IoT Business Models, Barrier to Adoption Or The Reason We Do This
Bill McCabe, IBM’s IoT Futurist, is getting a lot of attention on his post on IoT Business Models.
Despite his reference to the Nintendo Switch launch as being ten years earlier, there is good analysis of how the service transformation enabled by IoT shifts even B2C to a B2B revenue model.
He also references the trap of what I call the hardware ponzi scheme, where any new product sale that has a service component has to have a residual income stream from the ultimate customer to sustain fulfillment of that service.
So many early IoT firms are giving away services with their product sales. This requires increased sales into an increasingly fulfilled market to sustain the growing OpEx of services.
Better to get in front of this value erosion by building service revenues into the first product sales of IoT. This way there are service revenues sufficient to delight customers even as product sales erode to zero. That’s the promise of IoT business models!