Home automation, wearable devices, e-Health; the Internet of Things (IOT) market boomed in 2014, and it doesn’t look like it will be slowing down any time soon. In fact, 56 percent of North American consumers are interested in adding Smart Home services.
Telecom companies looking for a piece of the action need to decide where their opportunity lies. While telecom’s Smart Home subscribers have grown in the last few years, it still hasn’t reached the uptake of security providers or device-based specialists such as Nest.
So where is telecom’s opportunity to grow and monetize their share of the IOT market? While apps may be a popular aspect of IOT systems, it’s your services that offer the most potential for profit. Apps are very specific and provide limited service or value. Services can provide immense value and help set you apart from other service providers.
Apps vs. Services
According to a recent study, Smart Home revenues are expected to increase by 12 percent a year through 2020. In order to hit this kind of growth, the industry needs to rely mostly on recurring revenue. While applications can offer functionality to IOT consumers, it’s the services attached to them that will bring in real, recurring revenue for the telecom operators.
In addition, as the IOT market grows and evolves, the space for apps will begin to shrink. It’s estimated that 71% of users would prefer to use a single application for control their smart devices. Unlike other app users, IOT users won’t tolerate a variety of apps to control the different services they attach to their homes, cars, and lives.
If services are the best way for telecom operators to monetize the IOT, which services should they focus on? Where does your competitive advantage lie?
Services for the Internet of Things
Even though telecom operators are behind security and device specialists in subscribers, they do have significant assets that can help them grow their revenue in the IOT. Thanks to broadband internet gateways, telecom providers already have the most penetration into homes. The ability to interconnect solutions will be a major concern for consumers as they bring more devices and services into their home network with the IOT.
As the IOT market grows, it may end up with an ecosystem of solutions, standards and applications consumers are all trying to link together. In this case, consumers will need services that can easily interconnect their devices. As their service provider, you should understand this need now so you can prepare to meet the increasing demands as your customers connect more and more devices.
The IOT is growing at an alarming rate. It may not be the case forever, but right now thousands of applications are flooding the market offering users new functions, new data, and new connections in their homes and lives. It may be tempting to join the app landscape, but without the services to back them up, you’ll never be able to take full advantage of the IOT. Instead, build your services around the applications – both your own and others – and capitalize on the revenue of this rapidly expanding market.