Emerging IoT Business Models Profiled

February 6, 2017

Companies should conduct strategic evaluations that leverage strengths and differentiating capabilities, while balancing realistic expectations for revenue and margins

A new report from Navigant Research provides an assessment of Internet of Things (IoT) business models, describing four models and offering a discussion of the market’s value chain.

The IoT market is ripe for growth, with demand-side customers already adopting connected devices and software solutions to help them manage energy consumption or automate processes in businesses or homes. Companies seeking to conduct business in this space have a variety of ways to participate in the market, but they must be strategic when choosing a business model or pursuing a blend of business models. Hardware manufacturing, software platform, service provider, and hybrid solutions are the main IoT business models most companies are considering.

“Given that there are a handful of business model choices in the IoT market, companies need to have a clear idea of what the opportunities are, and are not,” says Neil Strother, principal research analyst with Navigant Research. “At first glance, IoT hardware can seem to be an attractive choice, particularly for makers of high-volume or high-priced products; yet for others, the more lucrative choice might be high-value software or services that can yield recurring revenue and provide a method of differentiation in a crowded field.”

When considering which model is the best fit for their firm, market players should assess what offers the best opportunities given the current state of the market and future expectations, according to the report. Key strategic evaluations need to be made that leverage a company’s strengths and differentiating capabilities in the IoT market, while balancing realistic expectations for ongoing revenue and margins.

The report, Emerging IoT Business Models, provides an assessment of IoT business models, describing four models and offering a discussion of the market’s value chain. The study also features a case study, along with an assessment of the pros and cons of the main IoT business models. In addition, the report delves into the regional and regulatory perspectives regarding IoT business models and highlights the security risks that need to be addressed by stakeholders in this market. Lastly, the report provides a set of recommendations for companies considering their IoT business model options. An Executive Summary of the report is available for free download on the Navigant Research website.

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