The Internet of Things - How Smart, Connected Products are Transforming Competition?

1. The Internet of
ThingsHow Smart, Connected Products are Transforming Competition?

2. What is Internet of Things?
★ Connecting with the physical
world with the web
★ Scenario in which objects, animals
or people are provided with
unique identifiers and the ability
to transfer data over a network
with little or no human
intervention
★ By 2020, 50 billion devices will be
connected to the internet

3. Smart, Connected Products
Physical Components
•Mechanical parts
•Electrical parts
Smart Components
•Sensor
•Microprocessor
•Data storage
•Controls
•Software
•Operating system
•User interface
Connectivity
Components
•Ports
•Antenna
•Protocols

4. Forms of Connection
One-to-One
•Individual
products
connects to the
user
One-to-Many
•A central
system
connected to
many products
simultaneously
Many-to-Many
•Multiple
products
connected to
many types of
products or
external data
sources

5. Capabilities of Smart,
Connected Products
Sensors and external
data sources enable
comprehensive
monitoring of:
- Product condition
- External environment
- Product’s operation
and usages
- It allows companies
and customers to track a
product’s operating
characteristics
Eg: Medtronic’ digital
blood glucose meter
Monitoring Software embedded in
product or cloud
enables:
Control of product
functions
Personalization of user
experience
Eg: Philips Lighting
hue lightbulbs via
Smartphone
Doorbot, a smart
connected doorbell and
lock
Control

6. Capabilities of Smart,
Connected Products
Monitoring and control
capabilities enable
algorithms that optimize
product operation and
use in order to:
Enhance product
performance, improve
output, utilization and
efficiency
Real time monitoring
data allows predictive
diagnostics, service and
repairs
Eg: Diebold monitors
ATMs for early signs of
trouble
Optimization Combining monitoring,
control and optimization
allows:
Autonomous product
operation
Self coordination of
operations with other
products
Autonomous product
enhancement and
personalization
Self diagnosis and
service
Eg: Joy Global’s
Longwall Mining
System
Autonomy

7. Reshaping Industry
Structure
★ Smart, connected products will
have transformative effect on
industry structure. The five forces
that shape industry competition
provides the framework necessary
for understanding the significance
of these changes

8. Bargaining Power of
Buyers
★ Smart connected products expand
opportunities for product
differentiation
★ Allows companies to develop
much closer customer
relationships
★ Allows firms to reduce their
dependency on distribution or
service partners
★ Eg: GE Aviation

9. Rivalry Among
Competitors
★ Smart, connected products have
potential to shift rivalry, opening
up new avenues
★ Creates opportunities to broaden
the value proposition beyond the
product
★ Eg: Babolat Tennis Rackets
★ Migration of cost structure
towards higher fixed costs and
lower variable costs

10. Threat of New Entrants
★ New entrants will face
significantly new obstacles,
starting with high fixed costs of
more complex designs
★ Broadening product definitions
can raise barriers to entry even
high
★ Eg: Biotronik offers smart devices
such as home health monitoring
system
★ Smart, connected products can
also increase buyer loyalty
★ Barriers to entry go down if
incumbents hesitates to fully
embrace the capabilities of smart,
connected products

11. Threat of Substitutes
★ In many industries creates new
type of substitution threats such
as wider product capabilities
★ Eg: Fitbit’s wearable fitness device
★ New business models enabled by
IOT can create substitute for
product ownership
★ Eg: Product as service – ZipCar -
Shared Biking System

12. Bargaining Power of
Suppliers
★ Smart, connected products are
redistributing the bargaining power
of suppliers
★ Bargaining power of traditional
suppliers will fall over time
★ Relative dependence on physical
components is decreasing, physical
components can be commoditized or
even replaced by software over time
★ Bargaining power of modern
technology suppliers will be high
Eg: Open Automotive Alliance with
Google’s Android operating
system

13. Fleet Management
System SavingsFOR 3 trucks
COST of GPS Tracking sensor= $130*3 = Rs7800*3=Rs 23400
Let assume drivers without monitoring take long routes
to save toll cost on highway-
And take 20 minutes more…
Assumptions about trucks-
• Speed of trucks =60 Km/h
• Diesel cost= Rs50/L,
• Average mileage of trucks= 5Kmpl

14. Cost of 20 Minutes Extra by 3
Trucks in a Year
• Distance covered by a truck in 20mins= 20Km
• Fuel cost for 20km= 20*50 Rspl/5kmpl=Rs200
• For 3 trucks=200*3=Rs600
• For a year= Rs600*30*12=Rs216000
Thus Rs. 216000 can be saved on 3 trucks by tracking them with the
cost of Rs. 23400

15. Disadvantages of Internet
of Things★ Compatibility: No set international standard of compatibility is there for
monitoring equipment's to be used
★ Privacy Threat: The level of encryption of data is not known at the moment and
there are chances that the data can be hacked
★ Intrusion: If a malware occurs in the system and the system sends information
regarding a commodity of use to nearby shops, the shopkeeper shall send the
commodity even when not required.
★ Widespread Malware: If a device gets corrupted due to virus attack, there are
chances that it may infect other devices also leading to problem for the

17. What All Can Happen to Your
Surrounding Smart Devices??
 Network Attacks
 Product Cloud Attacks
 Ipv6 Vulnerabilities
 Zero Day Attack
 Product Technology Stack Issues

18. A Network Attack

19. Product Cloud
Vulnerability

20. Taking Advantage Of
Ipv6

21. Zero Day Attack

22. Product Technology
Stack

23. Evolution of Threats
(>.<)

24. Can You Protect
Your Device ?

26. Implications for Strategy
Which set of smart, connected products capabilities and features
should the company pursue?
How much functionality should be embedded in the product
and how much in the cloud?

27. Implications for Strategy
Should the company pursue open or closed system?
Should the company develop the full set of smart, connected
product capabilities and infrastructure internally are outsource
to vendors and partners?

28. Implications for Strategy
What data must the company capture, secure and analyze to
maximize the value of its offering?
How does the company manage ownership and access rights to
its product data?

29. Implications for Strategy
Should the company change its business model?
Should the company enter new business by monetizing its
product data through selling it to outside parties?

30. Group 4 – Section B