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The Smart Coffee Maker
Posted on: 2017-07-10 2:17 PM Smart Coffee Makers
While walking through Best Buy the other day I was mildly surprised to see a WiFi-enabled smart coffee machine. The coffee maker comes with an app that allows you to schedule brews, monitor status, change settings, and receive notifications on Apple iOS and Android devices. Does it help you make a better cup of coffee? I don’t know, but it will send a notification to your phone when the water reservoir is empty.
This is an example of one of the monetization models for the internet of things, where manufacturers add connectivity and remote device management to traditional products and then add a premium to the price. It’s a traditional one-and-done sale that gives companies the ability to get into the IoT marketplace quickly. It can also provide a hook for future recurring consumption-based services, which is where the real money resides in IoT.
We’re all in the software business
Hardly anyone just builds a product anymore. Products now have sensors that collect data, create notifications, receive and process commands, etc. The revenue opportunity is tied up in the data that sensors collect and the services that can be built from that data. As General Electric CEO Jeff Immelt recently told PBS reporter Charlie Rose, “every industrial company in the coming age is going to have to be a software company.”
The thing to understand is that in the digital age, we’re all software providers. But it’s more than just software—IoT enables companies to sell services based on the data that collected while their products are being used. I could probably write pages on this topic, but it has already been done in The Big Book of MoT. Check it out if you want to stimulate your thoughts on how to create new IoT services.
Consumption-based monetization
Consumption-based models provide a lower cost of entry and better revenue opportunities because they are open-ended. When customers are consuming data, often with an app, it requires you to think a little differently about the people, processes, and technology involved in monetizing your business. As you begin to look at how to create recurring revenue streams from IoT based services, there are three things you should keep in mind:
Agility – One of the trends that were on display at this year’s Consumer Electronics Show (CES) was that monetization models for IoT products and services are rapidly changing and becoming more complex, including freemiums, premiums, upfront payments, subscription, and usage, often in combination. These trends apply to both B2C and B2B offerings. To meet market demands, you will need billing/monetization systems that are more flexible and nimble than most legacy platforms.
Automation – As you grow your IoT business, you’ll quickly find that the scale can’t be supported by manual processes. Spreadsheets won’t cut it for billing or financial processes like revenue recognition and provisioning—the volume of data from recurring revenue services will overwhelm these processes. SaaS cloud billing offerings can help you automate data collection and billing, and provide automated integration with other business processes.
Churn – This is often overlooked, but you need to ask some questions. Can your device be used without the subscription? If so, what capabilities are you putting in place to reduce churn? How easy would it be for a customer to switch to another vendor’s product and services? Do your monetization system and business processes provide the information you need, like customer usage data and analytics, to help manage customer retention?
A Better Cup of Coffee?
A recent post on c/net called smart coffee makers “a dumb but beautiful dream”. I see them as a vision of things to come. Will it make a better cup of coffee? Maybe, but IoT will provide unlimited new revenue opportunities for those that have the processes and technology in place to cash in.
This this is just a fad...According to EIEIHOME.com smart appliances are here to stay.
While walking through Best Buy the other day I was mildly surprised to see a WiFi-enabled smart coffee machine. The coffee maker comes with an app that allows you to schedule brews, monitor status, change settings, and receive notifications on Apple iOS and Android devices. Does it help you make a better cup of coffee? I don’t know, but it will send a notification to your phone when the water reservoir is empty.
This is an example of one of the monetization models for the internet of things, where manufacturers add connectivity and remote device management to traditional products and then add a premium to the price. It’s a traditional one-and-done sale that gives companies the ability to get into the IoT marketplace quickly. It can also provide a hook for future recurring consumption-based services, which is where the real money resides in IoT.
We’re all in the software business
Hardly anyone just builds a product anymore. Products now have sensors that collect data, create notifications, receive and process commands, etc. The revenue opportunity is tied up in the data that sensors collect and the services that can be built from that data. As General Electric CEO Jeff Immelt recently told PBS reporter Charlie Rose, “every industrial company in the coming age is going to have to be a software company.”
The thing to understand is that in the digital age, we’re all software providers. But it’s more than just software—IoT enables companies to sell services based on the data that collected while their products are being used. I could probably write pages on this topic, but it has already been done in The Big Book of MoT. Check it out if you want to stimulate your thoughts on how to create new IoT services.
Consumption-based monetization
Consumption-based models provide a lower cost of entry and better revenue opportunities because they are open-ended. When customers are consuming data, often with an app, it requires you to think a little differently about the people, processes, and technology involved in monetizing your business. As you begin to look at how to create recurring revenue streams from IoT based services, there are three things you should keep in mind:
Agility – One of the trends that were on display at this year’s Consumer Electronics Show (CES) was that monetization models for IoT products and services are rapidly changing and becoming more complex, including freemiums, premiums, upfront payments, subscription, and usage, often in combination. These trends apply to both B2C and B2B offerings. To meet market demands, you will need billing/monetization systems that are more flexible and nimble than most legacy platforms.
Automation – As you grow your IoT business, you’ll quickly find that the scale can’t be supported by manual processes. Spreadsheets won’t cut it for billing or financial processes like revenue recognition and provisioning—the volume of data from recurring revenue services will overwhelm these processes. SaaS cloud billing offerings can help you automate data collection and billing, and provide automated integration with other business processes.
Churn – This is often overlooked, but you need to ask some questions. Can your device be used without the subscription? If so, what capabilities are you putting in place to reduce churn? How easy would it be for a customer to switch to another vendor’s product and services? Do your monetization system and business processes provide the information you need, like customer usage data and analytics, to help manage customer retention?
A Better Cup of Coffee?
A recent post on c/net called smart coffee makers “a dumb but beautiful dream”. I see them as a vision of things to come. Will it make a better cup of coffee? Maybe, but IoT will provide unlimited new revenue opportunities for those that have the processes and technology in place to cash in.
This this is just a fad...According to EIEIHOME.com smart appliances are here to stay.
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