Monetization Strategies For The Internet Of Things
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Learn how "The Internet of Things" and the tidal wave of customer data can positively impact your service, grow revenue and increase profit potential. In this presentation Tom Dibble, President and CEO of Aria: -Highlights shifts in monetization models and recurring revenue -Discusses "The Internet of Things" and emerging opportunities in customer data -Shows you how a finance department with an agile billing system can maximize service, revenue and profit potential by leveraging their back-end monetization systems. Will you be ready to exploit the revenue opportunities that come from 26 billion interconnected devices and the tidal wave of ensuing data?
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Monetization Strategies For The Internet Of Things
- 1. 1CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Mone4za4on in the Age of IoT Tom Dibble, CEO
- 2. 2CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Mone4za4on in the Age of IoT Tom Dibble CEO, Aria Systems @tom_dibble @ariasystemsinc tdibble@ariasystems
- 3. 3CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems The Looming Opportunity: Internet of Things Military Agriculture Environmental Consumer Retail Industrial Medical Automo4ve • Product tracking • Inventory control • Focused marke4ng • Wearable devices • Implanted devices • Telehealth services • Resource alloca4on • Threat analysis • Troop monitoring • Crop management • Soil analysis • Species tracking • Weather predic4on • Resource management • Parking • Traffic flow • An4-‐theT loca4on • SmartMeters • Wear-‐out sensing • Manufacturing control • Climate control • Smart home control (ligh4ng, security, comfort) • Op4mized energy use • Maintenance
- 4. 4CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Bigger than Smartphones, Tablets, PCs (combined) Source: Gartner (November 2013) Shipments in 2020 (Millions) Figure 2. Internet of Very Different Things Hotel Door Locks 16000 14000 12000 1000 8000 6000 4000 2000 0 Parking Meters Vending Machines Remote Pa4ent-‐ Monitoring Nodes Toys Smart Meters Security Cameras Indoor LED Ligh4ng Smoke Alarms
- 5. 5CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems IoT creates an explosion of data, devices and opportunity – Peter Middleton, Gartner, Dec 2013 “…many categories of connected things in 2020 don’t yet exist. As product designers dream up ways to exploit the inherent connec4vity that will be offered in intelligent products, we expect the variety of devices offered to explode.”
- 6. 6CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems How big will it be? >50 Billion Devices By 2020 How big is your guess? $7.1 Trillion – IDC “… those billions of smart, connected gadgets such as Google’s smart glasses… should generate a staggering $7.1 trillion in annual sales by 2020.“ – IDC , June 2014 “Cisco’s Internet of Things Group (IoTG) predicts there will be over 50 billion connected devices by 2020.” – Cisco , November 2013 The Google effect: “...Google is installing extremely fast gigabit internet infrastructure when the average person needs 200x less speed because of IoT...” – Daily Infographic, March 2014
- 7. 7CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Delays are costly Profit Time AUP Erosion Shorter Peak Profitability Window Scheduled Launch Launch Delay AUP Erosion Example: iTunes $.99 Walmart $.55 RCN $.?? Verizon $.?? Product EOL Product lifecycle End-‐of-‐Life (EOL) date doesn’t change Creates early and unrecoverable sales losses Erodes Average Unit Price (AUP) over the en4re product lifecycle Shortens the window for peak profitability DELAY
- 8. 8CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems The Mone4za4on of Things (MoT) is not about:
- 9. 9CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems The Mone4za4on of Things (MoT) is not about:
- 10. 10CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Selling is Different Managing Customers is Different ReporPng is Different InnovaPon Increases It’s a whole new ball game
- 11. 11CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems • Freemium • 30 Day Trials • n Day Trials • By Segment Mul4ple Geos/ Markets Mul4ple Sales Models Excep4ons: Discounts & Credits Pricing, Packaging, Bundles Contract Changes Enabling unlimited, complex mone4za4on models Consump4on Subscrip4on Occasional / On-‐Demand • Flat Rate • Standard Tiered • Volume Tiered • Flat Rate Tiered • High water mark • Accumulated pooling • Threshold • Rollover • Family plans • Overage • Pay-‐as-‐you-‐go • Time based • Mediated/rated • Combina4ons • E-‐commerce • Indirect • Direct • Upgrades • Downgrades • Cancela4ons • Pro-‐ra4on • Trials • Dunning
- 12. 12CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Requirement for compe44ve advantage All Contents © 2014 Aria Systems “Today’s hyper-‐compe44ve business climate requires flexible, configurable billing soluPons that can handle a wide-‐variety of consumpPon and subscripPon-‐based business models – and the ability to change them, quickly and without IT intervenPon.” – Andrew M. Dailey, MGI Research (source: Forbes 3/18/14)
- 13. 13CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems A compe44ve tool to beter serve your customers RelaPonship Commerce AcPve OrchestraPon Enterprise Cloud AdapPve Selling Single Customer View
- 14. 14CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Make More Money • Op4mizing the life4me value of customer rela4onships • Keep the business growing and valued Solve Big Problems • Handles scale and complexity, security, reliability, compliance • High performance opera4on Keep Customers Engaged • Delivering a consistent high-‐ quality customer experience • Customer informa4on always presented in context Manage Things More Easily • It’s in the Cloud! • Pushes informa4on • No rip and replace Mone4zing IoT the Right Way Will...
- 15. 15CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems CONFIDENTIAL Not For distribu4on All Contents © 2014 Aria Systems Q&A
Notas do Editor
- Twitter is @Tom_Dibble and on Linkedin it is www.linkedin.com/pub/tom-dibble/0/169/9b2
- IoT leverages the cloud and machine to machine communications to generate enormous amounts of data that detail who’s using what, what they are using it for, to automate, predict, customize and alert, creating a better user experience. For X, Y and Z. And it’s already started and soon it will be pervasive and ubiquitous and will touch everyone, where they are…
- IoT promises to touch everything we do. Gartner expected these connected devices to be bigger than smartphones, tablets and PCs combined. From devices that automatically control your lighting, heating and security to interactive toys that use data from kids to personalize the experience; from health check monitoring that enable patients to get up from their hospital beds sooner, and so the elderly to live at home longer; from vending machines and parking meters that alert companies and drivers when supplies or time is running out, to hotel doors that keep the right people locked out. The total install base is expected to be 26 billion units in 2020, adding 1.9 trillion in economic value. By comparison the number of smartphones, tablets, and PC’s will reach about 7.3 Billion units.
- To be successful in IoT we are going to have to learn to leverage everything that we have used in the past. Are you prepared to take advantage?
- But how big will it be? IDC forecasts it to be worth a staggering $7 trillion in annual sales by 2020 Cisco predicts there will be over 50 billion connected devices And Google preparing now to process information 200X more than the average person needs now. The question isn’t whether it will be big but how big it will be?
- According to research conducted by Cardinal Peak, an IoT engineering firm, 43 % of all companies will have implemented solutions within the next year with another 25% implementing a solution in the next 1-2 years. The question is will you be ahead or will you behind. And what do you need to have in place to take advantage of the coming tidal wave. Delay is costly and irretrievable. The real costs result in a 12% hit in shareholder value for delayed launch and 33% decline in profits for a 6 month launch delay. Here’s why: You enter the market later Market losses because you’ve lost first mover advantage Products sold at discount to leader Few products sold over the course of product lifecycle Peak profitability shortened 3. Losses can’t be recovered because the clock starts ticking when customer perceives need and stops at product obsolescence end of product lifecycle remains the same and not pushed out Driven by market forces not your product cycle In a hyper innovative economy these consequences become exponentially toxic to your business. A 6-month delay can deplete 33% of lifecycle profits. Announcements of product delays decreased average shareholder value by about 12 percent, according to the researchers. "Our results suggest that negative stock market reaction to product introduction delays is actually quite rational given the impact of delays on profitability," they write. Source: http://inventionmachine.com/the-Invention-Machine-Blog/bid/87840/What-Are-Late-New-Product-Launches-Costing-You Referencing: Vinod Singhal, Departmental Editor of Production and Operations Management at Georgia Institute of Technology, and Kevin Hendricks, operations management professor at the Wilfrid Laurier University. In their study, "The Effect of Product Introduction Delays on Operating Performance”, the two researchers analyzed the financial performance of over 450 publicly traded companies, across industries, that had experienced product launch delays between 1987 to 2003. **Don Reinertsen @DReinertsen The Principles of Product Development Flow. 2009
- NOT THE DEVICES!!!!!! It’s the service
- NOT THE DEVICES!!!!!! It’s the service
- To be successful, you need to build back end systems that meet IoT drivers… From *Monetizing the Internet of Things: 4 key areas of focus, Melissa Tolentino, Silicon Angle, Feb 24, 2014 Marie Spoche, who holds a degree in trademark and copyright law with a minor in IT, suggests focusing on these key areas… http://siliconangle.com/blog/2014/02/24/monetizing-the-internet-of-things-4-key-areas-of-focus/ *Control configurations. Embedded Licensing monitors two aspects of how your software is used: by controlling access to the software source code and by controlling how the software-embedded hardware is used. *Support field upgrades. Field upgrades allow a customer to decide to upgrade their software without having to send it back to the company or purchase a new piece of hardware. With embedded software licensing, companies can verify the software’s integrity and then perform the upgrade in the field. *Create personalized offerings. When your smart software is monitored with an embedded license, you are able to offer different levels of software functionality within the same essential hardware device. This allows you to market essentially the same piece of hardware with different software at different price points to remain competitive. *Gather usage data. With licensing that ensures software cannot be tampered with or hacked, it becomes possible to monitor detailed usage data from the moment the object leaves the warehouse. This allows your company to learn which features are more or less popular, offer value-driven upgrade options and more. Rinse and repeat with greater velocity…
- Agile billing to the rescue: What is it? In short Agile billing is defined as.. “An agile billing solution is a competitive tool.” – Andrew Dailey
- To do this your billing platform needs to act as the central revenue management hub for your entire recurring revenue business, enabling you to create unlimited monetization models, effectively respond to any type of revenue event that may occur in your business, test models and iterate on your success and do it at a scale. In the end IoT is about serving your customer versus creating devices. Make sure you have technologies in place that maximize your capabilites and opportunities.
- The truth about IoT… IoT is here now, time to prepare MoT = a service, not the device It’s about collecting and applying consumption data It will drive intelligent go-to-market decisions, even if it doesn’t directly influence a bill! Enabling technologies are cheap; that’s good and bad Your biggest competitive differentiator will be pricing and packaging, and you need to move quickly and codelessly