The concept of incorporating products and services has been the basic company model for many organizations. A basic level IoT is provided as a virtual fix as part of the after-market maintenance solution. As a matter of fact, the theory of IoT moving beyond efficiency into possibility is welcoming. Companies will be able to start selling the outcome for which the product was purchased rather than the product itself, becoming a supplementary means to an end.
Original equipment manufacturers are certainly moving in this direction including Philips Electronics, which makes thousands of products impacting lighting and healthcare. According to a statement by its CEO, published in their annual report, “With the transformation of our business model architecture, we are increasingly becoming a technology solutions partner, with recurring revenue streams accounting for over 25% of sales. And we are shifting from transactions to relationships via service and solution business models.” Similarly, many organizations, like Schneider Electric, SpaceX, and Caterpillar, have followed suit in adopting this ideology.
Considering the shift that companies are experiencing, companies will have to engage in continuous conversations concerning their products which means that data will be just as important as electricity. However, IoT plays a far more important role in enabling companies to meet the demands of the constantly changing consumer mindset, as consumers today are more well-informed and demanding then they were a decade ago.
For example, Nest does not function solely as a thermostat. It remembers users’ preferred heating patterns after a week. It serves as a central nervous system for your house that informs you about the presence of particulates in the air or if raccoons exist in your yard.
Doug Oberhelman, CEO of Caterpillar, has quite a lot of confidence in his company’s approach. He said, “In the industries we serve today, we have the largest population of connected machines and engines in the world. Through Cat Connect and Minestar™, hundreds of sensors on machines and engines send terabytes of data to state-of-the-art monitoring facilities at Caterpillar and Cat dealers.”
To meet customer expectations, it will become a mandate for companies to move beyond just products and into services. They will venture from a product-focused experience to a subscription-or-service-focused experience. The question companies will begin to ask is, “What do customers really want, and how can I deliver that as an intuitive service, rather than a stand-alone product?”
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