Creating programs that make existing products more beneficial and even inventing new items that help mankind is an incredibly rewarding way to spend your life.
While you may have an idea (or an entire company) devoted to using the IoT to make other lives better, you still want to make a profit.
However, many new companies focus on the “traditional” monetization methods and fail to see the ample opportunities to generate revenue with connected devices.
Unfortunately, this won’t work in the market of connected devices for much longer.
By 2020 (as crazy as it sounds, that’s less than four years from now), the IoT will boast between 30 to 50 billion devices, and another 1 million added every single minute. These staggering estimates mean that competition is becoming fiercer by the day.
Only the smart (perhaps even shrewd) survive in the business world. Figuring out every method of monetization that you can implement will mean more options to weather potential storms and competition in the future. It may even help you pivot directions down the road.
To help, we’ve put together a few thoughts on making money with the IoT. Ready?
Key Stat: IoT is expected to be a $300 Billion industry by the same year (2020).
Choosing the Right Industry (and Products)
If you have an existing business, you may already have an industry of choice. If you are looking to venture into new territory, looking for a great idea for a startup, or be part of an incubation program this section will be more useful.
With WiFi becoming more and more accessible, any physical product is fair game for the internet age. That being said, there are incredibly lucrative industries (high competition, but higher revenue opportunities) and less popular options (potential to be a big fish in a small pond).
Local City and Government: With more local government offices making data easier to access, there are more options to interconnect. The open data that is available is provoking inventors to create some awesome gadgets.
Connected Homes: Another huge industry, this one includes products already in the home (like fridges, and TV’s) and with those just being invented (Amazon Echo). Security, maintenance, and entertainment are subcategories that are the driving force in this industry.
Healthcare and Medical: Perhaps the biggest beneficiary of a connected world, but also the scariest with security concerns, is healthcare. This category includes personal (Fitbit) and medical professionals, who are using connected devices to diagnose faster and save lives.
Others markets include Smart cars, industrial (factory, manufacturing), transportation, retail (products and stores), and agriculture.
Tips for Industry Choices
If you are starting with a clean slate, you’ll want to go with experiences and data. Take a look at open data sources and look for gaping holes that can be filled with software and/or devices. Your creativity will be your biggest asset.
Here are a couple of resources to get you started:
Choosing Your Business Model
Once you have an industry in mind and know how you want to enter your target market, it’s time to choose how you’re going to make your money. Depending on your chosen industry, the way you bring in revenue will vary wildly.
For instance, if your customers are healthcare professionals and medical facilities, a monthly SaaS pricing model will be nothing new. However, try to charge a monthly fee to use an app on a refrigerator and you won’t make it very far.
This example is just one of the dozens of nuances that are involved with choosing your business model. Not only are physical products connected to the internet, but there are also devices that are needed to connect them in the first place (microchips, Raspberry Pi, etc.)
Just putting software on a product is the single-minded mentality that will cause problems as the competition increases. The image below will give you a snapshot of the different business models.
To be entirely honest, you don’t have to make anything to get a piece of the $300 Billion pie. Although, (among other things) you will have to know someone who is manufacturing something (more on this in the next section).
Things to Think About
Build for people (lots of them): Solving a problem is the basis for entrepreneurship. Solving a big enough problem will help you out immensely in the long run.
Scalability: Build your infrastructure to handle large amounts of growth. Manufacturing connected devices can grow rapidly.
Data Data Data: There will be lots of data available, but only if you choose to collect and use it. Figuring this out ahead of time will help you monetize better in the future.
Constant Improvement: Not just with new versions of the physical products, but also iterations of your software and applications.
Alternatives to the Physical
There are hundreds of thousands of programs that will need to be constructed just to help manufacturers, end users, and even platform providers with the maturing IoT industry. Here are a couple of the big ones that could keep you off the (physical) production line:
Analytics: Data is increasing at a rate that scares many businesses. Being able to analyze and format this data into usable and profitable chunks of information is going to be a huge factor in the connected world.
App Development: Developing awesome third-party apps for the devices that are going to the market is a huge opportunity. We may know something about how to develop an engaging application that people love.
Choosing Your Partnerships
With so many “hands in the pot”, you won’t be able to maximize your IoT potential without strategic partnerships. In fact, building partnerships with others who are monetizing the IoT indifferent, but beneficial ways can help you weather competitive niches and even economic issues.
Example: Say you are developing a blood sugar monitor and app that helps diabetics track and trace foods that both help and hinder their blood sugar levels and builds a list of foods (over time) that they enjoy.
The partnerships with this model could include app developers to design user interactions, manufacturers to build the newly designed device or a backend software to aid you in maintaining your devices while out and about in the world.
Looking for a Good Developer?
Development companies (like Koombea) can be an integral part of monetizing the IoT. You see, if people don’t find the apps on your physical products useful and easy to navigate, they’ll buy from someone else next time.
Even if your primary business is development, fixing problems and increasing the speed of iterations can be daunting. In either case, come work with a world-class team of developers that has a proven record of success. Koombea understands and loves the IoT industry. We can help your company or startup by becoming a strategic partner that will work on your project like it was our own.
Are you ready for the IoT renaissance? Contact us to discuss methods to start monetizing with the IoT.