As discussed above, the perceived value may rest in different places for
different types of connected device/IoT system. Is it the overall service users
think is most valuable, or one or more of the devices that deliver it?
IoT is immature and there’s perhaps a tendency for users to focus more on
devices, as these are novel (as we suggested earlier). Service providers may
focus on more on services, as that’s where the potential for long-term
customer engagement sits. You may think that you are offering a health
management service, but if your users see beautiful bathroom scales then
persuading them to pay for an ongoing service may be tough. The key for a
business model is that customers feel they are paying a fair price (whether in
terms of money or sharing their data) for the value they receive, and you are
making the money you need.
Bringing digital business models to physical
products
Building digital services around physical products enables suppliers to apply
novel business models, more commonly found in the digital realm, to physical
products.
Combining physical devices and services is likely to lead to some interesting,
novel and disruptive business models that challenge our preconceived ideas of
what it is to own and use a product.
Business models we are accustomed to in the digital realm might make their
way into the physical world. For example, we are accustomed to using
websites that are free at point of use but make money from selling eyeballs to
advertisers. It’s not a huge stretch to imagine that physical devices might be
given away in exchange for advertising or user data. The ubiquitous
computing researcher Pertti Huuskonen jokes about the freemium fridge. Your
supermarket gives you a free fridge with a screen that forces you to watch an
advert every time you open it. Or the fridge might track the products you put
in it and eat, and where you bought them, and share that data with the
supermarket, and other advertisers. Users could buy their own fridges,
essentially paying for ad free experiences or privacy, or get free or cheaper