Right now, the Internet is largely a human-to-human affair. That is, we humans use various devices to do things via the Internet. Soon, all sorts of devices that we never imagined would be Internet-enabled will start to come online and connect with one another. The ability for these devices to talk to other devices is colloquially known as the "Internet of Things" and 2014 promises to be a transformative year.
Among C-level executives at product manufacturers and businesses in general, the Internet of Things (IoT) will be transitioning from "what and why" to "when and how."
According to recent research, more than 74 percent of C-level executives in medium to large businesses have heard of the IoT and say that it will play a large role in their businesses within the next three years. While there are some pretty large and dedicated IoT efforts happening already at some companies, it is just a drop in the ocean when compared to the swell of activity that is coming starting in 2014. Although engineering-level employees who may be aware of the IoT have not done much product development in 2013, they will begin new initiatives 2014. The IoT is simply too large a market for companies of all types — from consumer product manufacturers to light industrial to heavy industry — to ignore.
And why would any executive want to ignore the IoT? Businesses will realize that the IoT is as much about transforming existing products and services and unlocking additional revenue streams as it is about creating entirely new ones.
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Tapping into the business and growth potential of IoT-connected products does not mean starting from scratch and developing entirely new products, though that will no doubt happen. Rather, companies have the opportunity to add value to existing product lines, delighting customers and driving new revenue in the process. For example: a snow-blower manufacturer could provide connectivity in their machines so that a retailer — say, Home Depot — could now sell "weather-related services" instead of just the device. So, when a snowstorm is predicted, the retailer could remotely check the status of the snow blower, see that a sparkplug is not firing properly and contact the customer to suggest maintenance. Other services, such as driveway-salt delivery, could also be added.
As a result, we'll see that the IoT will cause businesses to alter the relationship they have with their customers by transitioning from selling products to customers to selling services to users.
This is a fundamental shift in the vendor/buyer relationship. What was once effectively a "one-off" sale with a more reactive relationship through service warrantees and "best guesses" on when someone would need servicing, now becomes a service-oriented relationship where the vendor is working in real-time with product data. This will fundamentally change the relationship into a service cooperative so the customer's needs are anticipated and fulfilled resulting in an elevated experience. Besides adding features and value to the existing item, the IoT will present opportunities to sell additional services, which will drive incremental revenue and further solidify the relationship with the customer.
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Just as with the Internet we know, there will be a coming together of platforms and standards that make interoperability between manufacturers possible. Right now, there are some IoT fiefdoms forming as different platforms and products compete for customer acceptance. For example: Lowe's and Staples have both come out with their own line of connected home products, including lighting, door locks and security systems, as have independents like the Nest thermostat. And while all of these will compete for mindshare and market share, there will be a coming together that enables these "silos" to talk to each other. In fact, on December 9, 2013, the AllSeen Alliance was announced. Members of the alliance have pledged to use a common protocol that will enable disparate products to talk to communicate and inter-operate. Whether or not this brand new initiative will be successful remains to be seen, but the need is clear. There will be winners and losers in the race toward the IoT, but in general, lots of business boats will be lifted. Just look at the Internet we all know right now: there are almost infinite products and services competing, but they do so on a common technological playing field that ensures openness, innovation and new sources of revenue. The IoT is no different and we'll start to see it play out in a big way in 2014.
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What kind of products will we see connect to the IoT in 2014? We've already mentioned some consumer examples that are on the market now and will gain traction in the new year. In addition, there will be interesting specialized, light industrial and business-to-business applications such as blood-sugar readers that can track the history of your blood sugar, baby jammies that can measure if a child is maintaining a high enough body temperature and getting enough oxygen, irrigation systems that only turn on when and where crops need watering, connected Biomedical refrigerators in labs that automatically dispense reagents and restock themselves as needed, smart parking spaces that will show you an open spot right away, energy-monitoring solutions that ensure your office is energy efficient. The possibilities are limitless.
The Internet of Things can enable any business, large or small, existing or emerging to transform itself into services that provides a previously unheard of combination of results: increasing the bottom line while delighting customers like never before.
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— By Michael Simon
Michael Simon is the CEO of LogMeIn. Follow LogMeIn on Twitter @LogMeIn.
