The Internet of ThingsHow Smart, Connected Products are Transforming Competition?

What is Internet of Things?

★ Connecting with the physical world with the web

★ Scenario in which objects, animals or people are provided with unique identifiers and the ability to transfer data over a network with little or no human intervention

★ By 2020, 50 billion devices will be connected to the

internet

Smart, Connected Products

Physical Components• Mechanical parts• Electrical parts

Smart Components• Sensor• Microprocessor• Data storage• Controls• Software• Operating system• User interface

Connectivity Components• Ports• Antenna• Protocols

Forms of ConnectionOne-to-One

•Individual products connects to the user

One-to-Many

•A central system connected to many products simultaneously

Many-to-Many

•Multiple products connected to many types of products or external data sources

Capabilities of Smart, Connected Products

Sensors and external data sources enable comprehensive monitoring of: - Product condition- External environment- Product’s operation and usages- It allows companies and customers to track a product’s operating characteristics

Eg: Medtronic’ digital blood glucose meter

Monitoring Software embedded

in product or cloud enables:Control of product functionsPersonalization of user experience

Eg: Philips Lighting hue lightbulbs via SmartphoneDoorbot, a smart connected doorbell and lock

Control

Capabilities of Smart, Connected Products

Monitoring and control capabilities enable algorithms that optimize product operation and use in order to:Enhance product performance, improve output, utilization and efficiencyReal time monitoring data allows predictive diagnostics, service and repairsEg: Diebold monitors ATMs for early signs of trouble

Optimization Combining

monitoring, control and optimization allows:Autonomous product operationSelf coordination of operations with other productsAutonomous product enhancement and personalizationSelf diagnosis and serviceEg: Joy Global’s Longwall Mining System

Autonomy

Reshaping Industry Structure

★ Smart, connected products will have transformative effect on industry structure. The five forces that shape industry competition provides the framework necessary for understanding the significance of these changes

Bargaining Power of Buyers

★ Smart connected products expand opportunities for product differentiation

★ Allows companies to develop much closer customer relationships

★ Allows firms to reduce their dependency on distribution or service partners

★ Eg: GE Aviation

Rivalry Among Competitors

★ Smart, connected products have potential to shift rivalry, opening up new avenues

★ Creates opportunities to broaden the value proposition beyond the

product

★ Eg: Babolat Tennis Rackets

★ Migration of cost structure towards higher fixed costs and lower variable costs

Threat of New Entrants

★ New entrants will face significantly new obstacles, starting with high fixed costs of more complex designs

★ Broadening product definitions can raise barriers to entry even high

★ Eg: Biotronik offers smart devices such as home health monitoring system

★ Smart, connected products can also increase buyer loyalty

★ Barriers to entry go down if incumbents hesitates to fully embrace the capabilities of smart, connected products

Threat of Substitutes

★ In many industries creates new type of substitution threats such as wider product capabilities

★ Eg: Fitbit’s wearable fitness device

★ New business models enabled by IOT can create substitute for product ownership

★ Eg: Product as service – ZipCar -Shared Biking System

Bargaining Power of Suppliers

★ Smart, connected products are redistributing the bargaining power of suppliers

★ Bargaining power of traditional suppliers will fall over time

★ Relative dependence on physical components is decreasing, physical components can be

commoditized or even replaced by software over time

★ Bargaining power of modern technology suppliers will be high

Eg: Open Automotive Alliance with Google’s Android operating system

Fleet Management System SavingsFOR 3 trucks

COST of GPS Tracking sensor= $130*3 = Rs7800*3=Rs 23400 Let assume drivers without monitoring take long routesto save toll cost on highway-And take 20 minutes more… Assumptions about trucks-• Speed of trucks =60 Km/h• Diesel cost= Rs50/L, • Average mileage of trucks= 5Kmpl

Cost of 20 Minutes Extra by 3 Trucks in a Year

• Distance covered by a truck in 20mins= 20Km• Fuel cost for 20km= 20*50 Rspl/5kmpl=Rs200• For 3 trucks=200*3=Rs600• For a year= Rs600*30*12=Rs216000

Thus Rs. 216000 can be saved on 3 trucks by tracking them with the cost of Rs. 23400

Disadvantages of Internet of Things★ Compatibility: No set international standard of compatibility is

there for monitoring equipment's to be used

★ Privacy Threat: The level of encryption of data is not known at the moment and there are chances that the data can be hacked

★ Intrusion: If a malware occurs in the system and the system sends information regarding a commodity of use to nearby shops, the shopkeeper shall send the commodity even when not required.

★ Widespread Malware: If a device gets corrupted due to virus attack, there are chances that it may infect other devices also leading to problem for the

Security Concerns

What All Can Happen to Your Surrounding Smart Devices??

Network Attacks

Product Cloud Attacks

Ipv6 Vulnerabilities

Zero Day Attack

Product Technology Stack Issues

A Network Attack

Product Cloud Vulnerability

Taking Advantage Of Ipv6

Zero Day Attack

Product Technology Stack

Evolution of Threats (>.<)

Can You Protect Your Device ?

Implications for Strategy

Which set of smart, connected products capabilities and features should the company pursue?

How much functionality should be embedded in the product and how much in the cloud?

Implications for Strategy

Should the company pursue open or closed system?

Should the company develop the full set of smart, connected product capabilities and infrastructure internally are outsource to vendors and partners?

Implications for Strategy

What data must the company capture, secure and analyze to maximize the value of its offering?

How does the company manage ownership and access rights to its product data?

Implications for Strategy

Should the company change its business model?

Should the company enter new business by monetizing its product data through selling it to outside parties?

THANK YOU

Group 4 – Section B