Business Models and the Internet of Things (Extended Abstract) - Interoperability and Open-Source Solutions for the Internet of Things - page 8

Smart things are hybrids, composed of elements from both the physical and digital
worlds. That means that, when used, they unite the principles of both worlds and in
doing so, introduce high resolution management into the physical world, too [ 1 ].
Should a fastening equipment manufacturer operating an electronic Kanban system
at its customers

plants provide information on the consumption to his customers free
of charge or use the freemium model? Or service-for-pay integrated with physical
delivery right from the start? And who owns the data? The customer whose warehouse
is the source of the data, or the supplier; after all, he owns the smart containers that
generate the data. Can and should the data

'

anonymized, across the entire customer

-

base reveal valuable, real-time developments in the industry and be capitalized as part

of the Leverage Customer Data business model pattern? Whichever is chosen, the
Freemium and Leverage Customer Data models are both examples of how business
model patterns that have been con

-

ned to digital industries can suddenly become
relevant for classic physical industries.

3 Business Model Patterns in the Internet of Things

The application-driven goal of this article is to derive well-grounded assistance, both
theoretical and practical, for developing Internet of Things business models. These
models should be inspiring and provided on a level of abstraction that will facilitate their
application across industries, while remaining concrete enough to be actionable for
innovators in business and society at large.
To accomplish this, we analyzed the 55 business model patterns from Gassmann [ 4 ]
and many Internet of Things applications with regard to their value-creating steps and
high resolution management. It is the latter that embody both the opportunities and
limitations of the Internet of Things

technical capacities. The results of this analysis
can be represented as six-components for business model patterns for the Internet of
Things: Physical Freemium, Digital Add-on, Digital Lock-in, Product as Point of Sales,
Object Self-Service, Remote Usage and Condition Monitoring. Based on their power
and their kinship

'

all of them facilitate digital services for physical products we

- -

merge them all together in a new business model pattern speci c to the Internet of

Things, Digitally Charged Products. On the other hand, the concept of Sensor as a
Service is so novel and so powerful that we suggest that it is itself a new business
model pattern. Further details on these components and new business model patterns
can be found in [ 3 ].

4 Entrepreneurial Challenges in Implementing Internet
of Things Business Models

Generating new ideas is not the biggest hurdle in establishing a new business model.
The capabilities of an Internet of Things reignite the discussion regarding the optimal
mix of product versus service in a business model.
One feature of the Internet of Things is the fact that the service portion of the
business models outlined here is always digital in nature. This has two consequences: