The data generated and used by Internet of Things (IoT) solutions come from a variety of internal and external sources, such as those generated by third-party APIs. Data can also be aggregated to produce new datasets, and the data being used are often blocked, or at the very least controlled, by the parties that own them as they represent an important source of differentiation. Such is the case with online giants like Facebook, but also for leading IoT players that own relevant data specific to their own vertical IoT.
Each IoT market is developing by vertical sector, but all face the same monetisation challenges
The IoT market is developing mainly by vertical sector, even if each is using comparable technologies, albeit with different standards and sub-technologies. As a result, the monetisation of these IoT data will also develop separately within each vertical, at least in the short to medium term. So the higher the number of connected products (hence the greater the volume of data) in play, the stronger the development prospects.
Monetisation will also depend on the ability to generate new data that can be cross-referenced with existing data, and so opening up new internal optimisation possibilities and the potential for new servicisation-driven (XaaS) business models. As it stands, however, most companies are still struggling to define these new models and move beyond the feasibility stage.
Hope for new revenue, but the real value of IoT data lies in the ability to cut costs
In the short to medium term, then, any monetisation possibilities for IoT data will lie more in cutting costs that in actually generating new revenue streams. This will, though, vary from vertical to vertical. To give an example: utilities rely to a large extent on national campaigns to deploy smart meters that help reduce labour costs, but create little opportunity to generate new revenue. Even in the automotive sector, which many consider the most promising vertical sector for IoT, and which already has data services in place, current opportunities to create new revenue streams remain eclipsed by opportunities to reduce costs.
According to IDATE DigiWorld, IoT data will help generate costs savings equal to 1% of each vertical sector’s (government services, automotive, health) total revenue, while the generation of new revenue thanks to data will help increase each market’s total revenue by less than 0.5%.
Source: IDATE DigiWorld in "IoT markets"
(network, factories, inventory, logistics)
|Products and associated services||Customer management|
(no third party involved
|Optimisation of infrastructure and logistics (potentially real time)||Improvements of products and services based on customer feedback
Development of new products
|Increased sales of existing products (upselling, cross-selling)
Development of new services associated with products (servicisation)
|Intermediation for third parties||Insights on infrastructure performance to optimise their choices||APIs around added value data
Recommendations and sales of third-party products (reseller, trusted third party, trust-centric provider)
|Sales to third parties||Insights and aggregated data sales|