Special Reports

A B2B2C consumer IoT strategy can protect margins through cross-selling

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The Internet of Things (IoT) sits in the “hype phase,” with numerous entrants discussing the various consumer services that could be provided by simply adding a $30 sensor to existing solutions during production to create new consumer appliances and entertainment devices. Moore’s Law economics gets paraphrased into “the race to the bottom,” which seeks to summarize the decades-long history of ever-more-powerful hardware devices at ever-decreasing price points yielding ever-small profit margin percentages.

Business-to-business (B2B) technology companies would therefore seem to be less inclined to focus on the IoT consumer space, given the shrinking profit yield associated with hardware innovation. However, to ignore the space can result in losing competitive positioning across the broader and rapidly growing IoT space in general. Therefore, it makes sense to evaluate the consumer IoT space in terms of the actual business opportunity it affords rather than necessarily how it conveniences customers. Yes, user convenience has value, but without a business enterprise able to generate sufficient margin returns in delivering the user convenience, it will not have market longevity. Consider this to be enterprise economics pushing back on consumerization of IT.

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