Analysis: A manufacturer’s guide to IoT monetization

Analysis manufacturer's guide IoT monetization

What does IoT monetization mean for the business models of companies that manufacture machines and devices?

Cutting costs, boosting productivity and achieving new efficiencies: these have typically been the focus points of most IoT projects to date in the manufacturing sector. But in 2018, thoughts will turn to how IoT data might be used not to save money, but to make it.

That’s the view taken at management consultancy Ernst & Young, which this week published a list of five key trends for the IoT in 2018. The firm places the ‘monetization’ of IoT at the very top of this list, ahead of edge computing, the battle for standards and cybersecurity. According to EY, “more and more decision-makers are realizing the disruptive potential of IoT and are likely to […] more effectively use and monetize the data collected.”

This is particularly true for manufacturers of machines and devices, where smarter products that collect and convey data back to the companies that make them have a “value creation potential” that has so far gone unexplored by many.

That may be because exploiting that potential involves some risk and a great deal of fresh thinking, as EY’s global IoT leader Aleksander Poniewierski points out. It will, he says, “demand a redesign of business and operating models that require interoperability of current solutions throughout the entire IoT stack and the need to embed new IoT sensors in existing products.”

Read more: No more security through obscurity for IoT device makers

Monetization matters

Despite the challenges ahead, some manufacturers are starting to think about IoT monetization far more seriously – from companies that build heavy industrial machinery, such as GE and ABB, to those that create mass-market consumer products, from automakers to manufacturers of domestic appliances.

What’s underway here is a shift away from simply relying on the upfront price levied for a piece of hardware (a forklift truck, say, or a lawnmower), and towards a software-based approach that focuses instead on the money that can be made over the lifecycle of that machine, often in the form of a subscription, through analysis of the data it conveys about how it is used, and how often. In some cases, the hardware itself may effectively be ‘free’, if the real money is to be made on regular subscriptions and value-added services based on that data.

In a November 2017 report, The Future of Connectivity: Enabling the Internet of Things, researchers at strategy firm McKinsey neatly sum up the shift like this: “Manufacturers are now transitioning to a device-as-a-service (DaaS) model in which they sell customers a subscription to their products. The subscription covers both the initial device purchase and later maintenance costs, which allows manufacturers to make money even if the products do not require service. In fact, they have an incentive to keep their devices running, since service costs could reduce their revenues.”

Read more: IoT device makers: Tackle security or face legal action

A shift underway

That’s a fascinating idea – and one that could be applied to many different kinds of manufactured products and customer segments. This is made amply clear by a recent study of 300 business decision makers in device manufacturing firms across five major markets, conducted by Gemalto, the digital security company currently being acquired by aerospace and defence giant Thales.

The study’s findings lead Gemalto to claim that the device manufacturing industry is already embracing software over hardware as its primary business model in its report, How Software is Powering the Hardware Renaissance. In it, more than four out of five (84 percent) of organizations say they are changing how they operate, with 37 percent claiming they have already made a full shift to a software-centric business model, which places software at the core of how they deliver value and generate revenue.

“The results of this survey validate what we see on a daily basis with our customers as we help them make this transition,” said Shlomo Weiss, senior vice president of software monetization at Gemalto.

“Companies who adopt software-based revenue models will reap three main benefits: long term relationships with their customers, predictable revenue streams and a clear competitive advantage. From gaining insight into product usage, to pay-per-use payment structures and on to new market penetration – all the companies we surveyed identified a real need to transform how they do business.”

Read more: ROI beats security as biggest challenge for IoT device makers

Coming soon: Our Internet of Manufacturing event will be coming to Munich on 6 & 7 February 2018. Attendees will get the chance to learn more about how connected technologies open up new paths to increased productivity and profitability for industrial companies. 

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Analysis: Four smart factory trends to watch in 2018

Analysis: Four smart factory tech trends for 2018

Internet of Business presents four key technology trends that will help the smart factory deliver on its efficiency and responsiveness goals in 2018. 

At the tail end of 2017, a new manufacturing plant opened in Sunnyvale, California, that takes the smart factory concept to a new level.

The facility belongs to Quanergy, a company that specializes in making LiDAR [light detection and radar] sensors – the technology that allows autonomous vehicles to sense their surroundings and to steer, brake and avoid collisions.

Quanergy’s new smart factory features a high-capacity, fully automated production line, located in a clean room environment. The line features state-of-the-art semiconductor handling and packaging equipment, including a conveyor system connecting machinery along this line that turns the raw material of silicon wafers into finished LiDAR sensors.

The facility also handles automated calibration and final testing of sensors, according to the company, providing “high quality and reliability in an industry that thus far relied mainly on manual labour to build mechanical LiDARS.”

Smartness, of course, is in the eyes of the beholder – but it’s probably safe to define the ‘smart factory’ as a venue in which connected technologies enable manufacturing operations to become more efficient and more responsive. And we can expect to see more connected technology and smart factories emerge in the manufacturing sector during 2018.

Read more: Huawei sets up Connected Factory group to push 5G in manufacturing

What does 2018’s smart factory look like?

With that in mind, Internet of Business has come up with a list of four trends to watch in 2018. These are technologies that we believe will help manufacturing companies achieve these twin goals of efficiency and responsiveness.

1. Industrial robotics

At a Philips plant producing electric razors in the Netherlands, robots outnumber production workers by more than 14 to one, according to a recent article from strategy firm McKinsey & Company. A new wave of factory automation is underway, its authors write, and robots are entering new environments and creating new value for manufacturers. In part, this trend is driven by the availability of collaborative robots, or ‘cobots’ that are cheaper, more mobile and more flexible than their predecessors and that can work safely alongside human colleagues.

2. OT/IT convergence

Operational technology (OT) and information technology (IT) have long been kept separate as sources of data – but there’s a growing understanding that combining the data from these two silos can lead to valuable insights into manufacturing performance. In turn, these insights can help with closer adherence to manufacturing schedules, fewer periods of downtime and faster responses to issues with machinery. In 2017, we saw a number of industry partnerships that bring together OT and IT companies – such as that between ABB and HP, for example. 2018 is bound to bring many more.

Read more: Machine vision: a bird’s-eye view of the smart factory

Here come AI and AD

3. The rise of AI

Artificial intelligence has a key role to play in the smart factory, helping manufacturers predict demand patterns and allocate resources far more accurately. In other words, AI allows manufacturers to answer questions based on cold, hard data rather than human guesswork. At its Oracle Open World event in September 2018, executive vice president of application development Steve Miranda unveiled new, cloud-based smart factory apps that come with embedded AI – Oracle Adaptive Intelligent Apps. These, said Miranda, would support “sophisticated decision science” – but in a way that was hidden from users and embedded in the software they use to perform day-to-day work tasks.

4. Additive manufacturing

As 3D printers become cheaper, faster, more accurate and better able to work with a broader range of materials, including production-grade ones, they’re increasingly used to make final products, not just prototypes. This is referred to as ‘additive manufacturing’, because these machines lay down layer after layer of a given material to create a ready-made object, as opposed to the ‘subtractive’ business of cutting, drilling and hammering material away. This will open the door to building personalized variations of mass-produced products – from a pair of sports shoes built to fit the individual user’s feet to an automobile with bumpers and spoilers customized according to their own design.

At Internet of Business, we’ll be following these trends closely over 2018. They also promise to be hot topics at our Internet of Manufacturing event in Munich in February (details below).

Coming soon: Our Internet of Manufacturing event will be coming to Munich on 6 & 7 February 2018. Attendees will get the chance to learn more about how connected technologies open up new paths to increased productivity and profitability for industrial companies. 

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Analysis: 7 New Year’s resolutions for the Internet of Things

Analysis: 7 New Year’s resolutions for the IoT

The New Year is traditionally a time for taking stock and, for some, committing to focus on improvements to our lives in the form of resolutions. The IoT could stand some improvement, too – so here are just 7 resolutions that the IoT industry might think of making for 2018. 

#1 – Develop enough humility for interoperability

The IoT is still young and this means that standards, protocols, network functions and all points of interconnectivity may still be forming. All vendors need to exhibit enough humility to appreciate and perceive the place their technology could ultimately have in the total IoT universe. This means never assuming interoperability will be a given. Keeping an open mind and an open approach to open standards will be among the most crucial resolutions for 2018. 

#2 – Move towards a higher purpose

All IoT technologies should be built with a higher purpose for society. This imperative is not simply related to IoT tech that goes towards building ‘smart cities’ where the higher purpose is our motive to create a better living environment for all – although it does absolutely include that work too. Companies should be focussing on resolutions around their contributions to social initiatives, philanthropic causes and environmental protection.

Read more: Korean Red Cross labels aid deliveries with smart tags from Thinfilm

#3 – Appreciate quality more

As we enter 2018, we know that business margins will be tighter and company-wide operational systems will be increasingly precision-engineered. This means that, where IoT devices are implemented, the quality of the software code they run will become even more important. We are entering a new era of accountability where software makers will need to provide evidence for functional efficiency like never before. The IoT needs both device (physical) and software (code) ‘build’ quality to up its game.

#4 – Buy into blockchain, with caution

We knew that the immutable ledger technology behind blockchain could soon prove to be particularly useful for the handling of payments and guaranteeing the integrity of transactions across IoT systems. We must now work to understand what blockchain is, but, at the same time, we must also remember that immutable does not mean unhackable. Even blockchain can be reverse-engineered through log file analytics. We must go forward, with cautionary caveats depending on the use case.

Read more: Opinion: Why blockchain matters for the IoT

#5 – Embrace the subscription-based business model

As the IoT grows, connectivity embedded within products will increasingly disrupt the idea of ownership – with connected autonomous cars for instance, consumers buy the journey, not the car. This is the view of Mike Bell, executive vice president of devices & IoT at Canonical, an Ubuntu operating system services specialist. Bell suggests that we’re moving towards ‘outcomes over assets’ and ‘consumption over capital investment’ – and this will go way beyond cars into all products. 

#6 – Make services first-class IoT citizens

Our first years of IoT development have been characterized by a fascination with devices, sensors, gadgets and gizmos. Our next responsibility is to look below the surface and appreciate the data that moves through the IoT. This is not just about bolstering IoT data security (although it is that too, obviously), it is about the need to appreciate how we weave a new fabric of software-based services out of the IoT data lake and start to understand where we can use the applications that will feed on those services to live better and work better.

#7 – Understand automation

Automation will now become increasingly important to all technology and the IoT is no exception. As we look ahead to 2018, we must understand what automation means. On the one hand it means automated updates for IoT devices. At a deeper level, it also means automating code and process workflows (that serve the software on our devices), based on defined reference templates and best-practice playbooks.

Read more: Ten IoT predictions for 2018 from Cisco’s Maciej Kranz

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Focus On Big Data Analysis To Make Public Service Helpful

Powerful digital tools help governments and other organizations protect and improve people’s lives.

These tools include objects with sensors that accumulate data as well as software that gathers this data through the Internet. The software sorts, analyzes, and shares the information with other software programs, all of which are supported by another, more powerful level of software called a platform. Combined, they are part of a network called the Internet of Things (IoT).

The IoT is a vast network of objects connected to the Internet. The most common IoT object is the cellphone; others range from computers in police cars to thermostats in government offices. They produce a flood of information called Big Data.

Making sense of Big Data

Without interpretation, data is not useful. To gain insights from data, government agencies must make sense of massive amounts of information from IoT sensors, back office administrative systems, social media, and other sources.

One example of a government agency that relies on solutions gained from Big Data is the French Gendarmerie nationale. It is the branch of the nation’s police connected to the French Armed Forces and aids national defense. The Gendarmerie nationale uses digital tools for constant gathering and analysis of social media to help identify potential terrorist actions and participants.

Analyzing social media also helps the agency see patterns in other kinds of crime. They use this information to predict where extra support may be necessary in the future.

The State of Indiana is another example of government controlling the flood of information. It has created a digital “data hub” aimed at helping its departments and agencies share and coordinate information.

The hub supports a unified approach to solving problems such as decreasing drug abuse and supporting citizens harmed by it.

The Republic, an Indiana newspaper, reports that before the hub, lots of data existed but hadn’t been shared among agencies. It says the state’s goal “is to help agency heads make decisions based on the latest, best, most comprehensive information available.”

U.S. governors discuss shared data

In 2016, the National Governors Association reported on U.S. state and local government use of Big Data.

The NGA emphasized strong interest in data analysis to control costs and improve targeting and delivery of services. But it said government data systems often make it difficult for agencies to connect digitally and share information.

Closed data systems become “silos” filled with valuable information that becomes useless. The data is so difficult to get that it can’t aid shared problem solving.

According to the NGA, governors can improve decision making based on shared data. But to do this, they need to promote digital transformation that connects state agencies for easy sharing.

IoT imperative in public services

IoT connectivity gives public service organizations the ability to generate and access data with greater ease than ever before. But before the data is ready to access, it must be cleansed and tagged with metadata. The cleansing process may involve changes in format, finding patterns and missing values, and protecting citizen safety by making data sources anonymous.

Some technology experts compare today’s wealth of digital data to a new kind of oil strike. Similar to crude oil, Big Data must be refined. As Forbes magazine notes, the IoT’s many benefits are accompanied by challenges. Forbes states, “The fact that nearly anything can connect to the Internet also means that nearly anything can serve as a point of attack. In this environment, organizations must re-examine their security strategies to ensure that they’re comprehensive enough to withstand threats in the age of IoT.”

Security is also supported by a powerful IoT platform. Once the data is cleansed and secured, public service networks can use Big Data to identify, manage, and reduce social risks. For example, sensors placed in wheelchairs can warn IoT-connected caregivers that elderly or disabled people need help.

Another example would be worker safety networks alerted to problems communicated by wearable IoT objects tracing the actions, location, and safety of workers. Firefighters will someday wear Internet-connected infrared devices, cameras, and monitors to check air supply and body vitals.

Municipal governments are beginning to pilot smart city projects that include more than networking agencies for data sharing and decision making. One role for IoT devices is predictive analysis of maintenance needs, such as setting times for roadway and building improvements.

Handling citizen complaints in a smart city

The IoT in smart cities can also help government become more responsive to citizens. Like the French police and the Indiana state government, Buenos Aires relies on the analytical power of a digital platform to help it become a smarter city.

One demanding analytical task amid the city’s flood of data is management of 30,000 complaints a month from residents. To be effective, this type of real-time data requires real-time solutions. With help from high tech, Buenos Aires now prioritizes and resolves problems within 96 hours.

Big Data analysis helps people by helping governments attend to their basic needs.

Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative in Public Services: Government and Healthcare.

Internet of Things – Digitalist Magazine

Analysis: Energy harvesting holds out promise of ‘self-powered’ IoT

Energy harvesting promise self-powered IoT

As we look forwards to 2018, energy harvesting technologies look set to solve one of IoT’s greatest challenges: power supply.

The millions of tiny sensors and meters that make up the IoT all need power. In many cases, they require batteries that must be purchased, maintained and disposed of if they are to continue to measure location, temperature, humidity, gas flow, vibration and so on in IoT applications ranging from smart buildings to precision agriculture. If predictions are correct, the number of sensors worldwide looks set race past the one trillion mark some time around 2020 – just two to three short years away.

But where wireless sensor terminals are deployed over wide areas and in remote locations, concerns over battery life and the costs associated with maintaining batteries can be a big concern, especially if it involves long journeys and fiddly replacement exercises.

Read more: How energy harvesting is powering the IoT

More harvesting, more efficiency

Energy harvesting technologies may provide a solution. These use power-generating elements such as solar cells, piezoelectric and thermoelectric elements to convert light, vibration and heat energy, respectively, into electricity.

The thinking behind energy harvesting is that it could help to extend battery life where batteries and energy harvesting are used together – or even circumvent the need for batteries entirely in certain wireless sensors. What’s vital is that the correct balance is struck between power generation and power consumption, in order to continuously deliver sufficient power to a sensor to keep it working on an ongoing basis.

According to a recent report from analyst company Markets & Markets, the energy harvesting system market is expected to more than double to $ 645.8 million in 2023, from $ 311.2 million in 2016.

Read more: UCSD engineers develop near-zero-power sensor for ‘unawearables’

Leading the field

EnOcean, a company based in Oberhaching, Germany, is a pioneer in this area and is planning to showcase its “self-powered wireless solutions” for the IoT at the Consumer Electronics Show (CES) in Las Vegas in the New Year.

Basically, the company produces sensors that rely on energy harvesting, rather than batteries, to collect and transmit data about their own state and the world around them in applications including building automation, smart homes, LED lighting control and industrial applications.

According to EnOcean CEO Andreas Schneider, “Maintenance-free sensor solutions based on open standards such as EnOcean and Bluetooth will significantly facilitate the transition to big data analytics and the Internet of Things.”

Elsewhere, UK-based Drayson Technologies has incorporated its Freevolt technology that scavenges radio frequency (RF) energy from cellular and WiFi transmissions – energy that is all around us, particularly in urban environments, but which usually goes to waste – in its Cleanspace tags for monitoring environmental pollution.

Energy harvesting technologies appear to have big potential. While there’s plenty of noise around the power-saving opportunities that the IoT promises, in terms of delivering more energy-efficient factories, vehicles and cities, far less attention is paid to its own energy consumption. If we are truly heading towards a ‘trillion-sensor economy’, as many suggest, then we need to ask some serious questions about what it will cost to power that economy.

Read more: Researchers create energy-efficient power converter for IoT

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