Key Takeaways
- By 2025, over 27 billion connected devices will transform industries and customer expectations.
- OEMs must build scalable IoT business models to thrive, focusing on customer relationships and data insights.
- Successful companies leverage integration, strategic partnerships, and clear value communication to monetize IoT effectively.
The Impact of IoT on OEMs
According to IoT Analytics, the significant rise in connected devices will reshape industries and alter customer expectations. By 2025, over 27 billion connected devices will exist globally, translating to more than three devices for each person. This acceleration in the Internet of Things (IoT) doesn’t just introduce connectivity; it fundamentally redefines how Original Equipment Manufacturers (OEMs) develop products and how they generate revenue.
Ten years ago, many OEMs pondered whether to develop smart products. Now, the focus has shifted to scaling and effectively monetizing these offerings. Leading manufacturers like BMW and John Deere have millions of connected units, while smaller firms also benefit from shifted business models that yield recurring revenue.
However, not all OEMs are experiencing success. Challenges with development cycles, unclear business models, and customer resistance hinder many. Insights from IoT Analytics’ report on 100 global OEMs reveal critical strategies differentiating successful companies from others.
Embracing Connected Products
Connectivity has become standard. Predictions indicate that by 2026, over half of OEM products will be IoT-enabled. Key insights arise from understanding customer data, which help companies proactively meet customer needs and address inefficiencies. Utilizing data effectively allows OEMs to transition from mere suppliers to valued partners in customers’ operations, thus enhancing relationships.
Developing Smart IoT Solutions
Creating a connected product is extensive, averaging 41 months from initiation to market for OEMs, with longer timelines in certain sectors. This complexity arises from integrating hardware with software, cloud infrastructure, and security measures. Successful OEMs employ agile development and cross-functional team collaboration to streamline this process, aligning with market demands from the outset.
What Sets Successful OEMs Apart
The most successful OEMs excel in three areas: insights monetization, customer relationship integration, and strategic partnerships. For instance, AI-driven predictive maintenance highlights revenue generation as over two-thirds of successful firms rely on it. Additionally, the integration of IoT data into core systems allows for personalized service and improved demand forecasting—critical for maintaining an edge in the marketplace.
Turning Smart Products into Profitable Business
Navigating the transition to profitable IoT models is challenging. Longer development cycles, security concerns, and regulatory hurdles frame much of the landscape. However, models like Equipment-as-a-Service (EaaS) offer new pathways, emphasizing accountability through usage-based charges that can foster stronger customer relationships.
Ultimately, clear communication of IoT value is essential. The leading OEMs not only connect machines but also forge deeper connections with their customers, transforming insights into actionable revenue streams and positioning themselves for future success in the IoT landscape. The most successful organizations will successfully navigate these challenges, ensuring sustainable growth through customer-centric strategies.
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