We’re already in the early stages of the connected world. Soon cars will provide rich Internet and multimedia consumer experiences by communicating with websites, refrigerators will notify a repair company if a problem should arise, toys will interact and converse with children and even digital pills will transmit data as they navigate the human body.
In the connected world a network superhighway will connect almost anything to everything. Innovative companies that get out in front of this trend will benefit from a persistent connection with their customers that gives them a huge advantage in creating and shaping the future. However, there are significant barriers that companies must overcome to capitalize on this new world. They must contend with a shortage of relevant skills, evolving business models, collaborative relationships, and the need for development platforms that deploy and manage billions, if not trillions of objects.
Devices with embedded networking already range from e-readers to cameras to home appliances. As this list grows, networking will evolve from a “nice to have” feature to “must have.” This is because the addition of networking to a device goes to the heart of its value proposition. A networked device establishes an ongoing new relationship between the provider of the device and the owner of the device. This shift in relationship will fundamentally alter how devices are marketed, priced, supported and used. A persistent customer relationship facilitates new revenue models based on subscriptions, add-on sales, and analysis of data streams that are potentially much more profitable than the one-time sale of a device.
An obstacle faced by many companies is that networking is not a core competency. As a result, few organizations have the skills in-house to lead this networking revolution. To cope with the capability shortfall, companies are taking collaborative approaches by working with consultants, outsourcing providers, software companies, Internet companies, chip makers and PC manufacturers to obtain both technical capabilities and a marketing advantage.
The need for interconnectivity
One thing that’s compelling about a connected future is that it presents consumers with the possibility of controlling their devices simply and easily from any location. Imagine a time when your car, in reaching a certain proximity to your home, will be able to alert central controls in your house to turn on the air conditioner, unlock the doors and put your favorite music on the home audio system.
Behind such a vision, however, is a difficult technological feat. There is a need for a common platform that can facilitate networking across different devices and services from different companies. Many of the networked products now coming to market are end-to-end solutions in which a single company manages the entire value chain based on that company’s proprietary platform. However, as connected devices proliferate and consumers start to demand things to work together, proprietary platforms become problematic. Very few companies have either the resources or the marketing clout to make their platforms standard, and, as a result, may find themselves isolated from a more robust marketplace where everything works with everything – across both different types and brands of devices
Remote health is one area where interoperability has already emerged as a problem. Here, patients and caregivers may depend on different life sciences devices from different manufacturers to manage a particular chronic condition. Because these devices are often the product of small, highly specialized entities, there is no “one-stop shop solution” that works for everyone. As a result, the healthcare industry must rely on third-party integrators who can bring the different pieces together and make all the devices talk to one other.
As the markets for connected devices matures we are likely to see proprietary platforms give way to common platforms that allow both developers and consumers to orchestrate functionality across many different devices and services, and encourage value chains that allow individual companies to specialize in what they do best.
What kind of company is best positioned to provide that common platform? Network providers and mobile operators are viable candidates. However, many of them today are focused on connecting one device or service at a time, rather than creating a system of devices that work together to deliver holistic solutions. To remedy this situation, operators will need to pull a page from the “triple play” handbook and apply it to the myriad of connected devices to address consumer demand for packaged solutions with different pricing and bundling options. It is not clear yet that operators are interested in taking on the role of aggregator. However, it is clear that they are well positioned to distribute, support and bill for such services. They will likely also have to consider partnering with a firm that can help integrate the various pieces and players as this will be important to delivering solutions for which consumers and enterprises are willing to pay.
The need for new business models
A final challenge concerns the new business and pricing models necessary to profit from the networked future. Mobile networking capabilities can be transformational, in part because they allow for constant interaction with the customer, thereby facilitating and often demanding new models for branding, pricing and distribution.
One-to-many platforms and models are one compelling way to monetize the networked future. A technology platform that permits device makers to reach a global market with a single deployment—a one-stop service that eliminates the need to negotiate certification, technology and business issues with individual telecommunications carriers – is a huge advantage, and one that plays to the strengths of mobile network operators.
Figuring it all out
Innovators are still exploring the ins and outs of the collaboration models, platforms and pricing strategies facilitated by networking. Because embracing this new networked world will be essential to achieving high performance in the future, the marketplace is certain to see multiple waves of innovation in the coming years.
Many approaches will coexist, and the market is unlikely to be dominated by a single model or clear winner. However, one thing is clear. Companies that provide a flexible framework for creating new open networks, standards-based platforms and new business models that are responsive to the needs of the consumer are likely to flourish.
Lisa Mitnick is a senior executive, mobility, at Accenture.
