designing business models for the industrial internet of things
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©Kii Corporation 2016
Platform Microservices Vertical Frameworks
Designing Business Models for theIndustrial Internet of Things
IoT Solutions World Congress 2016 | Barcelona, Spain
Martin Tantow | General Manager, EMEA
• Founded in 2007 after MBO from Nokia
• Global HQ in Tokyo. US HQ in Silicon Valley. Growing presence in the US, Asia and Europe• 90+ employees• Investors include Cisco
and Fidelity
We Enable The Delivery Of Complex IoT Solutions
50+ Customers and 30,000 Developers
Full-featured, Carrier-Grade Solution Enablement Platform
IoTPlatform
Smart BuildingsSmart Health Carrier SolutionsSmart Cities Smart LogisticsIndustry 4.0 (IIoT)
• Selected by the Hamburg Port Authority to identify pollution sources, reduce pollution and meet environmental standards • Extensible Smart Port solution
built atop Kii’s platform using AQMesh devices
• Working with the HPA to add additional solutions, integrate/interop with other devices/assets
Smart Environmental Monitoring For Hamburg Port Authority
NO2, SO2, PM2.5/PM10 etc. (low detection thresholds, <10ppb for NO2,SO2)
Major Technical Innovation Has Led to an Explosion of Connected Opportunities
Components ofIndustry 4.0Intelligent Machines / Tools / ElementsIoT / Connectivity
Big Data Smart DataSelf-learning Systems
AR
In 2020 (vs. today)
Sensor cost € 0.30Wireless connectivity
Penetration rate of 4G x5
Processor power x6
Miniaturisation“Computers” the size ofa grain of sand
Cloud, storage, data x16 data volumes
Market Size for Connected Devices will grow from $6.5B in 2015 to $48B in 2020 at 49.5% CAGR.
Sources: Intel, GSA, GSMA, Iaw Moore, IDC, ExtremeTech, Oliver Wyman
An Explosion of Connected Possibility
19921,000,000
20030.5 billion
2009Iot Inception
201311.2 billion
20128.7 billion
201414.4 billion
201518.2 billion
201622.9 billion
201728.4 billion
201834.8 billion
201941.1 billion
202050.1billion
0
10
20
30
40
50
90 969492 0200 140698 18161004 1208 20
Mill
ions
of d
evic
es
YearSource: Cisco
Four Predictions that are Prompting a Revolution in Business Models
It’s not enough to improve existing business models, new ones need to be invented
Boundaries between industries are being challenged
1
?
New opportunities if companies quickly adapt
to changing markets
Data is becoming the most valuable asset
2
Future IoT business models will be data-
centric
Services are becoming more prominent
3
Product companies become solution providers
More direct customer relationships allow mass personalization
4
Existing customer segments need to be revised and new ones
added
Development of Data-Centric Business Models
Industry Edge ComputingEmbedded Systems
Gateway
Sensors & Devices
Supply Chain Process
IoT Platform
Algorithm & Data Analysis
Cloud InfrastructureIaaS
PaaS
SaaS
Cloud
Connectivity
Pred
icti
ve
Mai
nten
ance
Surv
eilla
nce
Benc
hmar
king
On-
dem
and
- ava
ilabi
lity
- bill
ing
Pers
onal
izat
ion
& C
usto
mer
da
ta
Self
lear
ning
Solution
AR
Quality Availability
Smart Services & Business Models
Input
Network
Processing
Content
Benefit
Strategy Tactics
IoT Platform
Open Information Marketplace
Interoperability
Standards
Business Model Development by Stakeholder
Stakeholder Input Network Processing Content
Benefit(monetary/non-monetary)
Generalpublic
Internet / Mobile Network Pollution levels Immediate warnings
Ship positioning (AIS), traffic data, weather (e.g. wind)
Internet APIsAlgorithm for data harmonization & visualization
“Polluter” detection (ships, traffic, industry)
Possibility to fine polluter source or avoid pollution
Environmental data (e.g. NOx, SO2, NO2)
GPRS Post processing, outlier detection Pollution levels Service charges
Data marketplace Internet APIs / MQTT
Data interoperability, Solution Accelerator, Thing Interaction Framework
Pollution source identification and levels on map, push notifications
Service charges
Example:
Business Model = Logic of the firm, the way it operates and how it creates valuefor its stakeholders.
Business Model Strategy & TacticsStrategy
Industrial driving force
Ex: Gira (BMS, building technology)
Ex: Existing/legacy homes and buildings
Ex: Sigfox (connectivity)
Strategicintent
Market driven Technology push
Get-ahead
Catch-up
Ex: 3rd tier mobile carriers (e.g. upgrading to 5G)
DSLPhysical Freemium
Digital Add-on
Digital Lock-in
Product as POS
Object Self-Service
Remote Usage & Conditioning Monitoring
Sensor as a Service
Tactics (Physical Asset + Service)
Sources: Li et al, Fleisch et al
Physical asset with service (initially free): e.g. Canary
Inexpensive physical asset with add-on high margin services, e.g. AWS
Digital handshake to limit compatibility, e.g. Gigaset elements
Physical device or smart phone as POS, e.g. Shopkick
Ability to place orders on the Internet, e.g. Amazon Dash ButtonReal-time data transmission and ‘Pay per Use’ billing, e.g. remote 3D printerData provisioning for multiple applications, e.g. data marketplace
Developing a Marketing Proposition
Components(by stakeholder)
Strategy
Tactics
Target Market
Value Proposition Value creation to the customer
New & existing customer segments
Competitive Strategy Branding & differentiation / USP
Solution delivery process
Value Chain Ecosystem Revenue Model
Partners that can add value to the proposition
Revenue mechanism & pricing
Leveraging New Value Assets: Data Marketplaces
Source: McKinsey & Company
Setup phaseTechnical data marketplace
Target stateData and service ecosystem
Raw-data trader• Works only as an
inter-mediary to exchange data on a technical platform
• Data will be forwardedas raw data
Data normalizer• Defines standard
data model, format, and attributes for all data
• Incoming data will be syntactically verified
• Inventory of data will be continuously managed and extended
Data aggregator• Data marketplace
aggregates data into logical bundles
• For example, data for a certain region is combined and offered to service providers
Quality assurer• Verifies the content of
data and carries out consistency andquality checks
• Invalid data are rejected
• Fees for data marketplace are higher, though it is accountable for correctness of data
Depth of value added of the marketplace
Selected Major Opportunities – Smart City & Building, Healthcare
Application Description and Examples Current Status Outlook
EnvironmentalMonitoring
Sensors for environmental protection and monitoring:Air and water quality, atmospheric or soil conditions, movement of wildlife, earthquakes and tsunami-warning
Increasing deployment due to frequency of concerns.
Investment primarily government-driven. Budget limits govern growth.
InfrastructureManagement
Monitoring and controlling operations of urban and rural infrastructures:From traffic, parking management to maintenance of bridges, railway tracks and wind farms.
Increased attention as infrastructure programs gain traction.
National government renewal programs driving market.
BuildingManagement
Enhancement of building management systems (BMS):Access & energy management, light control, safety & conference room management.
Already large market which sees quick ROI.
Strong demand for mainly new properties.
Medical remotemonitoring
Health monitoring and emergency notification systems:From blood pressure and heart rate monitors to advanced devices like pacemakers or hearing aids.
Numerous small deployments to prove use cases.
Ramp up dependent on insurance and regulatory approvals.
Selected Major Opportunities – Industrial IoT & Security
Application Description and Examples Current Status Outlook
Industrial control, automation & measurement
Enabling smart factory through real-time optimization of manufacturing production and supply chain networks, asset management via predictive maintenance and maximizing reliability.
Strong growth. Clear ROI. Limited by sunk costs of old processes.
Expect fast ramp of high-value contracts by global manufacturers.
AI & Machine Learning
Algorithm for pattern recognition and computational learning theory. Making sense of all the data collected from millions and billions of sensors.
Growing AI technology adoption in various industries, several acquisitions by Google and Apple.
Deep learning breakthroughs will be driving a boom on AI.
SecurityMajor concern in the private and public sector, increasing exponentially to the amount of connected devices.
Huge concern and threat to all IoT solutions, major security issues are not solved.
Large market, expected to reach $37B by 2021.
Keep In Touch
Martin TantowGM, EMEA
martin.tantow@kii .com
Thank You!
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