It’s the connected fridge but not as you knew it. Recent Arkessa blogs and whitepapers have provided some focus on the business impact of X as-a-Service (XaaS) and OPEX based business models enabled by IoT connectivity, artificial intelligence and machine learning.
The XaaS model has already gained traction in consumer markets, such as automotive, furniture, even clothing and it could potentially kick start the Smart Home. Leveraging IoT connectivity could evolve the household appliance purchase model from the traditional retail transaction to a service based Appliance as-a-Service. The proposition being that instead of a one-time purchase of whitegoods such as refrigerators, washing machines, ovens, etc the manufacturers would charge consumers a manageable monthly recurring subscription.
Is IoT connectivity required?
Absolutely yes! XaaS implies that there is a guarantee on appliance uptime and performance. This would be impossible to deliver on if the appliance or service provider could not remotely and pro-actively monitor and manage a machine. By being connected, the service providers can understand how the appliance is being used, maintain optimum energy efficiency and significantly reduce the risk of costly breakdowns through pro-active servicing. It would also be possible to provide feature enhancements throughout the products lifetime.
In this model, it is the service provider who must provide assured internet connectivity and the simplest way to do this is via a WAN technology and there a number of options depending on how far the service provider wants to go. SIGFOX and LoRaWAN offer lower-power connectivity, likewise NB-IOT on the Cellular IoT side. When firmware and feature enhancement updates are part of a plan, 3G or 4G will support. Regardless of the choice, Arkessa’s managed connectivity service enables manufacturers to fit one connectivity module in the factory and then remotely provision it for operation according to service plan, data usage and country of operation.
This all sounds expensive – is it ?
If calculated in terms of the BoM (bill of materials) cost then yes there is an additional component cost for the connectivity and a modest monthly service charge when cellular is used. Most homeowners will do the sums and figure out that the cost of a service model for appliances might cost more than outright ownership over time.
Many will factor in the total cost (TCO) and adopt a different attitude to ownership and how they purchase.
The traditional model involves a lump sum payment (CAPEX) up front, often accompanied by an extended warranty period and in many households some breakdown insurance cover. In contrast, the service model enables consumers to get an appliance without laying out that lump-sum and perhaps most appealing of all, it gives peace of mind that the appliance will be maintained remotely and will operate at peak energy efficiency over time.
There are also some compelling benefits for the manufacturer in the X as-a-Service model.
The internet has enabled the rapid growth of some of the world’s newest and largest businesses. For many, that growth has been built by developing large subscriber bases paying monthly recurring fees (OPEX). By building this type of customer loyalty, service providers create a larger, more resilient and predictable revenue stream over time. It also creates a sustainable used appliance market for value-seeking consumers.
Customer loyalty will only come if the appliance manufacturers deliver on the promise of remote maintenance, can ensure peak performance and pro-actively provide machine or feature upgrades. Assured internet connectivity is the key enabler and manufacturers must retain control of that with a WAN-based solution which can be fully managed by the provider and under-pinned by a credible service level agreement (SLA).
Arkessa can help you succeed in IoT and X as-a-Service. Talk to us firstname.lastname@example.org