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This is IOT monetization lecture material which I used for IOT Conference in Oct 21st 2014, Moscone Center http://www.iotaconf.com/
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IOT Investment and Monetization-Chances and Challenges-
Daniel S. Lee, JD, MB
- Executive Coordinator,
Kotra SV Startup Center
- SV Advisor,
Actner-Lab IX IOT Incubator
-Co-Organizer of Meet up
Emerging Wearable and IOT Tech
Constraints - Biz Stage: Startup Oriented, Root Up approach - Biz Areas: Generally applicable - Monetization come with Investment & Innovation- In global Innovation Perspective
Overviews: IOT for Smart World
IOT Getting Hot!: Hype Curves -Gartner, 2012-
What does it Mean?
IOT Market Sizes and Shares
IOT Market Side and Chances
5 Tips for IOT Monetization
IOT Opportunities-Frameworks
Industry 4.0 Welcome, IOTs! Why?
Smart phone uses expanded
• Sensor price down
Device Tech Improved
• Better Size and connection
Network & Connection
• Network Costs down
• High Speed Internet Available •Various Platform available
Aspiration of New Market
and Innovation
Data>
intelligence
Operational
value
Cost v. benefit
Functions and Benefits of IOT
IOT value at
stake=14.4T
Metering
Monitoring
Control
Tracking
Payment
Information
Energy saving
Downtime minimization
Disaster planning
Inventory tracking
Loss prevention
Predictive maintenance
Asset utilization
Demand Forecast
Capacity PlanningCapacity Utilization
Pricing OptimizationNetwork Management
Yield Management
Loading Balance Optimization
2.5 trillion= employee
productivity
2.5 trillion
2.7 trillion=supply chain/
logistics
3.7 trillion for customer experience
3.7 trillion for innovation/ marketing improv.
Credit for IDC/EMC University + Ciosco Whitepaper on IOT
IOT Creates New Business Model-Based on IDC & EMC Model
New biz
model
-biz create new
value stream in
B2B/ B2C for
speedy market
performance
Real time
info.
-can capture more
data about
process/products
for operational
efficiency
Diversificatio
n of revenue
stream
-can create new
service and revenue
added to existing
one. (eg. Vending
machine)
Global
visibility
-makes it easier for biz
to see across
regardless of location,
by tracking
effectiveness and
efficacy.
Efficient,
Intelligent
Operation
Access to info from
autonomous end
points as smart grid
already supplies to
utilities help to make
decision for price, sales,
and support
IOT: Business Model Matrix
Value
Proposition
Revenue
Model
what
Value
Chain
What
What What
What do you offer to the customer?
3. Devices can take small
1. Cost efficiency can keep short
term
4. Data will give big
2. Innovative tech will last long term
5. Mashup/ Collaboration
Business Model Ontology
Sample BMC: for Health Device
IOT Ecosystem: Complicated
IOT: Value Chain Analysis
Chip vendorModule ventor
App/ midwarevendor
Service provider
MVNOs/ aggregator
SI (system integrator)
5-10% 15-20% 30-40% 15-20% 15-20%
Total Value
? %
A mobile virtual network operator (MVNO), or mobile other licensed operator (MOLO) is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently.
IOT Value Chain by Whom
Devices: Hardware Ecosystem
IOT Market Opportunities
IOT Marketing Model
Adopting sales and marketing approach is necessary because IOT might
create channel conflicts: Sales arena in IOT by Bosch 2014Basically IOT has same IT marketing channels by SNS and other IT
services
Launch Your IOT BusinessCompanies new to The Internet of Things face three main challenges. To build a profitable business (or line of business) around connected devices, you have to: Launch your
connected service. Once you have identified a business model that leverages the power of The Internet of Things for your business, you’ll have to:
.
Enable • Enable devices to connect to the wireless Internet.
integrate • Integrate into mobile operator networks, anywhere and everywheren the world.
Define
• Define use cases and map out business and operational requirements for every stage of your product
lifecycle.
integrate• Integrate your new Internet of Things business with your existing infrastructure.
configure
• Configure application programming interfaces (APIs) to meet your unique business need and requirement of
each and every mobile operator you work with
Deliver • Deliver the new applications and services to the market
Manage Your IOT BusinessCompanies new to The Internet of Things face three main challenges. To build a profitable business (or line of business) around connected devices, you have to: Launch your
connected service. Once you have identified a business model that leverages the power of The Internet of Things for your business, you’ll have to:
.
Monitor • Monitor your connected devices in real-time, tracking data usage,connectivity, etc.
Run• Run diagnostics to identify and troubleshoot issues on any device, anywhere at any time.
Define • Define the events that trigger each device’s activation and deactivation.
Set up• Set up real-time controls that give you visibility into every deployed device and let you manage data
usage.
Monetize Your IOT BusinessCompanies new to The Internet of Things face three main challenges. To build a profitable business (or line of business) around connected devices, you have to: Launch your
connected service. Once you have identified a business model that leverages the power of The Internet of Things for your business, you’ll have to:
.
Set Rate
• Set rates for each type and level of service you offer and define how those plans will be managed over time (e.g. free trial periods, introductory discounts, subscriptions of different lengths, renewal plans, split billing, etc.)
Handle • Handle billing, charges, and payments to and from customers, operators, OEMs, partners, suppliers, etc.
Establish • Establish data usage thresholds and cost controls.
Gather• Gather intelligence from all the data you’re now gathering and use it to create new revenue streams, optimize
processes, build new products, and improve existing ones.
Anal/Opt • Analyze and optimize your supplier costs in real-time
Automate • Automate every stage of the billing process
Capitalization: Investor EcosystemBootstrap, KickStarter,
Crowdfunding
Angels &
Incubators
($0-10M)
“Micro-VC” Funds
($10-100M)
“Big” VC Funds
($100-500M)
“Mega” VC Funds
(>$500M)
Corporate Innovation CenterCVC CIC CICI model(VC) (Innovat.) (Incubator)
Y-Combinator
TechStars
SV Angel (Conway)
Floodgate (Maples)
500 Startups
Plug & Play
First Round
Union Square
Atomico
Greylock
A16Z
Sequoia
INTEL
E bay/Amazon
IBM
QUALCOMM
CISCO
SoftTech (Clavier)
Felicis (Senkut)
Incubation
Seed
Series A
Series B
Series C+
IPO, M & A, Market
True
Foundry
Originally by Dave McClure of 500Startups, modified by Daniel Lee for educational purpose
Invest. & Monetization: 4 Key Players
•MVP Value-added
•Mass Production
•Market Revenue
• Market Domain
• Branding
• Clustering
• Hybrid MVP
• Value Add
• Modulate
• Idea
• Team
• MVP
Startups Incubators
Investors Innovation
Center
IOT capitalization & monetization by Daniel Lee, KOTRA Incubator 2014 ®
Challenges for Business Enterprise
Software complexity: embedded system demands
Interoperability: different devices need to work together
Scalability: devices and service need to collaborate
Data: how to handle volume and interpretation
Instant Availability: situational spontaneous operation and also instant identification of service
Battery: Power: Supply: need to be longer lasting and flexible, at the end.
Fault Tolerance: Things works properly in changing context with uncertainty
Security and Privacy : security for crime/ Privacy for Constitution issue
IOT capitalization & monetization by Daniel Lee, KOTRA Incubator 2014 ®
Problems and Solutions
Classification Problem Solution
Hardware 1) Short battery life 2) High price
1) Focus on distinctive service (narrow use)
2) Attractive design
User Interface 1) Voice/ action activation short
2) Smart phone domain
1) Minimize data entry 2) Operation integrated
smart phone
SocialRecognition
Privacy; leaking personal info; security
Anonymous data from beginning of use
Service 1) Too focused on gaming 2) Supplier oriented service
Custom tailored idea/ service by utilizing user’s action/ health info
Challenges in IOT Organization
Create C level position in identifying and
overseeing new digital biz opportunities:
Develop and revise execute team’s
understanding of the new digital landscape for biz
Design and Execute a plan for accelerate
Investments in digital biz tech & skills
• CDO/ CIO+@
• Responsible for finding new revenue stream
• See who’s the competitors
• How to cooperate to make disruption?
• Relocate the resources across biz based on key initiative
• Invest in key data collection and analysis area
• Invest human capital
Credit for IDC/EMC University
IOT Investment and Monetization
startup
MVP
Revenue
team
Plan
IP
sensor
Entity
Incubator
CVC/CIC
VC/ Investors
IPO
startup
startup
startup
Seed
Angel
modulation
Biz Modeling
Devicing
Mashup
MVP
gadget
Idea
Unit
Prototype +/- @
Value add Series A-C
Mash up Commercial
version Service
combined Branding
MarketingMass production
Value add M & A
Brand/Market Mash up
Clustering Market Domain
Global Partnership
Post M & A
B2B Frame Global OEM
startup
Series A
SeriesB -C
Series A
Series B -C
Series B-C
IOT capitalization & monetization by Daniel Lee, KOTRA Incubator 2014 ®
Mashup
Mashup
IOT Enterprise Partners/Leaders
Targeted Changes for IOT Biz• Fusion with Existing biz/ Industry
- Combine Solutions: sensor, device, communicat.
Network with Industries: construction, agricultural,
manufacturing, healthcare, and etc.
- Industry specific knowledge for traditional industry
• Mash-Up: One Source Multi-Use or 2 sources to combine for value addition
- BM to utilize infor/data collected by things, will accelerate IOT industry
• Intelligence Oriented Design - Build up system/service based on targeted Intelligence
to secure utility in ROI
• Collaboration in Ecosystem - startups, Investors, innovation center or other
enterprises
Standardization of IOT Tech
One M2M Framework
One M2M
WG1
demands
WG5
Management
WG4
Security
WG3
Protocol
WG2
structure
Chronicles & performances
2011: Consensus Meeting2012: 1st Executive Committee Seattle
(MOU + 20 enterprises)Now: Tech. Committee with 5 Working Groups
1) WG1: 2 Tech Reports 2013 08 approved
- Tech Reports: ROA method + SOA under development: Resource of Architecture combined with Service of Architecture
2) WG3: protocol analysis for necessity on each interface3) WG4: security standards, countermeasure, token authorization,
- will be approve by end of 2014
4) WG5: device management, semantic standard development.
- OMA + BBF= management standard
- Watch One M2M: http://www.onem2m.org/-
Watch out Asia and Latin America
Smart World by IOT
Thank you
Contact
Daniel Lee, JD, MBA
Executive Coordinator
Kotra Startup Center