IoT companies will finally begin realizing revenue from data in 2023. Medtech will lead the way.
I’ve been thinking a lot about value. The current migration away from pure subscription billing to more accurate billing models such as usage-based is well underway. Precision is now the name of the game. We’ve talked about how, for SaaS companies, the financial value that companies like ours can surface and extract from previously unrecognized data patterns is significant.
But SaaS companies aren’t the only businesses poised to reap significant rewards from usage-driven monetization models in 2023.
Take the IoT market.
Until now, IoT companies have had to rely heavily on hardware sales to grow revenue. This hasn’t proven problematic as adoption of IoT devices has only continued to accelerate. In fact, some estimates suggest that the US IoT market will be greater than $124 billion by 2027.
However, it is common knowledge that relying on hardware sales alone means that many (if not most) IoT monetization opportunities remain untouched. Yes, hardware is lucrative, but over 70% of organizations have yet to generate service revenues from their IoT solutions.
Until now a hardware-focused pricing strategy has been practical, because of the complexity posed by data analysis, management, and extraction. It’s mind-boggling how much data is generated by IoT devices -- close to 80 Zb by 2025! This is both a massive opportunity and a significant technology challenge.
For instance, very few companies could afford the cost (in people hours or dollars) associated with a homegrown monetization system that could actually tackle all that data. And, there was no existing billing technology that could do it without massive customization and endless updates.
But, technology (5G, AI, Billing) is all finally catching up.
The technology supporting IoT distribution is finally being deployed. 5G is now offering new mobile connectivity, driving IoT device usage & growth. More devices equals more data.
Artificial Intelligence (A) improvements in algorithms and hardware are getting better at training data modeling. Many IoT companies are working to accelerate the rate that IoT-derived data can be analyzed and turned into useful insights in data centers and at the edge.
The Explosion of IoT in Medtech
Today’s MedTech companies are too savvy to simply sell wearables and walk away. From more complex at-home monitoring systems to driving the very mechanics of care in hospitals, IoT has become a critical player in healthcare.
IoT technology can measure how often a device is used, in what context, by whom and for how long. Once this data has been aggregated and anonymized, organizations can choose to sell it raw, package insights from it or monetize it using advertising. In today’s climate leaving money on the table is not an option. Being able to bill precisely on these measurements and data points is essential. The incentive to figure out service and data monetization has never been stronger. (Stay tuned for more insights here in the coming weeks).
The bottom line: in 2023, extracting value from the massive amounts of data generated by IoT devices will no longer be a rare occurrence, but commonplace and Medtech will be leading the way.
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