There are three ways traditional hardware manufacturers can make additional revenue by connecting their products.
#1 – Product as a Service Package
A great example is the smart lock company, Latch. They partnered with Amazon to allow deliveries to be done inside your house. They also partnered with Airbnb to make it easier for new guests to enter the apartment while still making sure it is secure.
You not only have monthly revenue that will far exceed the original cost of the device over the course of several years, but you have customers that are more engaged with your brand, and access to data that you can use across your platforms for other products.
Manufacturers should think of their product as an entry way into the consumer's home and explore various value-adding activities that will enhance the customer’s use of the product.
Explore the complimentary services to your core product.
#2 – Sales Opportunities at the Right Time
Sensors on connected products give you real-time information on the state of a product. It knows when it’s getting close to the end of a warranty period, or if the product is used more than usual, and when it’s time to consider a replacement or maintenance.
Manufacturers now know exactly when someone is most likely in need of a new product and can adjust their marketing to give deals precisely at the right time.
You now know where the user is, their usage patterns, and how to reach them. It’s the perfect time to get your consumers hooked on the next upgraded product.
This is especially relevant for companies that sell industrial products such as Caterpillar or GE. This information is gold for their account managers.
#3 – Data
June, the smart oven, currently collects data on what type of food is cooked. They use this data, package it up, and sell it to food distributors who want to know detailed information about how consumers eat food.
This can also be done with the many traditional hardware products from Whirlpool, Kenmore, Maytag, and other large home manufacturers. They have the infrastructure to get devices into homes and collect data from all over the globe that is useful for many brands looking to get consumer behavior information.
This could be applicable to almost any industry. Whether you’re making a grill or you make tractors for farmers, the data is a huge potential for revenue for the parties that need it the most.
As more companies get away from evergreen designs (a.k.a. products made for a singular purpose) to smart connected products, there are opportunities to use software and hardware to build substantial revenue.