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Internet of Things Blog | Bosch Software Innovations » Changing IoT business models

Making IoT technology work is relatively simple compared to making IoT business models work.

Changing IoT business models

Who sells, who buys and who uses an Internet of Things (IoT) solution? Making IoT technology work is challenging. The same applies to making IoT business models work. I believe one of the most curious and exciting aspects of the Internet of Things is the proliferation of creative business models (sometimes called commercial models) we have seen across the ecosystem. I wrote briefly about the issue of changing business models in this blog posting.

I wish it were easy to lump all the business models into neat categories. But in fact, it’s difficult to definitively categorize IoT business models. In this blog I’ll review the three most common models and present some examples.Figure 1: Business-to-Business model for the Internet of things sales ecosystem [Source: Analysys Mason, 2013] But keep in mind that there are variations for each of these models – that’s what makes our jobs more exciting!

Business model one: B2B

The Business-to-Business (B2B) model is the most classic model in IoT. As shown in Figure 1, an enterprise or group of enterprise sellers offers an IoT solution to an enterprise buyer. The buyer might be responsible for integrating the solution or there might be a system integrator or other service companies involved. The enterprise as the buyer is also the user of the solution. Another example would be a smart home platform as described by Christian Heinrich in his smart home blog. The B2B business model is most similar to classic enterprise IT business models where a technology vendor sells its products to a large enterprise buyer. I expect to continue to see a large number of classic B2B IoT implementations across multiple industry sectors.

Figure 2: Business-to-consumer model for the Internet of things sales ecosystem [Source: Analysys Mason, 2013] Figure 3: Indirect distribution model for the Internet of things sales ecosystem [Source: Analysys Mason, 2013]
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