This is the last of a 4-part series on the Internet of Things (IoT). As I mentioned in my first post, there are 3 parts to the IoT architecture, in what I call “Triple A” IoT architecture:
- Aggregation – Building an IoT device to capture the data
- Analytics – how do you process and analyze the data
- Action – how do you monetize the data (this blog post)
Let’s continue with the example in the previous blog posts and assume you have 1000’s of air quality sensors that are sending data every minute. Now that you have created the air quality IoT sensor, aggregated the data to the cloud…now what?
That question is where I think most business models in the IoT space just breakdown. Let’s be clear, creating an IoT sensor is easy, just go to YouTube and you will find video after video on creating an IoT sensor. What’s missing is that most companies and startups don’t know how to monetize the data correctly into a long-term revenue generating entity.
With the AQI sensors you would create a “heatmap” of the pollution levels not only at an area level like BKC or Nariman Point but at a building level. Can you imagine in the future that a building has an AQI reading per floor. For example, Express Tower in Nariman Point has an AQI level of 120 on the first floor but on the 20th floor the AQI level is 20. What do you think will happen to the property prices of those floors. Or suppose the overall AQI level of Express Towers is 150 whereas Maker Chambers IV is 300. First thing is that Mukesh Ambani whose office is in Maker Chambers IV would be pretty irate.
Or, suppose the AQI levels can be linked to the air filters in the HVAC system. If so, once the AQI levels reach a certain threshold then you would automatically dispatch a technician to clean or replace the air filter. Anyways, these are just examples of a potential pricing model that could be implemented. Bottomline, the IoT space is getting a lot of attention but I think much of that is on the technology side and not enough on the business model side which will make the business sustainable.