Connected Living for Better Business: How Do We Do Business From Connected Homes?
We talk a lot about smart homes. However, most of the discussion centers around what benefits the consumers are deriving through intelligent and connected home devices. Automatic scenes, self-learning thermostats intelligent this, smart that… it’s all about the consumer.
But where is the money going to come from? For an industry that is predicted to be growing exponentially already (it’s not), and explode even more in the next couple of years, the current business models are not supporting this growth.
The large focus on the gadgetry side of the connected home has led to a plethora of devices available through retailers like Amazon and Best Buy in the US, and Media Markt and others in Europe. Consumers are buying devices that do a variety of functions. Advanced consumers are able to integrate these devices and even control them from one centralized mobile app. Combining them into one solution is confusing for the average homeowner and what happens when something goes wrong? When two devices don’t play well together? Who do you call?
Let’s put those questions aside for the moment and return to the previous issue. Where is the business from?
Profiting from device sales at hardware margins is not a long-term business model for an industry with such enormous predicted growth – it may not even be enough for the device vendors themselves to sustain a long-term business model. The aforementioned retailers have indeed found ways to monetize through partnerships with grocery and fast food chains as well as other partners to share revenue from voice assistant generated sales.
But what about the rest of us? These days, long term business growth is sustained by introducing the service and recurring monthly revenue factor. This is where service providers enter the fray. Verticals such as Telcos, Utilities and Insurers wants in and are all making plays in the consumer IoT services markets. They have the advantage of providing a one stop shop for fully integrated devices and technical support to justify a service charge.
However, service providers still have trouble building a viable long term business model based on recurring monthly charges alone. Many are now looking at alternative ways to monetize the connected home opportunity and there are many ways that technology, supported by artificial intelligence capabilities and intelligent use of data analysis give them the ability to do this.
In the upcoming series in this blog that will deal with the varying business opportunities in the connected home we will look at how we can create more value for the consumer, through services based on voice. The main voice assistants available today, Siri, Amazon Echo and Google Home will allow service providers to create a plethora of OTT services that will bring great value to the consumer that will, in turn, generate revenue for the provider.
Additionally, data analytics create a large well of indirect monetization possibilities for service providers. By gaining actionable insights into usage patterns of consumers and their devices, the possibility to upsell devices, recognize churn indicators, predict when maintenance is required will serve to increase revenue, maintain customer loyalty and reduce operational costs. These insights can be made on an individual user and device and also on groups of consumers categorized by geography, size of property, size of family, gender and others to create effective campaigns according to knowledge gained from their general usage behavior.
In the lead-up to CES in January, where will be focusing on the business side of the connected home opportunity, we will discuss all of these issues in more depth and bring some real-world examples of how to leverage the huge growth in consumer interest in this industry.
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