Increasingly, device manufacturers are finding interesting opportunities to drive more value out of Machine-to-Machine (M2M) and the Internet of Things (IoT) initiatives. Common definitions of Machine-to-Machine (M2M) and the Internet of Things (IoT) are based on the concept of “connected devices” and may be described as:
Machine-to-Machine (M2M) refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability.¹ M2M uses a device (such as a sensor or meter) to capture an event (such as temperature, inventory level, etc.), which is relayed through a network (wireless, wired or hybrid) to an application (software program), that translates the captured event into meaningful information. (Source: http://en.wikipedia.org/wiki/Machine-to-Machine)
Internet of Things (IoT) is a scenario in which objects are provided with unique identifiers and the ability to automatically transfer data over a network without requiring human-to-human or human-to-computer interaction. IoT has evolved from the convergence of wireless technologies, micro-electromechanical systems (MEMS) and the Internet. (Source: http://whatis.techtarget.com/definition/Internet-of-Things)
The primary benefits of connecting devices have historically been the ability to better support them remotely, e.g., knowing when a pump is close to failure and needs to be replaced, when restocking is required in a vending machine or when a system is running old software. Additionally, this helps reduce the support costs associated with the maintenance of the device. Connected devices can circumvent the need for manual inspections, and can also speed up time to diagnosis and ultimately resolution. Customer satisfaction improves in this scenario as well, as they continue to receive uninterrupted benefit from the device.
Moving beyond machine-to-machine and the Internet of Things
The breadth of use cases and benefits of M2M and IoT are expanding to include new ways to monetize the offerings from the device manufacturer. A wide range of opportunities open up when the connection is used to share usage data from the device. More specifically, it enables new business models to be implemented – these can be business models that are more lucrative in general and/or more appropriate for specific sub-markets. For example, users of a device can be charged based on number of discrete uses, or usage levels during specific times of the day, or a concurrent number of users within an enterprise, or based on geographic location, or use of specific features… or any number of parameters.
This data can also be aggregated and analyzed for improved business intelligence. Monitoring patterns of usage consumption can lead to focusing new sales activity on the products or features that are most highly valued, and in the most receptive markets. It can lead to targeted marketing campaigns that up-sell users to new levels of functionality or renew them at the most opportune time. It could focus development on the most valuable features, on the most widely deployed platforms. It could be fully anonymized and provided to others to be leveraged in their databases, marketing activities, or support services.
M2M has evolved to encompass and enable high-order value propositions, driving increased revenue. Maturity models presented by Gartner, Sprint, and others at recent M2M conferences reflect this evolution. They generally depict the major steps of connectivity, support enhancement, and then additional monetization.
Creating new revenue opportunities
M2M is a trend that is driving IDMs to use licensing and entitlement management to protect and monetize their IP with the ability to diagnose, fix and upgrade products remotely, to offer scheduled preventative maintenance instead of emergency repair services, to roll-out usage based pricing models, and to get real time feedback on product performance.
Flexera Software's FlexNet Producer Suite for Intelligent Device Manufacturers is a part of a strategic solution for Application Usage Management. FlexNet Producer Suite provides embedded software licensing to unlock new revenue streams, protect intellectual property and implement configure-to-order manufacturing processes that dramatically reduce inventory while enabling greater responsiveness to changing market conditions. It also delivers back-office software entitlement management solutions to streamline fulfillment, protect maintenance revenues, implement new revenue models quickly and easily and establish direct relationships with customers through multiple tiers of distribution.