[From the last episode: In contrast to the Industrial IoTThe Internet of Things. A broad term covering many different applications where "things" are interconnected through the internet. (IIoTIndustrial Internet of Things. A broad collection of factory, automotive, agricultural, medical, and other areas where IoT technology is used.), the Consumer IoT (CIoTConsumer Internet of Things. IoT gadgetry designed for home and personal use.) benefits to end users are less obvious.]
One of the things we discussed for the CIoT last time was the fact that servicesWe are used to purchasing products outright. "Services" is a new concept where you may or may not buy the product, but optional or mandatory services come with the product. Those services may have an ongoing cost separate from the purchase price. might be a key part of a product. And that ownership might give way to renting or leasing. This is actually a pretty big deal, and it’s by no means restricted to the smart homeA buzzword for interconnected home devices - TV, refrigerator, door locks, etc..
Even within industry, so-called “business models” are changing. Rather than owning equipment, companies may charge based on how much “work” gets done. For instance, rather than buying or leasing a forklift outright, a warehouse company might get charged for the number of pounds or tons of material that got lifted.
One of the most dramatic examples is that of airplane engines. Engine-makers might charge for the amount of thrust used rather than selling or leasing the engines outright. This is actually a very complicated example, since airplane engines are increasingly outfitted with all kinds of sensorsA device that can measure something about its environment. Examples are movement, light, color, moisture, pressure, and many more. and monitors, radioing operational data as the plane flies. The engine-maker collects that data to keep an eye out for issues or to understand how to optimize flight.
I’ve heard some concern about being charged for thrust. Would cost-cutting tempt pilots (or, more importantly, the pilots’ bosses) to skimp on the thrust to save money? That’s entirely conjecture, and how you think about that also depends on whether or not it’s a pilotless plane (something we don’t have yet). We’ll look into issues of “skin in the game” in a future post.
Two Types of Service
So there are really two flavors of these services. Let’s focus back on the home for examples. On the one hand, you might buy a clothes dryer outright. The accompanying service might be smart sensing to make sure the temperature is high enough to dry quickly, but not high enough to damage clothes. Or perhaps it will be smarter about knowing when the contents are dry. The payoffs here are less clothes damage and energy savings.
Of course, it also depends on whether the service is an option that you can decline, or whether you have to purchase the service to use the dryer. We’ll talk more about this, and some considerations you should keep in mind when acquiring IoT devices, in a future post.
So here we have an example of a device with a service on top. You might consider the dryer services not to be of value, but with another example – say, a home security camera, the service might really be mandatory. We are increasingly able to understand the contents of images. Just look at the tagging features in Facebook. They can tell which parts of the picture are faces (most of the time). In the future, it may know not only that this is a face, but to whom the face belongs.
That kind of computing is probably not possible on an inexpensive home security camera, so it will send its images to the CloudA generic phrase referring to large numbers of computers located somewhere far away and accessed over the internet. For the IoT, computing may be local, done in the same system or building, or in the cloud, with data shipped up to the cloud and then the result shipped back down., where beefy machinesIn our context, a machine is anything that isn't human (or living). That includes electronic equipment like computers and phones. can do all of that computing work. Without this service, the camera is no better than a “dumb” camera you might have had 10 years ago. This makes the service less optional. Do you pay extra for the service? Or does the purchase price include the service? That’s for the security company to decide.
Appliances-as-a-Service
The second flavor of services applies when you don’t actually buy the device outright. Let’s say that, instead of buying the dryer (with possible smallish add-on service charges), you simply buy a “dryer-as-a-service.” This “<something>-as-a-service” notion is really common these days – at least in concept, even if it hasn’t quite pervaded the consumer market yet.
In the case of a dryer, you might pay per load. Yeah, it’s kind of like going to the laundromat – except that you can do it in your home, and you don’t need quarters. Is this a better way to go? Well, that depends on the price of the dryer, the monthly service charge, the cost per load, how long you plan on owning the dryer, and how often you dry clothes.
If you’re a parent of five, with two in diapers, you’ve got lots of clothes to dry – and depending on how the math works out, the service model might cost more over time. On the other hand, if you’re a bachelor not known for sartorial splendor, wearing that same T-shirt for four days straight, well, paying per dryer load might save a ton of money.
And, as mentioned before, if you’re low on cash for buying a new dryer, then the service model might be better for you even if you end up paying more in the long-haul.
With this rental sort of arrangement, you don’t own the dryer. So it’s also important to be sure you know who is responsible for maintenance and repairs. If someone else owns the dryer, then is your monthly charge partially covering repairs if something goes wrong? Or do you have to pay for that yourself? You’ll need to do some careful comparison shopping to see what typical monthly charges are. If your service agreement doesn’t cover maintenance, then how does its price compare to those that do?
Leave a Reply