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The Internet of Things: Changing Business Models for CE Brands

The consumer electronics industry has gone through a massive sea change over the last several years as Apple has defined the next generation of user experiences for millions of consumers through devices like the iPhone, iPad, Apple TV and more. In addition to beautiful physical design, ease of use is the key differentiator for Apple, and it is this element of user experience that has set the stage for the hardware wars of today.

At the same time, the rise of the Internet of Things and “smart” devices has put large device manufacturers on notice. With the rash of connected TVs, Blu-ray players, lighting control systems, thermostats, smart locks and other connected devices coming to market in record numbers, consumers’ eyes have been opened to the possibilities surrounding a truly connected and automated home.

Just as Apple defined this new consumer mindset around user experience, the Internet of Things is defining the next wave of consumer electronics innovation. In the very near future, consumers will want their smart devices to connect with other products from different manufacturers, and they’ll want it to be easy to control everything together in one cohesive system.

This trend has created a significant, yet unavoidable challenge for CE manufacturers who are used to the old ways of doing business. In order to thrive during this coming land grab of connected devices and automated homes, CE manufacturers have the opportunity to not only provide the consumer with a seamless experience, but also take advantage of new business models and revenue streams similar to the financial windfall Apple opened with the introduction of the App Store.

Here are three reasons why CE manufacturers need to take a hard look at new business opportunities made possible by the Internet of Things.

1. A Connected Hub for Direct Communication

Consumers who purchase connected home products will connect those devices to a central hub that coordinates the dozens of devices and subsystems in the home. Consumers do not want to deal with multiple apps to control multiple devices. As a result, whoever supplies and supports this control hub will create a centralized home automation dashboard for the consumer, while also establishing a powerful portal for future revenue streams and consumer education.

The value around education lies at the center of this connected hub. Manufacturers can provide consumers with more specific information about features and functionality of their connected products, in addition to educating them about the many ways they can work together. By having this type of “always on” connection to the consumers’ home and wallet, manufacturers can keep them up-to-date on new product announcements, complimentary products that work well with items the consumer already owns, templated home automation setups and more.

2. An App Store for the Home

Much in the same way the App Store adds value to Apple’s hardware products, or GM’s OnStar adds value to their automobiles, CE OEMs can generate synergistic revenue with similar types of services in the home, including referrals to recommended providers such as plumbers, electricians, or locksmiths to service their products. Whether the manufacturer supplies the service itself, or simply serves as a referral point, there is new money on the table to be captured. This creates an onboarding process for the connected home that is as seamless as the App Store is for a new iPad owner. In addition to software, manufacturers can also make referral revenue on hardware – whether it’s selling their own or suggesting products made by others.

Applications can also be built that provide custom or templated functionality for the devices a consumer has purchased for their connected home. If a consumer wants the Philips Hue lights in their living room to tint green when their plants need to be watered, for example, an application can be built to do just that.

3. New Partnerships

The change being ushered in by the rise of the Internet of Things means that the old system of doing business no longer applies, and CE manufacturers must approach the industry in new ways. Connectivity is shaping this new era of consumer behavior, and today’s digitally-savvy consumers want to control their devices with their smartphones and tablets, in one central app.

Given this new reality, manufacturers must look to work with new partners that can help them thrive in this fast-moving digital era. Referred to as co-opetition, the traditional concept of business as a “winner takes all” endeavor is giving way to a new era that, in the networked economy, forces companies to both cooperate and compete. These types of strategic partnerships with companies that may once have been considered competitive are unavoidable, and it is necessary for device manufacturers to start examining their options now.

Home Automation Presents Business Opportunities

In today’s highly competitive environment, connected home products and services will open up new streams of revenue for device manufacturers that choose to act. The time is now for the industry to get serious about the opportunities offered by the connected home and the Internet of Things. Those that seize this moment will provide significant value to their business over the long term.

As the “brains” of the Connected Home, Zonoff provides a comprehensive software platform that enables, device manufacturers, retailers, and service providers to deliver new connected products and services to the consumer mass market. The Zonoff Connected Home Platform consists of Home, Cloud, and App software and powers everything from entry level point solutions to comprehensive home automation, remote control, energy management, and safety monitoring.

Mike Harris is the CEO of Zonoff