The Internet of Things (IoT) is creating new software vendors as companies move from manufacturing “things” into first-time software vendors.
This is according to Gartner, which found that shifting product value from device hardware to the software running on the device can allow companies to maximise their revenue potential.
Gartner indicated that many makers of “things” still introduce a “box” mentality to products and do not keep in mind the extra revenue opportunities of licensing-controlled embedded software.
Many of these are first-time software providers that see a significant market opportunity in the IoT.
Laurie Wurster, research director at Gartner, said: “The IoT is creating a new type of software vendor for whom LEM is vital to protect, differentiate and monetize their offerings.
“We expect that by 2020, a failure to put in place a LEM system will result in a 20 percent drop in potential revenue generated from software for device manufacturers connecting to the IoT.”
Mr Wurster went on to say that monetising software on the devices will make it easy for them to increase and drive recurring revenue streams, leading to billions of dollars of extra value.
He added that with an estimated 25-plus bilion “things” in the marketplace, there is potential for manufacturers to collect an average of $65 of software from each of the installed units.
Gartner found that the majority of manufacturers do not, or have yet to, introduce commercial LEM systems to monetise the IoT.
The group suggested that companies will look to build LEM capabilities in-house as they already have the internal resources required to build an efficient LEM system.
Posted by Jon Aspinell on 31st July 2015
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