A study by the McKinsey Institute has calculated that the market for IoT components and systems will grow by more than 30% annually.
The Internet of Things will offer interesting opportunities both for existing and for new technology companies. In the short term, at least. But hardware suppliers and installers of IoT systems will have to start looking out now for diversification, or for a radical switch in their activities.
Short term
Companies that offer complex system integration solutions are much sought after. Despite all the integration possibilities and interoperability of the systems, combining devices and software into an IoT environment is an extremely complex undertaking.
By offering integrated solutions, suppliers can accommodate their customers in the short term. In the longer term the research institute expects that there will be greater demand for all-in vertical solutions and large-scale horizontal platforms.
Four types of survivors
1. Developers of relevant IoT technology that have specialised in inexpensive components. Examples include sensors with low consumption that offer cheap connection possibilities, etc.
2. Owners of IoT data. For instance, manufacturers of industrial machines equipped with sensors. The hundreds of terabytes of streaming data that these generate will provide a transparent overview of possible anomalies, thus avoiding outages before they happen and permitting preventive maintenance.
3. Platform suppliers. Third parties will be able to develop apps for these platforms, with the platform supplier ensuring interoperability of the apps. Successful platforms will generate lucrative networks, since each new customer and each new application will offer added value for all parties.
4. Suppliers of end-to-end solutions. According to McKinsey, these suppliers have the greatest advantages since the Internet of Things demands a high degree of customised work. This ensures that companies that can offer complex solutions (hardware, software, installation and services) will have the edge. These suppliers of end-to-end solutions will be able to position themselves in the field of components, software or integration systems.
New business models
The IoT will also bring new business models for companies that use the Internet of Things: new pricing models and service-based business models.
- New pricing models: customer-specific, dynamic pricing models based on specific customer preferences. These models can offer advantages both for the user and for the supplier. Examples include car insurance companies that tailor policies to the insuree’s actual driving behaviour, generated by the vehicle’s data sensors.
- Service-based business models: instead of capital-intensive investments, the supplier operates a pay-per-use model: energy per hour instead of a gas turbine, transport services instead of cars, printed pages instead of laser printers. These “as a service” models offer the advantage for the customer of not having to invest in upgrades or maintenance.