Monetization Strategies For The Internet Of Things


Published on

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?

Published in: Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • Twitter is @Tom_Dibble and on Linkedin it is
  • 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.  

    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…

    *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
  • Monetization Strategies For The Internet Of Things

    1. 1. 1CONFIDENTIAL  Not  For  distribu4on  All  Contents  ©  2014  Aria  Systems     Mone4za4on  in  the   Age  of  IoT   Tom  Dibble,  CEO    
    2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 15. 15CONFIDENTIAL  Not  For  distribu4on  All  Contents  ©  2014  Aria  Systems    CONFIDENTIAL  Not  For  distribu4on  All  Contents  ©  2014  Aria  Systems     Q&A