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Monetizing the Internet of Things: Show me the Money Silicon Valley Innovation at its Best Chris Kocher Managing Director Grey Heron [email protected] @xopher5 Chris Kocher kocher@ greyheron.com 415-378-8801 @ThingsExpo Cloud and IoT Expo November 3, 2015

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Monetizing the Internet of Things: Show me the Money

Silicon Valley Innovation at its Best

Chris Kocher

Managing Director

Grey Heron

[email protected]

@xopher5

Chris Kocher kocher@ greyheron.com 415-378-8801

@ThingsExpo

Cloud and IoT Expo

November 3, 2015

Chris Kocher kocher@ greyheron.com 415-378-8801

The Internet of Things (IoT) is a Mashup of Old and New Technologies

Networks

Big Data

Solenoids

Chips

Sensors

Compute engines

Clouds

Smart Phones

Platforms

Appliances

Analytics

Storage

Communication

protocols

Security

Things

Chris Kocher kocher@ greyheron.com 415-378-8801

IoT Evolved as the Perfect Storm of Convergence between Moore’s and Metcalfe’s Law

Size,

Price

# of Devices and Time

Embedded sensors

and wearables

2010s –

2020s

Network

Speed,

Bandwidth

Minicomputers

1970s-1980s

Mainframes

1960s-1970s

PCs and Laptops

1980s – 1990s

Smart phones,

Tablets 2000s-2010s

Modems 1200, 2400

9600, 56K baud

Acoustic couplers

Internet

Chris Kocher kocher@ greyheron.com 415-378-8801

10 Key Areas Driving IoT Ecosystems

Smart Cars

Retail Stores

Quantified Self - eHealthcare

Connected Homes

Intelligent Transportation

Agriculture 2.0

Smart Cities and eGovernment

Smart Buildings:

Energy, Light, Security

Smart Factories Utilities and Energy Grids

Chris Kocher kocher@ greyheron.com 415-378-8801

Many Ways to Monetize the IoT – but no one ‘Right’ Answer

SW Perpetual License

Freemium models

Customization

Service pricing

Outcome- based pricing

SaaS/PaaS/IaaS

OEM pricing

License per person/per seat

HW/Device/Thing sale

Consulting fees

VAR/Reseller Channels

Ad-based models

Integration fees

Revenue sharing

Usage per hour, transaction, API call …

Chris Kocher kocher@ greyheron.com 415-378-8801

Monetize Across the IoT Ecosystem It all starts with the customer and works back through the value chain

Technologies

• Semiconductors

• Chip sets

• Computers

• Software

• Sensors

• Apps

• Networks

• Cloud Computing

• Big Data

• Predictive Analytics

• Machine Learning

• …

Platforms

• Internet

• IP addressing

• Cisco

• Microsoft

• Google

• Intel

• Qualcomm

• ARM

• Samsung

• Citrix/Octoblu

• Arduino

• Alljoin

• Raspberry Pi

• Sigfox

• Zigbee

• …

Organizations

Retail Stores

Factories

Farms

Transportation

Energy Utilities

Hospitals

Military

Industry Associations

NGOs

Governments

Universities

Things

• Appliances

• Homes

• Buildings

• Cars

• Phones

• Machinery

• Planes

• Computers

• Buses

• Fitness trackers

• Cameras

• …

People

• Health

• Convenience

• Travel

• Shopping

• Work

• Security

• Entertainment

• Cooking

• Sleep

• Exercise

• …

Business Models

Chris Kocher kocher@ greyheron.com 415-378-8801

Ecosystem Implications for Monetization

1. Understand the value you are creating for customers/users

2. Build to scale - this is a game of big numbers

3. Deepen and own the customer relationship

4. Collect data, own data, analyze data, monetize data

5. Integrate with ecosystems to reduce friction

6. Deliver distinctive meaningful value to customers

7. Align internal teams and partners to ensure delivery of a coherent,

unified IoT offering

Chris Kocher kocher@ greyheron.com 415-378-8801

Link Monetization to Customer Value

• Better satisfy customers needs

• Improve brand image/loyalty

• Sell more of existing products

• Sell new products/services

• Increase ‘stickiness’

• Reduce churn – Increase LTV

• Reach new markets

• Be more competitive

• Create new business models

• Incent referrals

• Price differently

• Increase margins

• Find new revenue streams

• Reduce costs

• Streamline operations

• Improve efficiency

• Better service levels for same cost

• Shorten cycle times

• Minimize downtime

• Improve safety

• Shorten supply chain

• Reduce inventory costs

• Eliminate wasted time, resources

• Reduce labor costs

• Remove ‘friction’

• Reengineer operations

• Reduce customer acquisition costs

(CAC)

Revenue enhancement Cost reduction

Chris Kocher kocher@ greyheron.com 415-378-8801

The 4 Vs Framework for Monetizing IoT

1. Vertical- Horizontal Integration

2.Value Creation

3.Value Migration

4. Value Delivery Systems

Chris Kocher kocher@ greyheron.com 415-378-8801

Value Creation: - add new value to current offerings and tap new revenues

http://www.bloomberg.com/bw/articles/2014-10-02/intel-ceo-takes-chipmaker-beyond-pcs-into-new-products

Smart beer keg…

…Or… new beverage

distribution channel

Chris Kocher kocher@ greyheron.com 415-378-8801

Some Final Advice as you Embark on your IoT Monetization Journey

1. Align with customer value

2. Consider how you can migrate value to other markets

3. Keep it simple

4. Take off your product blinders and focus on business model innovation

5. Don’t be a solution in search of a problem

6. Make sure your product/service is not someone else’s seeding strategy

7. Prepare to go ‘silo busting’

8. “Never mistake a clear vision for a short distance” - Paul Saffo

Chris Kocher kocher@ greyheron.com 415-378-8801

Thank You

[email protected]

Chris Kocher kocher@ greyheron.com 415-378-8801

For Further Information on Grey Heron, IOT and Big Data

• Monetizing IoT: Show me the Money

• http://sandhill.com/article/monetizing-iot-show-me-the-money/

• The Internet of Things: Challenges and Opportunities

• http://sandhill.com/article/the-internet-of-things-challenges-and-

opportunities

• Is the Internet of Things the 5th Wave of Computing?

• https://www.linkedin.com/pulse/20141125084549-25688-is-the-internet-

of-things-the-fifth-wave-of-computing

• Avoiding Big Data Train Wrecks while Maximizing Business Value

• http://sandhill.com/article/avoiding-big-data-train-wrecks-while-

maximizing-business-value/

• Grey Heron, Website: www.greyheron.com

• Chris Kocher LinkedIn: https://www.linkedin.com/in/kocherchris

• Chris Kocher email: [email protected]

Chris Kocher kocher@ greyheron.com 415-378-8801

Helping Companies Monetize Products

Chris Kocher is a managing director of Grey Heron venture consulting.

He is a 30-year veteran of Silicon Valley and multiple innovation and

investment cycles. Chris brings a wealth of strategic and hands-on

operating experience to help CEOs, executives and investors build

revenues and shareholder value.

He has consulted with over 100 companies on innovating with new

business models, product strategies and monetization in disruptive

markets and established industries.

Chris can be reached at [email protected] if you’d like to discuss

how he can assist you in growing the value of your business.

Chris Kocher kocher@ greyheron.com 415-378-8801

Back up Slides

Chris Kocher kocher@ greyheron.com 415-378-8801

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