Business Models and the Internet of Things

freemium longtail or hidden revenue everybody knows that the infamous Internet has not only refined many established business model patterns but also spawned a series of completely new ones Google and Facebook give away their products for free yes but they earn billions on user data and targeted advertising Amazon and Alibaba oh their success - offering unlimited products without wasting money on shelf space and Skype and LinkedIn allure customers with free and basic services just to sell them pricy premium products later on but even though digitalization has radically changed the way we do business the physical in the digital world are still separated from each other this is however about to change with the Internet of Things wait a minute the Internet of Things the Internet of Things stands for the vision that the physical world of atoms and the digital world of bits merge together so far humans have been the only connection between these two worlds soon however also sneakers bicycles warehouses supermarkets shelves radiators and hotel kitchens will be connected to the Internet and to each other now the question arises of how the Internet of Things affects business model innovation and how companies entrepreneurs and customers are supposed to respond let's take a thing a lamp for instance and add a sensor that connects this thing to the Internet for example a present sensor in addition to its physical function of generating light the lamp now offers a range of new digital services the lamp can now be used as let's say a security system while its owner goes on holiday the lamp turns on and off automatically and if some burglar breaks in despite this deterrent the lamp sends a message to its owner and to the neighbors and to the police which all happens at a negligible cost let's break it down to a simple formula as a supplier you combine a physical thing with a number of IT components sensors actuators and internet connection and cloud-based data analysis as a customer you then profit not only from the things physical and local function but also from a series of new digital services the possible applications are endless a box of goods in a warehouse that knows when it's empty and signals it is time to restock supplies a watch that measures your heart rate and alerts an emergency physician when anomalies occur or a rentable bicycle that only debits your credit card after the first two hours of use the physical thing plus I T let's call it a hybrid thing keeps its original and local function but the connection to the Internet presents a multitude of new service possibilities these services can be enjoyed from anywhere and they can be realized at very low marginal costs the lamps presence information can be used not only for burglary prevention but also for heating cost optimization for in connection with the aforementioned heart rate watch / sleep regulation on top of this the Internet of Things also expands the customer portfolio of physical things thanks to the generated user data this user data not only enables the lamp owner to optimize his own life but also helps for example energy suppliers to run their networks more efficiently therefore a physical thing with an added IT component is a lot greater than a sum of its parts and we can use this great hole for numerous new business models so-called digitally charged products allow for a multitude of possibilities examples are physical freemium digital add-on digital lock in the product as a point of sales or object self-service yet the most important transformation the business world is undergoing thanks to the Internet of Things is another four years digital giants such as Google or Facebook have profited from the fact that the Internet allows for exact measurement and equally exacting management activities the Internet of Things helps us transfer this management mentality to the physical world in our research we refer to this as high resolution management inventory can be updated at minut intervals for instance and cars will soon be able to measure and communicate Road conditions in real time yes the Internet of Things is for business administration what the ultrasound was from medicine or the microscope for biology so let's wrap it up how does the Internet of Things affect companies and entrepreneurs six points are key first producers of physical goods must develop towards service providers with all the challenges connected to that new role second industry and internet cultures are colliding and we are in need of bridge builders who understand both worlds third companies have to work together more than ever the strategic value of developer communities and business ecosystems is enormous fourth the development of services and business models tailored to these opportunities won't happen on the drafting table even the Nespresso business model he did 20 years from its invention to actual market success experimenting in short and iterative cycles is necessary fifth it is crucial to focus on straightforward solutions at first construct a security system as easy to install as a light bulb only with a strong foundation will we be able to build complex platforms and sixth we must learn how to deal with sensitive user data how can we turn employees into high resolution managers and who actually owns the data we have collected so please watch out the world around you does too thank you very much you

Channel: HSGUniStGallen

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Keywords: Business Model (Literature Subject), Internet Of Things (Industry), The Internet (Media Genre), Animation, RSA, Explanatory, Explainer, Animated, Feemium, Longtail, Hidden Revenue, Physical Freemium, digital login, Digitally Charged Products, object self service, high resolution management, Internet der Dinge, Internet, HSG, University of St.Gallen

Id: kYQ_PHOCjyg

Length: 7min 17sec (437 seconds)

Published: Tue Sep 30 2014