyer, “It works with all of
in which humans interact with one another...
disequilibrium on every front. The winners and unforeseeable
them.” Extremely easy to say, extremely
hard to do, and not merely because of
in the IoT will be those who have the wisdom
to begin their efforts with the adoption of
“web” of provider
its technological challenges (such as the
standardization challenge described above).
the mantra that they don’t know what they
don’t know, and therefore do all they can
interactions
The larger challenge is one of establishing a to prepare themselves technologically and that must be
new extensibility for business partnerships
themselves.
even psychologically for the widest array of
possibilities in advance. accommodated
in order for
consumers to see
the full value in the
connected devices
and services
enabled by the IoT.”
18Monetizing the Internet of Things
Pitfalls and Perils on the Road
to IoT Nirvana
By Bob Harden
A
As I sat down to actually write this One App to Rule Them All
post I spent a chunk of time staring
at an empty page and scratching my “One app to rule them all, one app to
head (a risky activity for me given the find them, One app to bring them all, and in
steadily declining amount of hair still the Cloud to bind them” - me “Since recurring
attached to it). What does “IoT Nirvana” even
look like? It’s a dizzyingly broad subject. Not a line from Tolkien, but probably only revenue will be
From a consumer perspective, I would
because apps didn’t exist in his time.
the dominant
broadly describe it as hands-on technology
that gives me more insight into and control
Whether it’s controlling the lights in my
living room from a hotel in Brazil, wearing
monetization
over the things that are important to me. I see
at least five significant issues that need to be
a wristband that accurately predicts the
moment I’m going to die so that it can alert
model for the IoT,
addressed along the way: the coroner to be on hand when the fateful you should expect
moment arrives, or owning a refrigerator that
• Ease of use warns me when my milk expires, there are the customer
• Security and privacy
• Liability
thousands of potentially cool IoT services
available to give me more control over my experience to be
• Government intervention
• Evil (Google-style)
daily life.
critical for the IoT’s
What won’t be cool is purchasing 10-20 success as well.”
19Monetizing the Internet of Things
different services from 10-20 different vendors
using 10-20 different apps with 10-20 different
Management have both recently been
hacked by the People’s Republic of China.
“Customer
user interfaces. If that’s the way the IoT goes,
it will be a long tough slog to nirvana. Lack of
If we can’t keep classified government
information secure, how are we going to
retention and
standards and closed product ecosystems will keep the information about where you drove up-selling are
not get us where we need to go. your car last week secure? The saving grace
might be that no one but your mechanic or critical for
Brendan O’Brien alluded to this in a post a
couple weeks back and I think he was spot on.
insurance company will be interested in that
information, but I wouldn’t bet on it. profitability,
For the IoT to be user friendly, we’re going to
need service aggregators: one-stop shopping How secure will our connected homes be?
and happy
for a wide variety of services, with one bill and
(most importantly) one app that integrates
How about our medical monitoring devices? customers are
all your services in an easy-to-use interface. If it’s connected, it’s hackable. And if it much more likely
Apple seems to be giving this some thought
with HomeKit, but their history points to
can be hacked, it will be hacked eventually.
If you’re lucky, the hacker will just be a
to stick around
closed ecosystems and Apple-only products. kid hacking into your home to turn on
your kitchen lights at 3:00am. You’ve been
and upgrade
I’m looking for something a little more
open and inclusive than that. I want the
punked, but there’s no real harm. But if you’re than unhappy
unlucky…
ability to pick and choose preferred providers
with a single app to run all my services, like an
customers.”
A recent study from Fortify found that
Amazon Prime for the IoT. Jeff Bezos, if you’re 70% of the most commonly used IoT devices
reading this, I want a cut. Then again, you’re had vulnerabilities. The most commonly used
probably already working on it. devices and their Cloud components had an
average of 25 vulnerabilities per device. 80%
Internet of Things or Internet of devices tested leaked private information
of Targets? including user names, addresses, dates of
The Department of Defense and the birth, and credit card or health information.
government’s Office of Personnel If our lives are going to be more connected,
20Monetizing the Internet of Things
with truly sensitive information available
to be hacked, we’ll need better security
all of that out will at some point put a damper
on innovation. “Lack of
protocols and practices.
standards and a
How Do We Tax It?
Legally Speaking
The previous issues almost surely guarantee
closed product
One of my favorite quotes from my
programming days is, “Designers who try to
that the government will get involved. We’ll
have to let them in the door, and once they’re
ecosystems will
make things completely idiot-proof usually
underestimate the ingenuity of complete
in, they will never leave. That usually brings not get us where
unintended consequences. Check out Robin
idiots.” You can’t test for every possible case
because you can’t identify them all. So what
Cook’s medical thriller Cell for a truly creepy we need to go.”
vision of what government intervention in the
happens when one of those unimagined and IoT could look like in the medical field.
untested cases causes an injury, or a property
loss, or the exposure of sensitive consumer And when government gets involved,
data? inevitably the question comes up, “How do
we tax it?” In an age where governments at
If McDonald’s can get sued and lose all levels are struggling to meet budgets, it’s
because a cup of hot coffee is actually served almost inevitable that someone within the
hot, what’s in store for the manufacturer of a bureaucracy will look at the vast number of
home management system that gets hacked? online transactions or data and see dollar
What’s the manufacturer’s liability for the pain signs. Advocates for the IoT will need to get
and suffering involved when that kid hacks in front of this to ensure that the government
your system and punks you by turning on becomes a partner to innovation and not an
your lights at 3:00am, repeatedly, for several impediment.
weeks?
The answer is, we don’t really know. I
Do No Evil
worry that the IoT opens the door to a whole Yes, I’m talking to you, Google. I want to see
new set of legal precedents around product how you’re going to balance the whole “Do no
liability and data breaches, and that sorting evil” thing with the unprecedented potential
21Monetizing the Internet of Things
financial gain of being able to detect the
sensor in my Nikes or my wrist appliance, and
But the IoT, done right, will make the
world a better place by providing you more
“…the IoT, done
provide presence-based advertising in public
places based on massive volumes of data
control over your day-to-day life and perhaps
making your world a little safer. And that’s a
right, will make
collected from all of my other IoT devices. good thing, regardless of what obstacles we the world a better
Cashing in on that opportunity will not make might encounter along the way.
the world a better place. place by providing
you more control
over your day-
to-day life and
perhaps making
your world a little
Author Bio safer.”
With expertise in recurring revenue strategies and implementations,
former Director of Billion Solutions at Experian, Bob Harden, is now
Founder and Principal of The Harden Group. Contact bob.harden@
ymail.com or visit www.hardengroup.net.
22Monetizing the Internet of Things
Personalizing the Internet of Things
By Jeffrey M. Kaplan
A
combination of technological sensors on commercial vehicles to track their
innovations and macro-market movement and status in order to fine-tune
trends are converging to create transportation logistics and reduce potential
unprecedented opportunities that downtime.
will transform how nearly every
industry operates as a result of connecting a Since the cost of the nanotechnology
widening array of objects, devices and services that powers the remote sensors has been cut
via the “Internet of Things” (IoT). Personalizing dramatically, the range of ‘things’ that sensors “Personalizing
how the IoT captures, collates and shares the
data generated in this connected world is the
can be attached to has become limitless.
how the IoT
key to fulfilling its promise. Even more importantly, the Cloud has
made it financially feasible to deploy the
captures, collates
The IoT idea has become one of the hottest
technology topics of 2014 because a variety
sensors anywhere because it significantly
reduces the connectivity costs. In addition
and shares the
of consumer and industrial products can now it reduces the cost of capturing, storing and data generated
be connected in a scalable and economical analyzing the data generated by the sensors,
fashion to produce a new set of services which as well as sharing the output of said analysis to in this connected
were not possible in the past. whoever needs it.
world is the key
Today’s IoT capabilities have evolved from
a previous generation of machine-to-machine
Now, nearly every industry is exploring
ways to connect to their end-products to better
to fulfilling its
(M2M) sensors, systems and software that
were primarily utilized to handle a finite set of
understand how they operate so they can
improve their efficiency, and better understand
promise.”
industry-specific functions. One of the most how they’re used in order to better serve their
prominent examples has been deploying customers.
23Monetizing the Internet of Things
In the consumer world, IoT
implementations have already become
Fitness services, such as MapMyRide and
Strava, have capitalized on the data captured
“Since the
commonplace via a variety of wearables. The
most common of these consumer goods is
from their users’ exercise activities to develop
new value-added services that offer deeper
cost of the
an assortment of fitness products like Fitbit, insights into their routines and provide more nanotechnology
and the most elaborate is Google Glass.
What they both have in common (along with
detailed statistics regarding how they rank
against others. Based on these data, these that powers the
countless other IoT consumer items) is their
ability to capture data from the user’s personal
services can sell advertising space to various
companies seeking to appeal to their highly-
remote sensors
experience, analyze it in the context of other
data points, and provide the user with valuable
targeted population of users. They can also
repackage the data to help other businesses
has been cut
insights that can help them better understand improve their products. dramatically, the
their behavior and improve their performance.
This personalization process has become range of ‘things’
This functionality is not only empowering
to the individual, it is also a powerful tool
expected in the consumer world.
that sensors can
for commercial product providers to build
a tighter bond with their customers in an
What makes the IoT phenomenon
especially exciting is the infinite ways in which
be attached to has
increasingly commoditized marketplace.
The key is personalizing IoT solutions in the
the consumer applications of today can be
converted to commercial and industrial uses,
become limitless.”
industry sector the same way personalization thereby transforming how various businesses
has become the norm in the consumer web. operate.
We are all accustomed to Amazon’s ability For instance, fitness-oriented wearables
to immediately recommend books, movies are quickly being converted into health-
and other consumer items to us based on oriented devices aimed at helping patients
our previous purchases using continuously overcome various ailments. These new health
learning analytics. A growing number of monitors enable doctors to more closely track
vendors are developing similar abilities to their patients’ vital signs, and also allow the
enable their connected objects and devices patient to view how they are progressing.
to deliver the same benefits in the IoT These connections can substantially improve
environment. the quality of care to the patient while
24Monetizing the Internet of Things
reducing the cost of healthcare delivery for the
provider.
The factors for success will be calculating
the economic value to the user in light of “The key is
The same equation holds true for other
competitive alternatives, and having the
right mechanism to test, set and administer
personalizing IoT
industries. Transportation companies can use
data generated from various sensors attached
the constantly fluctuating price-points in the
increasingly personalized IoT marketplace.
solutions in the
to their vehicles to monitor their status and industry sector
location, identify issues before they become
real problems, and recommend methods to
When these issues are overcome, both the
customer and vendor will reap the benefits. the same way
improve their performance and efficiency.
Personalizing this analysis to match the driver,
Customers will gain better quality products
and services that will employ the customers’
personalization
vehicle, cargo and terrain will be the key to
properly leveraging the IoT’s capabilities.
buying and usage data to keep pace with their
constantly evolving needs. And, the vendor
has become
will have an opportunity to retain and produce the norm in the
Given all these ‘moving parts’, determining more profitable revenue from customers in an
how to measure the value of this IoT increasingly competitive marketplace. consumer web.”
personalization process will be essential.
Author Bio
Jeffrey M. Kaplan is the Managing Director of THINKstrategies (www.
thinkstrategies.com), founder of the Cloud Computing Showplace (www.
cloudshowplace.com) and host of the Connected Cloud Summit focused on the
IoT market on September 18 in Boston, MA (http://cloudsummits.com/event/
connected-cloud/.) He can be reached at jkaplan@thinkstrategies.com.
25Monetizing the Internet of Things
The ‘Reach Out and Touch
Everything’ Era
By Parker Trewin
H
ow big will the IoT be? According security systems, hydration reminders, and
to ReadWrite, if you ask Cisco and course-correcting behavior alerts stand to
Morgan Stanley it’s somewhere increase amenity, wellness and safety, there
between “big” and “ginormous”. is also a very real give-get transaction that’s
taking place.
Cisco says there will be 50 billion devices “Reach out and
connected by the end of the decade. Morgan
Stanley extrapolated a 50% higher estimate at
We are trading service for personal
information that’s a quantum leap from what touch somebody’
75 billion. To put it into perspective that’s 9.4
connected devices for every man, woman and
we are used to; the website tracking information
that Facebook collects is a good example of this.
is becoming
child on this spinning little ball we call home.
Morgan Stanley suggests that even that number
With class-action suits filed against Facebook
as recently as last week, it’s clear that many
‘Reach out and
could be low with up to 200 devices helping each aren’t on board with the present standard for touch everything’.”
of us stay better connected. handling personal information. With emerging
IoT technologies collecting terabytes of personal
The IoT is big news because it borrows from data, the question is, “Are we ready to unbutton
the old Ma Bell campaign and significantly ups the equivalent of our online dress shirts while
the ante: “Reach out and touch somebody” is many are still loosening up their collars?”
becoming “Reach out and touch everything.”
And in that there’s some good news, some While one could argue that privacy concerns
bad news. All those 75 billion devices are “… vary as much as dress codes, which range from
generating signals of data to be analyzed and free-spirited California nudists to burqa-clad
measured, many of which in real- or near-real- Afghani Muslims, the question remains: How
time.” And while self–driving cars, automated will anyone feel when the data that Facebook
26Monetizing the Internet of Things
collects, analyzes and distributes to “improve
your experience” explodes to a gazillion device
much we trust its myriad operators.
“With emerging
manufacturers? It’s one thing to grant access to
your clicks, uploads and site visits, but the IoT
Recent news also suggests that this might be
a ways off. To get there, industry must confront
IoT technologies
thrusts upon us another level of scrutiny: how
long and how well you sleep, what you eat, where
security breaches that threaten bank accounts
and erode customer confidence in what we’d
collecting
you drink, how alert you are, how warm you keep expect to be the most technologically demanding terabytes of
your house, when you close shop, when you
power up, ad infinitum.
companies – banking and online retailing. Still,
the IoT manufacturers can learn much from personal data, the
How comfortable can even the California
the successes and mistakes of social and web
services companies that have preceded them and
question is, ‘Are we
nudist be when the opening of the kimono goes
beyond skin deep to reveal their habits, moods
have navigated these rocky waters. ready to unbutton
and behaviors? Ready or not, it’s a question that Trust is bolstered by two simple and powerful the equivalent of
we’ll soon be asking ourselves as we embrace the notions: appropriate transparency and active
rise of the machines. permission. I, for one, am selectively on board if our online dress
The IoT requires a level of acceptance that
manufacturers and providers have told me in a
way I can understand, exactly what they intend to shirts while many
blows past social voyeurism and sharing. With the
IoT, we go beyond accessing personally identifiable
do with the information they collect, and if I give
them explicit permission to do this. Of course,
are still loosening
info to increasingly personal information on how
we live our lives. Like the social era before it, how
they then must do what they say. their collars?’ ”
we feel about the IoT boils down to two things: And while this may never get a nudist in a
how much we value the service versus how much burqa, or vice versa, it might provide clothing
we abhor living under a microscope, and how that we can all be comfortable in.
Author Bio
Parker Trewin, Aria Systems’ Senior Director of Content and Communications, has repositioned
brands and created award-winning content. His efforts have led to industry-wide recognition that
include CoDIES, Stevies, Edison, MarCom Platinum, and BMA Gold awards. By combining classic PR
strategies with content marketing acumen, Parker championed owned and earned content that has
been published in the Wall Street Journal, the London Times, Businessweek, The New York Times,
Computerworld.de, TechCrunch, Lifehacker and Huffington Post.
27Monetizing the Internet of Things
Will Connected Devices
Disconnect the Family?
By Adam Hanft
T
olstoy famously said, “All happy watched the same thing, which meant parents
families are alike, each unhappy knew every second of their kids’ entertainment
family is unhappy in its own way.” consumption.
Why am I beginning a piece about
the Internet of Things with a nod to the patriarch
But the advent of small, portable sets
changed that. It meant that kids could watch
“Who will the
of the 19th century novel? Because I want to shift what they wanted in the privacy of their refrigerator
the focus of the conversation about connected bedrooms, outside of parental oversight. This
devices and their technological implications created all kinds of struggles between children text when it’s
to a discussion of the human implications of a
world where there are potentially hundreds of
seeking independence and parents seeking
control and insight. being opened
sensors monitoring thousands upon thousands
of interactions in every household. The evolution of the personal computer
in the middle
Families are a complex mixture of sharing
magnified this tension. The days of the “family
computer” seem like ancient history, but there
of the night
and privacy. Over time, as technology has was a time when there was a single giant for a midnight
innovated, it has added new tensions to the digital structure in the kitchen or family room
inherent privacy tension. For example, television that parents and kids shared. As the internet snack?”
sets first entered our lives as big consoles that emerged – and within it the whole “net nanny”
sat it in the living room. Everyone in the family phenomenon – the issue was heightened as
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