Gartner claims Internet of Things will require business model shake-up

Internet of Things
Internet of things pose new challenges

Computer manufacturers hoping to make cash from the Internet of Things (IoT) can't make profit selling more devices, according to analyst company Gartner.

Instead, Gartner warns, manufacturers who are hoping to make a play to compete in the IoT market will have to shake up their business models completely.

A new report published today by Gartner, called Emerging Technology Analysis: Software Licensing & Entitlement Management Is the Key to Monetizing the Internet of Things, reckons manufacturers will not only have to sell more gear, but figure out how to make money from the software they develop.

Software licensing and entitlement management will be the key to making the cash they need, the report said.

Turn on and off

The concept to use licensing to turn on and off features and capacity in different combinations to create additional value in the devices themselves and in the software that runs on top of them.

This is a similar model to how modem and router vendors can use software configuration to let customers pay to upgrade the existing device to accommodate greater bandwidth.

Device makers could provide different product tiers using licensing to unlock the appropriate features - without having to manufacture separate models.

Easy upsell

They could then quickly and easily upsell customers later by leveraging software-driven control of the device and licensing to make it easy for customers to upgrade to more expensive models.

The report suggests that IT manufacturers come up with a comprehensive management plan that supports both the online and offline licensing and entitlement life cycle. It will need to be scalabile to cope with IoT requirements in order to properly license software, Gartner said.