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An introduction to IOT Phase 2 – Charge (Pay per Use)
So hopefully at this stage, the mid-point mark in our 5 part blog series, you’re all relatively comfortable with what exactly the ‘Internet of Things’ is and how it’s going to revolutionize your life over the next few years whether you like it or not. What probably hasn’t been made clear so far though is just who is going to pay for all this new technology (50 billion connections don’t come cheap you know) and why exactly they would want to do it.
Well unsurprisingly the answer to this comes in two parts.
In the world of M2M the key business driver was cost saving so the companies & organizations who deployed M2M solutions generally had no expectation to make money from them. Instead they gained value by having to employ less staff, reduce downtime, increase productivity etc, etc. As we evolved to IOT (Phase 1 – MANAGE) we started to add real intelligence to our offerings so organizations could expect increased customer loyalty, higher service levels, even increased revenues, so again there were benefits there to justify the expenditure and organizations were willing to absorb the costs. As we move forward to the next phase of IOT however we are starting to see something unusual develop, rather than technology being used to bolster existing infrastructure and use cases we are actually seeing the development of business models specifically based on these new technologies. So for the first time we’re seeing standalone economic value that could not exist without the Internet of Things.
Probably the most obvious example of this is and one of the first use cases to arise from this phase of IOT was ‘pay per use’ motor insurance which as its name suggests means drivers are insured not only when they actually use their vehicle but also based on how and where they use it. Having a ‘thing’ onboard your car that records your mileage, speed, location and risk pattern (ie. do you take corners to fast, brake too often, take off from lights at speed etc.) means insurers can determine the real risk in an individuals policy rather than comparing them to broad groups based around age, gender and engine type. This offers the insurer the ability to tailor policies and the driver a real opportunity to reduce their premiums so it’s a win/win all round.
Beyond this however, IOT Phase 2 can just as easily be adapted to any ‘Pay per Use’ model from street cars in large cities (ZipCar, GoCar, Car2Go, etc) to the Aviation industry where engine manufacturers have taken the amazing step of retaining ownership of their engines and charging airlines based on the amount of thrust used. This last model is particularly interesting due to the real time nature of the data transfer and the high value of the product now being delivered as a service. Without IOT the manpower and time required to collect information from every plane engine in the world would mean that it could be weeks after a plane landed before the manufacturer could bill for its use which would have meant this new billing innovation could never have happened. With IOT the usage of a multi-million dollar piece of equipment can be collected and transferred instantly using a $1 piece of hardware. Not that it actually is though, no these guys like to spend money so they make sure it’s a highly robust, secure, reliable and expensive piece of hardware, it’s just doing the job of a $1 one.
Now that the initial use cases have started to hit the streets new concepts are starting to pop up everywhere with companies becoming increasingly creative in their use of technology. At a recent automotive event I attended a number of manufacturers suggested that they were moving away from the individual car being the center of their focus and moving towards the individual driver. So in a couple of years time you could be a BMW ‘user’ with access to any of their cars each of which will recognize you and change their settings accordingly including seat position, radio stations, GPS co-ordinates, favorite routes, in-car purchases, media subscriptions (Netflix, Apple, etc) and a whole host of other criteria based on your personal data. Imagine walking onto a street and just picking the closest car to you to drive home in, it’s not that far away you know, they just have to figure out where to stick the badge 😉
So if the car manufacturers, a notoriously IT un-friendly industry, can make it work then the reality is anyone can. We’re already seeing Pay per Use Medical equipment with connected Chemotherapy systems that automatically configure themselves to the patients records, meaning patients can be treated closer to home or even at home. Pay per Use is even starting to creep into the traditionally slow moving world of Manufacturing with remotely reconfigurable production lines offering the possibility of ‘cloud based’ outsourcing were clients can remotely control production facilities for small batch manufacturing proving once again that once the technology is available the market will provide.
So now that we know who’s paying lets move on to the next stage of our series, Phase 3 – Remote Operation. This is were we get into the weird and wacky world of Amazon drones, self driving cars and robot mining, it’s where IOT meets Isaac Asimov, Arthur C Clarke & Philip K Dick and things start to get really interesting.
So tune in next week sci-fi fans, same time, same channel, blah, blah, blah ……..
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