IoT – The grossly under-utilized opportunity

Internet of Things (IoT), in terms of age, is somewhere between teens and adulthood, but despite that age as a formal discipline in its own right (for the uninitiated, Cisco Systems estimate IoT to be born around 2008-09), communications industry appears to have missed the bus, well, almost! Most opportunities, typically between the age of 6 and 12 years, either gain traction and become mature or vanish. Not so with the IoT opportunity.

When industry says that data is new oil – it has at least two meanings – one, that the data backbone – the internet and networks on which data travels, and another, true analysis of available data. Unfortunately, industry is trying to leverage only on selling the data backbone, and is far-far away from leveraging on insights that the advanced analytics can bring in. And IoT is no exception to this.

Take the example of connected cars – where cars have an embedded chip with a SIM that transfers data to OEM’s data center. Depending on configuration, this data could include geo-spatial data of the car, driving statistics, car vitals (examples include battery status/health for EV, oil temperature, etc.).

While most manufacturers offer free connected car subscription for typically 1–3 years, data suggests that up to 78–92 percent of the users do not renew the subscription after the free trial period. There are two reasons for this – while OEMs see this as additional revenue stream and charge anywhere between ₹3000 to ₹5000/- p.a., customers are yet to see real value in it.

For sure the facility to locate car, intrusion alert, turn on the AC, etc., are liked by many, but Facts ‘n’ Data surveys suggest the mental-shift from these features being perceived as good-to-have to must-have is still a far cry. The result is that the customer does not renew subscription and OEM stops receiving data! The telco stops realizing value – a typical lose-all scenario.

The solution – a Win-Win-Win situation where the telco, the OEM, and the User, all win! It is known that the connected car gateways are not data-hungry at all – all they need is as little as 200–500 MB p.m. at an average. While the device cost is typically billed with the OEM cost (vehicle price), what is left is just the SIM card subscription. Some of the long-term data plans from telcos cost just under ₹1600 with 24 GB data for 11 months. That is almost ₹150/- p.m. In this context, when a user compares the connected box subscription @₹3000 to ₹5000/- p.a. (s)he obviously sees no value in it, more so when you can neither use data, nor use voice.

Assume that the connected car subscription remains free, with OEM bearing the cost. Obviously, cost would be very low (₹70–100 p.m.) because of bulk buying power of the OEM.

Now, if perpetual intelligent analysis of data can be done – e.g., AI-based predictive diagnostic (the ability to compute, e.g., that car mileage has deteriorated due to air pressure or engine oil condition), or the ability to get insights into car-usage pattern (in one case, we were able to analyze data to detect cases where commercial cars were registered as private cars to get warranty benefits and this led to detection of warranty fraud worth ~₹28 crore over a 3-year period), product and parts improvement (e.g., cars that ran mostly at nights or particular area/zone reported shorter life of a particular component, so that the component can be improvised), understanding car user’s jobs-to-be-done* (e.g., users of a particular model in a particular segment of cities use it at regular times, such as morning/evening hours while a segment exists that uses cars on weekends only), geo-spatial mapping to identify the ideal location of new car showroom/workshop, the benefits such as user-experience enhancement, product improvements, customer insights, own customer base retargeting, definitely outweigh the cost involved.

*https://hbr.org/2016/09/know-your-customers-jobs-to-be-done.

The article has been co-authored by Gaurav Bhaskar, Partner, Facts ‘n’ Data.