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Internet of Things: IoT Becomes Springboard for Manufacturers to Diversify into Software and Services
By the end of 2013 there were 9 billion devices connected to the internet. By 2020 the scope of connected devices and the Internet of Things is expected to grow to 28 billion, as estimated by IDC.
An IDC report prepared for Flexera Software looks at how the IoT market is changing the nature of traditional manufacturing, turning manufacturers into software and service shops:
- The number of manufacturers that will be making devices with the ability to communicate via the internet will double over the next two years
- Manufacturers are increasingly adding technology to the devices to produce software-enabled ‘intelligent devices’
- Manufacturers (79 percent) are beginning to build in remote monitoring and maintenance of their products
- Manufacturers are growing their margins by bundling their hardware with software, services and consulting
- Manufacturers are increasingly getting more of their revenues from software and services, compared to just hardware
Amy Konary, research vice president at IDC said that “hardware device makers are faced with a variety of challenges associated with thin margins, inflexible and costly supply chains, and limited revenue streams. By transforming their business models via software, Internet connectivity and licensing capabilities, device makers can enter new markets, diversify and increase their revenue streams, improve margins, and differentiate from the competition.. That is exactly what is happening now.”
