New Revenue and Opportunities with IoT Ecosystem
Does your IoT strategy look at what an IoT application can do or what an ecosystem built around it can do?
As the IoT world develops, many people are focused on creating connected apps that solve a problem and improve the device experience. In my view, users and enterprises are both better served when, instead of merely creating an IoT app, we create an IoT app with a monetization and an ecosystem-building API so incremental revenue can be realized throughout the ecosystem.
Successful ecosystems for incremental value and monetization have been around for ages. Consider a brick and mortar business such as Home Depot, one of the largest players in the home improvement retail industry in the United States. The customer’s shopping experience is better because customers are offered options that add value to their purchase. For example, when building or remodeling your home, carpeting and flooring tile is available online or in the store. You can install it yourself or take a Home Depot DIY class that’s conveniently offered in the store. Home Depot’s strategy of building complementary ecosystems of services and products ensures continued business growth and has proven highly profitable.
Online ecosystems have been extremely successful as well, with the Amazon affiliate program as a prime example (pun intended)! Numerous websites – from book and electronics reviews to mommy bloggers — enjoy the opportunity to generate revenue via referral fees as their website links to a wide range of relevant products from Amazon, while Amazon rakes in incremental sales from its affiliate program.
However, Salesforce is truly one of the leaders in online ecosystem building.
Salesforce launched a PaaS called Force.com and an object-oriented programming language called Apex that lets you create applications around the Salesforce ecosystem. And the ecosystem around Salesforce is incredible! Entire companies such as Apptus, Veeva and ServiceMax have successfully built their value proposition around Salesforce.
Unfortunately, in the IoT world today, too many people are not thinking about ecosystems, but instead thinking about applications that solve specific problems.
One example that comes to mind is Ring, the video doorbell that connects to your home Wi-Fi network and sends real-time notifications to your smart phone or tablet when someone is at your door. It’s a brilliant product, yet their approach to their Ring app has been short-sighted.
What if the Ring application was built, not just to answer the doorbell, but with an ecosystem-building API and monetization capabilities? Several businesses could add value to Ring, giving Ring an ability to monetize access to their APIs and customer base. Using that API, a video home surveillance system could offer an add-on service to Ring customers to send a fleet to check out what’s going on if you or an automated system detected suspicious activity. Available public data feeds from local law enforcement about burglary suspects targeting your neighborhood could trigger calls to authorities if a video match was detected. Instead of the limited uplift of $2 to $3 a month for cloud storage for Ring videos, there could have been a $20 uplift for home security. There could be incremental sales by allowing businesses to use Ring to build their services.
Perhaps a business targeting neighborhood watch communities using a network of Rings. Or a neighborhood pet-cam service for $10 a month to allow you to work in peace, knowing you can always locate your pet with a bad case of wanderlust.
When you start building IoT applications – going the extra step and building it in a fashion that allows ecosystems to be created — will help you successfully monetize your application. We have customers that have built an application to remotely monitor the sensors and tweak settings in a home appliance. That is certainly good – it helps sell a few more high-end appliances. But the ones that can think of shipping replacement water filters from Amazon when the one in your refrigerator is reaching its end of life, or the apps that can help you schedule a service call with a local authorized repairman when something goes wrong will generate significantly more incremental revenue.
Monetization systems that are added on as an afterthought after your application has been built will often end up suboptimal. Design the system with monetization in mind, and pick the right infrastructure to build it on so that it doesn’t stop at the app, but goes on to allow for partner management, APIs and monetization to be built.
In my opinion, companies like Ring and others are stopping short of a whole new level of monetization because they only focus on their own use case and do not expose that application as an ecosystem builder. At Accelerite, we are among the IoT platform vendors who recognize this need and have this capability in our Concert IoT service creation and enrichment platform. Companies should be thinking of an IoT app — not as the endgame — but as a starting point to building an ecosystem around it.
Guest Post. Author: Nara Rajagopalan, Accelerite