I like to walk expo floors that have a lot of machines, gadgets, and gizmos and engage with vendors, doing some research and testing out some ideas.
Last fall, I walked around a local pharma manufacturing vendor expo. At this expo, I was particularly interested in folks who had sensors or sensor-based solutions (I was in an IoT state of mind).
My hardware side was interested in the size and variety of wired and wireless sensors, the different protocols used, the range of choice customers had to match their use case needs.
My real interest, though, was driven by my software side, to see if any of the companies went beyond sensor manufacture and had some software-driven business model, some value-added service for their customers. For example, I asked the sensor companies if they ran any monitoring services for their customers.
Blank stares
Interestingly, none (save two) of them really had any business where they ran monitoring or offered a monitoring dashboard for their customers. Indeed, one guy so didn’t understand my question, he kept talking about his installation and maintenance service. That seemed exemplary of the limit of the sensor makers’ business models.
Two companies, tho, were indeed focused on aggregating sensor data – one focused solely on temperature monitoring, the other on more general sensors for lab monitoring. They were collecting the data for recording and auditing, compliance, and alarms. One of them told me that they created a network just for the sensors that report to them, but I didn’t get a clear picture how that was done.
I also spoke to a few big-machine makers, at least the ones who seemed to offer some level of equipment data available to users. But of the ones I asked, none did the ‘phone home’ sort of business model for their customers (think GE and RR jet engines). Like the sensor folks, whatever data they provided was up to the customer to manage and analyze.
Opportunities
There’s a gap between what the sensor and equipment vendors offer and what the customer will find useful (notice I don’t say ‘need’ – read on for why). These hardware vendors could generate a new recurring revenue stream by adding value atop their hardware for their customers (see a bit of a related discussion here; and why it’s not easy, as I discuss here).
Ok, so note that I didn’t say customers ‘need’ something more than what the vendors offer. That’s because I think not only do you get blank stares from the hardware vendors when discussing any addition of a software layer of value, but you’ll also get blank stares from the customers as well.
With any new way of thinking, often the customer themselves do not know the value a new bit of software could add to their business. And so you not only get in a bit of a chicken-and-egg problem in building the market, but the players (vendors and customers) in the market don’t even know that there is more value to unlock from the hardware they have.
How do we make the market, where there is value to be unlocked, but neither the manufacturer or the customer even know how to uncover the opportunity or even articulate the need?
What do you think?
I have some thoughts on this (and have actually helped vendors and companies unlock this value), but I’ll save them for another post.
Image by Kerstin Riemer
