With smart, connected products into a new business era

Smart, connected products open up completely new possibilities of value creation as a result of their significantly expanded functionality compared to traditional products. They change the rules of competition and thus enable companies to rethink their existing business models. ^[1]

Start of a new business era

The steady increase in the available computing power combined with low energy requirements, the advancing miniaturisation and the diverse technologies of wireless networking led to radical product innovations. Products previously were exclusively made of electrical and mechanical components. Nowadays they are developed into ever more complex systems that combine, sensors, data storage, microprocessors and network components.^[1]

These “smart, connected products” arise as a result of their increased scope of functions, creating completely new opportunities for value creation, changing the rules of competition and thus encouraging companies to rethink their existing business models.^[1]

Companies are faced with the challenge of managing the vast amount of data that is now available, and, in some cases, highly sensitive. Another challenge is to generate new revenue streams.^[2]

Unlike traditional products smart, intelligent products (for example through software updates) continue to evolve long after they have taken up their service at the customer. Thus, the relationship between a company and its customers is changing.^[2]

Although companies are still at the beginning of the development of products that support and/or operate autonomously, the potential of these smart, connect products is already revolutionising the respective markets and it is generally expected that their era will begin in the near future.^[3]

Gartner, one of the world’s leading market research and consulting firms in information technology, is forecasting a total of 6.4 billion smart, connected products worldwide for 2016, which will grow to 20.8 billion by 2020.^[4]

The Internet of Things

The Internet of Things (IoT) concept has been designed to investigate the increasing number of these smart, connected products and the new possibilities involved.^[5]

It should be noted that it is not the “internet”, but the fundamental change in the nature of the “things”. Their extended range of functions and the data generated by them paves the way for a new era of competition. The internet, in this context, is only a mechanism for the transport of information whether it is generated by humans or machines.^[5]

For companies, it is crucial not to focus on the specific technologies, but to pay particular attention to the changes in competition caused by this new product category.^[5]

Opportunities for your business model

Use smart, connected products for your business model. Offer new features to your customers, generate new revenue streams, gain insights into user behavior and increase customer loyalty. These are just a few opportunities that the Internet of Things offers for you.

Action instead of reaction is the motto. Microtronics develops and operates complete IoT solutions. In a free of charge meeting Microtronics will explore the potential for your business model together with you.

References list

1. ↑ Porter, M. E., & Heppelmann, J. E. (2014, November). How Smart, Connected Products Are Transforming Competition. Harvard Business Review, S. 66
2. ↑ Porter, M. E., & Heppelmann, J. E. (2015, Oktober). How Smart, Connected Products Are Transforming Companies. Harvard Business Review, S. 98
3. ↑ Dawid, H., Decker, R., Hermann, T., Jahnke, H., Klat, W., König, R., & Stummer, C. (2016). Management science in the era of smart consumer products: challenges and research perspectives. Central European Journal of Operations Research. https://link.springer.com/article/10.1007%2Fs10100-016-0436-9, S. 2
4. ↑ van der Meulen, R. (2015, November). Gartner Says 6.4 Billion Connected „Things“ Will Be in Use in 2016, Up 30 Percent From 2015. Abgerufen 28. Februar 2016, von
5. ↑ Porter, M. E., & Heppelmann, J. E. (2014, November). How Smart, Connected Products Are Transforming Competition. Harvard Business Review, S. 66