The Uncomfortable Adventure of an IoT Innovator

Image credit: iStockphoto/maselkoo99

If you are an innovative company working in the IoT market, there is so much more to success than coming up with an amazing product.

I was very much reminded of this last week when I had a long conversation with someone in this industry. And while I can’t name names for fear of losing a friendship, he did make some points that I think are worth imparting in general.

The OEM reality

Some background to start. My friend’s company has come up with a great piece of kit to go into a connected environment alongside other IoT devices.

In its field, it’s the market leader, so the potential is significant. While his company has signed a contract with an established manufacturer, the hope is that they’ll be able to sell it to others and get the product into many of these environments worldwide.

From the start, however, there were issues in the first installation. The OEM has a very rigid and structured way of doing things with suppliers based on an older style project management approach, but my friend’s firm had recently moved to agile, as have many software companies.

So, the first thing to get right was the approach. My friend’s firm had to make some allowances for the OEM’s approach and get a project manager onto things to ensure that timelines were adhered to around delivery.

Pricing opens a new can of worms

Once this was established, and more questions came up. Which network would be used, and what would be the data rates? Would they use the OEM’s platform and plug into it through an API or create their mini platform?

For the OEM, they are already putting this feature into their products. But they are yet to work out how to charge for it once the original gifting period ends.

This created a dilemma for my friend’s company — should they make it free, or do they move to a subscription model? Or should they have added the cost of the IoT features to the product's original price, or should they use another charging model? And how to cost it upfront?

If they charge too much, would that put consumers off? There are a few players in this global market, and the reality is that for some brands, consumers would expect these features to be included for free, while others are considered budget brands even though they are providing the same feature.

The final dilemma my friend mentioned was the opportunity for his firm’s business model. He could see an opportunity to create a service provider layer that went across all OEMs in this space, which would manage issues of infrastructure provision and, most importantly, billing on behalf of them all.

Ultimately, he reasoned, this would be cheaper and simpler for the OEM’s, strip out complexity and cost, and probably result in a better service for consumers.

The issue was whether the OEMs and the market are ready for an intermediary-type service provider in this space. My friend was tossing up whether it would be better to be an early mover and stake a claim in this space now or wait until the market was more mature and the rules of the game had been established.

Only looking at the bigger future picture

Even more importantly, he wondered if his own company was ready for it. Sure, they had created some neat technology that was in demand by big global players. But to make this change could be too much of a transformation.

His chief executive officer, he said, was taking the “run before you walk” approach and was telling him just to focus on getting the implementation right and forget about the bigger future picture.

When I said I thought this was a little shortsighted, my friend suggested I go into a meeting with the CEO and advocate.

Luckily for me, I did not have to argue my position; I just get to write about it. My friend and his company are working on this every day, and it’s the future of the organization they are dealing with.

Who would have thought that a simple IoT implementation could raise so many questions?

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and DigitalWorkforceTrends, and the editor of NextGen Connectivity. His fascination is with how businesses are reinventing themselves through digital technology and collaborate with others to become completely new organizations. You can reach him at [email protected].

Image credit: iStockphoto/maselkoo99