In this blog post, Randy Littleson, Senior Vice President of Marketing at Flexera Software speaks with Rami Ahola – Global Electronics Center of Competence at IBM and Vikram Koka – Vice President Intelligent Devices and IoT at Flexera Software and asks them to about industry variations in IoT and the role bundling plays in IoT
Randy: There is certainly some shift of traditional models, and it seems to vary by industry, right? Consumer versus business and perhaps by vertical we’re going to see some differences, do you agree?.
Vikram: Yes, even in the business area usage varies by industry. I’ve definitely heard customers in very asset intensive spaces talk about a consumption based models and renting an application for a period of time, 2 weeks for $10,000 versus buying a perpetual license at $200,000 and only using it once a year for two weeks. Users want to be able to rent a capability for a short burst of time, use it and then say I’m good. I’m going to check back in for another year or two.
Rami: Even in the industrial space the IoT is enabling a lot of new business models even though you might not necessarily say that’s monetizing the Internet of Things but it’s enabling them. Rolls Royce power by the hour is a prime example of that, where they basically no longer sell jet engines they sell hours of run. The only way they can make money is by having very good control over where that jet engine is today, what condition is it in and when do I need to send people to service it
Randy: I’m interested in your thoughts on software being monetized independent of hardware or more with the hardware? What do you think the trends are going to be relative to that because we’ve talked about the Internet of Things as a combination of software and hardware amongst other things. Do you think software’s going to be frequently monetized separately or as part of a bundled solution going forward?
Rami: I’m looking at the industrial aspect and it’s largely going to be separate and not bundled because in a lot of cases we might have equipment from a variety of different manufacturers that you wanted to hook up to the same piece of software. This allows use cases that drive actionable insights. It will be difficult if every piece of hardware comes bundled with its own set of software. There will always be exceptions and in the consumer space we’re seeing some of those exceptions like Nest, but I think the business dynamics are, over the long term, more challenging. That’s because let’s say you sell a Nest thermostat today, you get money today and that’s it. But you’re still on the hook for keeping that service up and running for years. Especially with some of the devices that have a longer lifecycle that business logic can become illogical pretty fast.
Randy: Good observation. The issue is between an ongoing cost and no ongoing revenue. Vikram what are your thoughts on software being monetized separately with hardware or not?
Vikram: I’m actually seeing both. To Rami’s point I completely agree and I’m seeing the separate model as well, because many times there is software independent of hardware. Especially for things like control systems, monitoring systems, provisioning capabilities, analytics because you may have different assets from different organizations, different suppliers within the same factory or enterprise. Also seeing software capabilities on the asset itself start to be monetized independently. . Where an asset maybe deployed with a certain set of capabilities that are monetized with the device and then additional capabilities being turned on, which may be powered by software. It may add 3D imaging system or better algorithms for quicker torque in some cases, or being able to respond faster. Definitely seeing both monetization on software with the hardware and on its own.
Share your perspectives—How does IoT vary by industry?
Part 1 discussed Defining the IoT.
Part 2 discussed Monetizing the IoT
Part 3 discussed Licensing the IoT
Up Next: Part 5: Licensing lifecycle and entitlement management in IoT