Did you know that OEMs can tap into ongoing revenue streams simply by converging into Industrial IoT? It’s transforming the way they do business in exciting ways! Industrial IoT has equipped OEMs with a comprehensive set of tools. This enables them to develop products and offer features that were previously inconceivable for their customers. It has fundamentally changed how companies sell, market, and generate revenue from their products. Additionally, it has revolutionized how OEMs manufacture and deliver products to market.
These innovative capabilities have also opened doors for companies to establish new revenue streams. Traditionally product-based companies have begun offering services, while service-based companies have started collaborating with OEMs to reach a wider customer base. This shift has freed OEMs from solely relying on new product sales to maintain a steady income stream.
The entire product lifecycle, from cradle to grave, has been significantly altered. This includes changes in development, manufacturing, marketing, sales, and customer support.
IoT’s Impact on OEM Product Development Cycles
Before IoT, the product development process typically ended once the product was launched in the market. The focus would then shift towards the development of a new version. Unless a critical defect or recall was necessary, the OEM would primarily offer after-sales service. The product itself wouldn’t receive further updates or features.
With the advent of IoT, the product development cycle extends beyond the initial launch. Today, OEMs offer patches, security updates, and even additional features after the product reaches the customer. In some cases, OEMs may even provide lifetime upgrades for certain products.
However, IoT has also introduced new challenges for OEMs. They now have the added responsibility of safeguarding their equipment from novel security risks that were non-existent in traditional sales models. Previously, manufacturers were only liable for equipment-related damages if the product was inherently faulty at the time of sale. However, with IoT, if a malicious actor discovers a vulnerability and exploits the system to steal customer data, the OEM may be held accountable.
Adapting Business Models to Utilize IoT
These new challenges and operational modes have presented OEMs with opportunities to establish new revenue streams. Traditionally, revenue streams from hardware products were limited to sales, parts, and after-sales service.
The emergence of IoT has enabled manufacturers to offer continuous updates as a service to their clients. In both industrial and consumer settings, the security of IoT products weakens over time as new vulnerabilities are discovered. To address this, OEMs have begun offering lifetime updates through monthly or annual subscriptions.
Many OEMs have also adopted a Software as a Service (SaaS) model for the software associated with their IoT products. This involves ongoing software updates and the addition of new features, with customers incurring a monthly or annual subscription fee on top of after-sales support and hardware parts.
For instance, several automobile manufacturers now offer features via subscriptions. As an example, BMW recently announced plans to offer heated seats as a subscription service. This allows customers to purchase vehicles at a lower upfront cost while generating a recurring revenue stream for the OEM.
Similarly, many IoT manufacturers have implemented extended 24/7 customer support. In the event of a device malfunction, customers can contact support, and technicians can leverage sensor data for remote troubleshooting. This model is prevalent in consumer electronics and the automotive industry.
How Can OEMs Leverage IoT to Create New Revenue Streams?
Industrial IoT offers OEMs a variety of ways to generate new revenue streams, including:
- Continued Support and Maintenance for devices and their servers.
- IoT Platform Access Fees
- Tiered Payment Structures for various service levels.
- IoT device configuration services to ensure seamless integration and ongoing functionality.
- IoT connectivity management solutions to guarantee reliable and secure connections for their devices.
While the Internet of Things offers businesses a vast array of options for creating revenue streams, ensuring customer satisfaction remains paramount. Subscription fatigue is a growing concern among consumers, and they may be hesitant to pay for features that are part of a product they already purchased. The backlash against BMW’s heated seat subscription exemplifies this sentiment.
New revenue streams often necessitate additional investments and carry inherent risks. Therefore, for IoT OEMs, conducting thorough market research to understand customer needs is crucial before developing products, business models, and pricing strategies.
Bridgera: Your Best Guide to Building Successful IoT Revenue Streams
Bridgera, a leading IoT development company, is your ideal partner for creating exceptional IoT products that maximize revenue streams. Our team has a deep understanding of end-user needs and preferences within the IoT ecosystem.
We develop IoT solutions and services that your customers will love and be willing to pay for.
Ready to increase your revenue outlets? Contact Bridgera today!
About Bridgera: Bridgera effortlessly combines innovation and expertise to deliver cutting-edge solutions using connected intelligence. We engineer experiences that go beyond expectations, equipping our clients with the tools they need to excel in an increasingly interconnected world. Since our establishment in 2015, Bridgera, headquartered in Raleigh, NC, has specialized in crafting and managing tailored SaaS solutions for web, mobile, and IoT applications across North America.
About Author: Joydeep Misra is the Senior Vice President of Technology at Bridgera LLC, specializing in IoT and SaaS. He played a pivotal role in establishing and leading Bridgera’s IoT division, showcasing a dedication to innovation and excellence in the tech field. Additionally, he is an accomplished author and sought-after public speaker.