On July 29th, Gordon Hui of Harvard Business Review wrote an interesting blog post titled, “How the Internet of Things Changes Business Models“. In this post Hui writes about the shift in business innovation and competition models as result of the expansion of the Internet of Things. Hui first talks about value creation saying, “…in a connected world, products are no longer one- and-done… new features and functionality can be pushed to the customer on a regular basis. The ability to track products in use makes it possible to respond to customer behavior… leading to new analytics and new services for more effective forecasting, process optimization, and customer service experiences.”
He then goes on to talk about value capture. The Internet of Things opens up alternative revenue streams that “become possible after the initial product sale, including value-added services, subscriptions, and apps, which can easily exceed the initial purchase price.” Additionally customers tend to become more loyal to a product or company due to the massive amount of personalization that can now go into a smart, connected product.
Below is an interesting chart Hui urges readers to look over in order to understand this shift in value creation and capture. Additionally if you want to learn more about this shift in business models, listen to industry experts including ThingWorx’s Dave Westrom, discuss the topic via an online radio show, “Coffee Break with Game Changers“. Or, if you want to hear tangible examples directly from business leaders whose organizations are customers or partners of ThingWorx watch their online presentations here.