The concept of Product-as-a-Service has excited many who have been looking at the potential opportunities for brands over the last few years. But, while talk around the topic continues, examples of where this alternative business model is being rolled out are limited.
Mobica and Arm recently co-hosted a roundtable that brought together technology providers and household consumer brands to discuss the opportunities and challenges in this space. We were seeking to understand how manufacturers can utilise IoT to turn their products into a service.
What was clear from the outset was that our participants could see the potential benefits for both the consumer and the organisations. For example, the ‘as a service’ model could help remove the large initial outlay required for consumers who want to purchase premium products. For those more interested in the experience – rather than the ownership of the physical asset – this would be a game changer.
From the manufacturer’s perspective, this could also help brands in that premium category increase market share, without lowering prices and devaluing their product. An IoT-enabled approach would also allow brands to gather usage data that could help improve future product design.
With dozens of proof of concepts (PoCs) under their belts, our participants represented organisations that are actively looking at options in this area. However, the Product-as-a-Service concept does have challenges – and this conversation revealed that not all of them are as obvious as you might think.
For example, security is always a major concern raised with IoT-enabled tech, and questions were raised around the protection of data during the discussion. But this issue was confidently addressed by participants who felt supporting technology had matured over the last 3-4 years, to the point where this was no longer a primary reason for manufacturers to hold back.
In fact, technology wasn’t the biggest problem at all. The main challenge was seen to be the change in business model.
For an organisation to switch to offering Product-as-a-Service, they would need to create an alternative risk management model, develop a new sales pitch and put new incentive schemes in place. This is a big change.
For organisations to make the leap, they will need to feel confident about the commercial gains, and believe the profile of the brand won’t be damaged in the process. Without those reassurances, they will be reluctant to commit the resources needed for the roll out.
There were also questions raised over whether consumers would be willing to share their data. The answer always seem to be yes, but only if they get something in return.
With the above in mind, the consensus was that brands needed to do more than simply connect products to the internet and allow consumers to control products from their phone.
It was acknowledged this would have advantages in relation to a smart home hub. However, if boardrooms are going to invest, it was felt brands will need to go further. It was clear though that some brands are planning to do just that and provide services that have the potential to enhance the consumer experience.
It’s obvious that our roundtable is only the beginning of this conversation, and it will be interesting to see how brands utilise IoT to provide services that provide consumers with an optimised brand experience.
We’d like to extend our thanks to everyone who participated. And, we hope to continue this conversation, and help each other make progress in this area of technology in the future.