Taking a Connected Product to Market

Journey-Driven Consulting

The Growth of Connected Products

Thanks to continuing advances in data science, inexpensive electronic components and ubiquitous wireless service, intelligence can be embedded into just about any product, from industrial equipment, cars and homes to watches, clothing and medical devices.

While every marketer will experience disruption from connectivity, many find the idea of taking a connected product to market challenging or even baffling. In this piece from Razorfish, we shed light on the imperatives of taking a connected product to market, including:

  • Connectivity’s impact on the global economy
  • How connected products work
  • Important considerations for intellectual property and profit
  • Conclusions and recommendations 

 

Connectivity’s Impact on the Global Economy

The connected age will add trillions in new business value

Over the next decade, connectivity is estimated to generate nearly $4 trillion in added business value in manufacturing and factory automation alone. Add other industries such as healthcare, retail, automotive and office management, and the annual impact on the global economy could reach $11 trillion (source: McKinsey).

Business leaders will initially look to new partners and vendors as they begin to equip their internal teams with new skills and capabilities to support their first dips into connected waters. In the medium term, connectivity will stimulate new types of alliances and business models, changing the way we live, learn, work and play. The long-term impact, however, will disrupt businesses on a scale we haven’t seen since the dawn of the industrial age.

Potential Performance Gains in Key Sectors.
Figure 1: Connectivity is poised to add new business value while reducing costs in several key sectors. Source: GE estimates

Things as customers

In 1998, Kevin Ashton, a brand manager at P&G, predicted a future supply chain management scenario where objects would report their whereabouts and status, (even reorder themselves upon their near-depletion). Calling his idea the Internet of Things, Ashton’s vision rapidly spread throughout the community as business leaders became intrigued with the idea of products that, sensing their surroundings, would call on each other to solve old problems in new ways, largely with data, digitally visible, for the first time.

Ashton was right. In a recent cross-sector study by the Economist Intelligence Unit (of over 200 R&D executives), the majority of respondents said connectivity is providing customer insights that were previously impossible to acquire. A majority also said connectivity will enable direct customer interaction for the first time.

Cross-Industry Survey.
Figure 2: Executives say connectivity reveals customer insights that were previously impossible to acquire. Source: The Economist Intelligence Unit

In a Connected Economy, Anyone Can Enter the Advice Business

Imagine a product that helps you run faster, along with advice about how to improve your overall athletic performance and prevent injury. It also replaces itself by automatically ordering you a new product because it knows it has depleted its useful life. The product we’re referring to is much more than a pair of smart running shoes. Such thinking caused Nike to move its market position from a provider of athletic apparel to a provider of athletic advice.

Unprecedented levels of connectivity have enabled companies to shift their business models from product sales, to integrated service providers. Caterpillar used to sell tractors. But in a connected economy, its offering is part of an interconnected agricultural management solution, moving them from the tractor business to one that advises farmers on how to increase crop yields and expose the brand to a far broader range of money-making solutions.

Healthcare provides another compelling example. In the connected age, heart disease patients could be given a smart scale to capture and monitor changes in weight. In this example, a gain of three pounds in 48 hours warns the medical team of potential problems, which, left untreated, could lead to congestive heart failure. Most importantly, the added intelligence of the product doesn’t impact the way users have been trained to use it, something that is an important product design consideration.  

Connected Products Chart.
Figure 3: Smart Devices Will Proliferate Throughout Healthcare  Source: Gartner

How Connected Products Work

The technical ecosystem underlying the Internet of Things (IoT) continues to evolve at breakneck speeds, and for many, it can be overwhelming and complex — especially for those who aren’t rooted in technology-intense organizations. We’ve broken it down at a high level, highlighting Device Software (DS), Device Hardware (DH) and Cloud Enablement Services (CES).

Three Facets of IOT Chart.

Device Hardware

The device hardware

The device hardware interacts with users and their environments. Data may be collected from sensors such as buttons, accelerometers, barometers, thermometers, microphones, cameras, infrared motion detectors or GPS chipsets. Device hardware may also act on the user or environment through motors, speakers, lights (LEDs), fans, pumps, heating and cooling elements (e.g., peltier devices) or other devices.

Processor power, memory and battery capacity, as well as network capabilities such as GSM, Wi-Fi or Bluetooth are also supplied by the device hardware. Some processors are capable of entering extreme low-power modes that can run on a single AA battery for a year or more, waiting for external events to wake them into a high-power operational mode.

Sensors may find nonobvious applications. For example, the barometer in the BME280 IC is sensitive enough to detect which floor it is on within a building environment, and its hygrometer is sensitive enough to detect the rise of ambient humidity as a person approaches the device.

 

Device Software Icon.

The device software

IoT software makes decisions and performs processing that you choose not to delegate to the cloud enablement services (CES). The greater the device autonomy, the more reliable your device becomes in the face of network interruption, along with quicker response times to external stimulus. Local computation also can reduce usage of finite network bandwidth, and can potentially improve user privacy and reduce your liability for the secure offsite handling of sensitive information. Tradeoffs include an increase in power consumption, heat dissipation, reduced battery life and potentially cost.

The inexpensive ESP8266 processor with integrated Wi-Fi capabilities can run on a single battery for over a year. While not capable of floating point math and local speech recognition, it can transmit microphone audio for CES interpretation, as with Google’s speech-recognition APIs (which expose local audio to the public internet). The more expensive Philips Hello IC chip can perform on-device speech recognition.

 

Cloud Services Icon.

Cloud enablement services

This IoT component performs any computational tasks that are difficult or impossible to conduct on the device itself. Cloud enablement services also record and share device data as part of the core user-facing functionality or as analytical data that help you understand user behavior and device performance out in the field. CES can share and coordinate information among devices owned by a user, or among devices owned by different interaction users (social IoT). CES often provide a user-facing web interface through which users can manage their devices or access useful information (for example power generation over time by a rooftop solar array).

Centralized cloud enablement services are easier to administer over time. In extreme cases, CES may be the only palatable place to house highly sensitive or proprietary algorithms.

There are two flavors of open-source legal licenses. One version permits its inclusion in derivative work, which is closed; a second version requires that all derivative work must be open-source. If the latter type of open-source technology is used as an ingredient, it is vital that it only be used in a facet which is itself open. Cisco was fined when it overlooked this requirement with one of its custom Linux projects.

Some vendors don’t intend to make money from an IoT offering itself, opting to add connectivity value to an existing product. If this describes your situation, consider keeping one facet closed as a hedge in case you wish to modify your business strategy later on.

Conclusion and Recommendations

Product design is critical to success

Integrating the functional and emotional attributes of a product that is smart and fun to use, and has obvious intrinsic customer value, is the challenge of every designer. Many brands will be tempted to put focus on the technology at the expense of design. Get external assistance if your organization lacks the history and skill for delivering highly functional, beautifully designed products that excel ergonomically.

Respondents indicated which kinds of organizations they believed were most important to partner with when developing smart products.
Figure 4: Connected Products Introduce New Types of Partners, Particularly Design Firms Source: The Economist Intelligence Unit

Widen the aperture for ideation

One of the best ways to understand the value of connected products is to research solutions within and outside your sector (see the list below). But regardless of where you get inspiration for connected products, the user experience that sits atop an IoT-enabled product must be intuitive. If the connected product’s added value isn’t instantly recognized, consumers will quickly reject it (and return to the old way of doing things).

Look beyond your home sector for inspiration and ideasIndustrial Internet Icon.

Industrial internet

Connected solutions
GE enables remote monitoring and diagnosis through its AT&T-enabled "Industrial Internet."

Benefits from connectivity
AT&T reports 40 percent increase in its M2M customers this past year, with millions of new devices connected to its network.

 

Connected Healthcare Icon.

Connected healthcare

Connected solutions
Sensors, along with the wireless health-monitoring device market, will give medical professionals early warning signals, as seen with the smart scale.

Benefits from connectivity
Beneficiaries include the elderly, those with chronic conditions and individuals in remote locations without convenient access to healthcare.

 

Connected Retail Icon.

Connected retail

Connected solutions
In-store cameras can become IoT sensors that anonymously monitor customer behavior inside stores.

Benefits of connectivity
Helps increase revenue through improved stock availability; also pushes highly relevant, personalized offers to customers in real time.

 

Connected Cars Icon.

Connected cars

Connected solutions
Cars equipped with internet access are allowing connectivity to devices both within and outside of vehicles, opening broad capabilities from entertainment to safety.

Benefits of connectivity
A four-wheeled personal assistant makes dinner plans, takes verbal replies to emails and Facebook posts, and suggests re-routes to the driver’s destination.

 

Connected Insurance Icon.

Connected insurance

Connected solutions
Telematics solutions from auto insurers more closely align driving behaviors with premium rates for auto insurance products.

Benefits of connectivity
Rules vary, e.g., one who drives short distances at slower speeds is charged less than one who drives long distances at high speed. 

 

Connected Homes Icon.

Connected homes

Connected solutions
Google’s Brillo OS connects anything from a washing machine to a trash can and integrates with other Google technologies.

Benefits of connectivity
Refrigerators detect and reorder depleted products; heating and air conditioners turn on when residents are on their way home.

 

Connected Financial Services Icon.

Connected financial services

Connected solutions
The complex technology behind virtual assistants, which are starting to be seen in major banks, is completely invisible to the user.

Benefits of connectivity
The technology enables banks to increase loyalty with better customer experiences enhanced by intelligent conversations.

Prioritize quality integration

Half the cost of getting a connected product to market will be spent integrating various components with each other and with external systems, within and outside the enterprise. However, integration often gets less than its fair share of effort, due to competing tasks such as user-interface design, data and analytics. The big components of a connected product are important, and critical, but if integration doesn’t work perfectly, the whole idea behind the connected product will be compromised. Also remember that how we connect today will change tomorrow, so the technical architecture for your product needs to be both flexible for today and adaptable for tomorrow.

Related Content

Locations

34 Offices. 5 Continents.
1 Vision.