The first industrial revolution ushered in a global transformation as the means of production transitioned from human labor to machine driven automation. The second industrial revolution accelerated change through the growth of the railroads, iron and steel production, manufacturing automation, the use of steam power, oil, electricity, and electrical communications.
Pundits argue about the defining attributes and timeline of the third industrial revolutions–but few question that it is unfolding before us as we speak. The proliferation of computers and software digitized the previously analog economy, and brought with it unprecedented levels of automation, productivity and innovation. With the introduction of embedded software and app-driven hardware into manufactured devices, and the ability, through software licensing, to monetize those device functionsand features – devices have become intelligent solutions and capable of generating completely new types of revenue streams. Connecting those intelligent devices to the Internet (the “Internet of Things”) is accelerating the third industrial revolution by enabling services, solutions and big data offerings around every day industrial and consumer goods.
So the question remains – has the third industrial revolution already swept through the manufacturing sector, is it just in the beginning stages – or is it still largely promise and hype? That is the question addressed by this report.
Challenges Inviting Change
Major technology innovations don’t necessarily usher in technological revolutions. The conditions have to be ripe – businesses must be open to radical change. One indicator of receptivity is the extent of the challenges they are currently facing. The more pain – the more open enterprises are to new innovations to remedy existing challenges.
According to the survey, device makers are indeed experiencing a broad range of challenges. 48 percent reference the need to make more money among their biggest challenges. Agility is also a major pain point – 47 percent say reducing time to market for creating new products/enhancements, and 47 percent say enhancing their ability to react quickly to changing market needs and/or new market opportunities are major challenges. Other pain points include security (42 percent) and reducing manufacturing costs (40 percent).
Vive La Revolution: Device Makers Massively Adopting Intelligent and Internet of Things Capabilities
If conditions are ripe for transformative technologies to take hold, the question remains – are those technologies actually being adopted?
Perhaps the two most revolutionary advances in recent years to hit the device manufacturing industry revolve around intelligent and Internet - connected “Internet of Things” (IoT) technologies. Intelligent devices are defined as physical devices that include embedded software (or external software applications) that control product features, function and/or capacity. Internet of Things devices are Internet - enabled devices that help accomplish specific user scenarios by bringing their data and functionality together with other devices.
Intelligent and IoT devices also leverage software, software licensing & entitlement management, and Internet connectivity in ways that address many of the big challenges respondents reported earlier in this report. For instance, leveraging software and software licensing, manufacturers can turn device features and/or capacity on and off as appropriate, allowing them to charge customers for capabilities they want, while not charging for capabilities they don’t. Managing entitlements also plays a key role. For instance, knowing which customers have which features turned on allows the device makers to target segments of users for cross/up-sell opportunities. Leveraging licensing and entitlement management, therefore, gives device manufacturers many more options to monetize features and functionality, allowing them to:
- Produce different products on the same hardware chassis, driving down costs by eliminating the need for additional production lines and minimizing the number of SKUs that have to be kept in inventory.
- Create innovative products on existing hardware chassis. This reduces the cost and time to bring differentiated products to new or existing markets.
- Up-sell existing customers by electronically activating additional device capabilities or capacity. This makes it easier to capitalize on incremental revenue opportunities.
- Meet evolving customer needs without requiring them to swap out hardware or otherwise disrupt their operations. This makes for a more positive ongoing customer experience.