Why Companies Should Consider Developing Their Own Smart Products
Hear the name “Alexa” today and you likely don’t think about a human but instead a smart home device and ecosystem created by Amazon. It has made its way into the modern day vernacular in the way many other brands have done (Kleenex, Xerox, etc.) While this product was developed by and for Amazon, the company started out as a retailer, not a product development business. The success of Alexa should be a prime example for other vertical businesses — such as hospitality, Quick Serve Restaurants (QSRs), big box retailers, auto rental companies, OEM companies, and commercial and residential developers — looking for ways to be more innovative, grow the brand and create new revenue streams, to consider bringing smart electronic product design and development in-house.
Following Amazon’s Success Story
Years ago, the company dipped their toe in the water of product development by creating Kindle. As experts have noted, the value of the Kindle franchise extended beyond simply hardware sales of that e-reader. As a retailer, it was a “strategic pursuit to promote and sell digital content.” Through this device, they were able to drive more people to their online store, sell more books and, using personalized preferences, determine other items of interest to individual customers. Not long after Kindle’s launch, Amazon was earning between $265 to $530 million a year from e-books alone.
Alexa, Amazon’s smart speaker, works in very much the same way to drive consumers to the company’s content such as music, movies and other items available for order just for the asking. Of course the voice-activated device enhances the customer experience through ease of use, but more importantly to Amazon is the number of connections back to the store. Even with other smart speakers on the market today, it’s still Amazon leading the pack with their products.
The lesson here is that by developing your own products and controlling your outcomes, these products become an integrated part of your business structure, acting as a gateway to your entire eco-system. It expands your entire business.
Why Developing Your Own Products Make Sense: It’s About the Data
With success stories like this, the trend is clear: many in the C-suite of Fortune 1000 or non-traditional verticals are looking beyond off-the-shelf products to begin to build business strategies based on the design and development of their own smart hardware/software solutions.
The core business case for non-product companies to make such a drastic move lies in the data. Simply, when you create your own product to gather data, you own that all-important and unique-to-your-company data. It can mean everything to understanding and improving your relationship with your customers and serving them in ways that make you more successful. This can lead to new and innovative services and products designed to generate new revenue streams and improve margin.
What Type of Companies Should Be Thinking Ahead
Shopping malls, resorts, or theme parks with a static IoT device can track traffic flow and patterns. The closer these types of businesses can get to individuals enhances the opportunity to gather more exact information and allows a company to better and more proactively serve that customer. Of course, getting closer means something along the lines of supplying uniquely designed products such as wristband Bluetooth wearables that not only help detect traffic flow, but send individuals helpful messages about routes that may be faster, stores that are less crowded or rides that have shorter wait times. Behind the scenes, there are other passive systems like camera machine vision systems that are also working to replace and enhance security, and pattern detection systems that are manned or reviewed by people. These types of products make it possible to create an eco-system that changes and enhances experiences.
In the hospitality setting, the interaction can become more natural via voice-activated products. Guests can step into their hotel room and control the lighting, temperature or make requests for extra towels or a forgotten toothbrush without ever having to call someone at the front desk. With simply a verbal request within the room, they could even have their favorite music play or watch the hotel’s video content.
Much of the intelligence you see in these interactions requires an active connection with the cloud, but the latest trends are towards edge machine learning and intermittent over-the-air updates that are bringing that processing back to the local level and making the experience even more present and effective.
A company that develops a smart smoke detector that can be tied to WiFi can alert the homeowner via mobile phone to a problem when he or she is away. Or it can even send a message when the battery is low and needs to be replaced so that annoying beeping doesn’t occur at 3 a.m.
For businesses to recognize the many opportunities, ask questions such as:
How does a physical artifact or product plug into the life of the end user and add value to the company brand?
What is the mechanism that synchronizes with your customers subtly and positively?
How do you pull information and convert it to solutions from the mass of raw data?
Many people on the business side identify only one side of the equation and lose sight of the other. Clearly there are hardware solutions that might solve one or two problems for your customers. With additional data that those pieces of hardware capture, you are able to trend or generalize into longer-term strategies or broader solutions and offer greater service to your customers.
When you start with the hardware, then adding the software, with all the ways it can be improved and advanced, makes the opportunities endless for all kinds of companies. Regardless of the type of business a company is in today, it can also be in the business of product development tomorrow.
If your company is seeking ways to create more personalized and enhanced experiences for customers so they are better connected or you’re looking for insight on how to collect and have control over data your company can gather to improve your brand, be more innovative and ultimately increase revenue, there is a smart path forward.
In my next blog, I will discuss how companies can get from here to there.
Your feedback is welcomed.