revenue relationships in the internet of things

− Zuora Confidential, not for distribution beyond intended recipientSlide 1 − Zuora Confidential, not for distribution beyond intended recipient

Why ZuoraZuora Provides a BluePrint to Succeed in the

Subscription Economy!

Revenue Relationships in The Internet of

ThingsBy Travis Huch

Confidential and Proprietary Information. Do not distribute beyond intended audience.

Agenda

2

• Why the IoT is bigger than any single trend

• The Five Revenue Relationships in IOT that

matter

• Every model for increasing revenue in IoT

• The Disrupters

• IoT devices from Kickstarter

• Success patterns for enterprises

• The challenges

• Summary

Confidential and Proprietary Information. Do not distribute beyond intended audience. 3

The World is Changing

Gartner Says the Internet of Things Installed Base Will Grow to 26 Billion Units by 2020 and is a $3.8 Trillion New Era

- Gartner Press Release 12/12/13


This is a Huge Shift – B2C

Connected Home

Connected CarConnected Self

Connected Consumer


Construction

Telematics

This is a Huge Shift – B2B Embedded Diagnostics

Building Control Systems

− Zuora Confidential, not for distribution beyond intended recipient

6

Twine Wireless Sensor

Zuli Smart Plug

Smart Things

StickNFind

The Kickstarter IOT Disrupters


Are You Building

A Device?

Are You Building A Way

To Have A

Relationship With Millions Of

Users?

Or


8

The Five Ways to Build a Relationship with Millions

(DON’T JUST BU ILD A DEV ICE )

1. Information As A

Service

2. Bundle Play

3. Pay As You Go

4. Loyalty Play

5. Device Only

( DATA P L AY )


Information Play

Traditional revenue came from large gene sequencing machines

Now able to leverage cloud for compute storage and contextual sharing

Subscription to consumables as well as the aggregated data from machines

Collaborative research /Comparative use

BENEFIT: Recurring revenues

that are increasing significantly YOY

#1


Benefit: Nanthealth instantly

gains massive access to distribution and guaranteed revenue stream. 400+% YOY growth 98% adherence.

Bundle Play #2The device is a cap on a prescription drug bottle. Glows to remind the patient to take drug. If cap not opened, caregiver notified over the network.


Usage-based Insurance. The Metronome transmits your mileage. Costs $.03 to

$.06 per mile on average $30 - $60 per

month

Benefit: Urban drivers can save

an average of $400 per year

Pay As You Go#3


Belly provides loyalty solutions that drive consumers into retail locations with incentives and offers. Repeat business is the best business.

Benefit: 7-11 benefits from

not having to engineer and manage its own loyalty solutions.

Loyalty Play #4

+ =


Nike FuelBand uses gamification and social media to drive customers to set goals, and connects them with the Nike community. The end user just buys the band

Benefits: Nike Inc’s

global revenues increase by 16% in 2012, its highest growth in 15 years

Increased customer insight

Device Only Play#5


DREAM BIG “Hey, I don’t want you to lose that dog I sold you. Let’s put a GPS collar on him.”

“Oh, I’ll just pick up Ironman from where Johnny just stopped watching on Netflix in the house and I’ll stream it to the back seat of the Yukon so he doesn’t miss the big fight”

“I’m just going to send you a new water filter for your fridge. The one you have in there is so gross.”

“My beacon picked you up on the way in Sally, here is your Americano just like you like it.”

“Travis, I don’t think you should keep going up this hill. You’re already at 155 BPM. “


Infinite pricing options

Success Patterns for Enterprises• Prepare for a business model transformation

• Leverage the usage data of how and when and where to improve the user experience and create a relationship

• Specialize on what you’re good at – you can’t build everything

• Think about tiered value as part of the architecture

• Build for change – future-proof your solution

• Enable customers to identify themselves as power-users. The who in the relationships are key

• Set a bar for success of recurring vs. one-time revenues for Year 1


BUT, There are Challenges• The systems to

manage inventory is not the systems that will manage the relationship

• Rate of change

• The new 2 tier distribution: Device sold on Amazon - The subscription sold direct.

• Churn


Infinite pricing options

And Inherent Complexity in IOT

• Hardware is different than the service

• Length of service period and contract

• Connectivity may be bundled • Notion of peak or seasonal

usage• Multiple Units of Measure

(devices, users, storage, etc• Different categories of buyers• The pricing you start with will

change!


Can you engage and manage at scale?

Can you change pricing in weeks?

Can you move from one basic unit to another (users, GB, devices)

Can you handle the use cases? (renewals, upsells, downsells)

Is sales part of the experience (quoting)?

International and regional pricing?

Will you support electronic payments?

Questions to Consider


Our Experience with Internet of Things

19


Autonet Mobile

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• Remote start• Unlock • Find my car • Geofencing and breadcrumbs• Remote Diagnostics • In car WiFi for any application


Summary

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• Business model innovation is as

important as tech

• Build a tiered value architecture

• Build flexibility into the system

• Focus on your core strengths – don’t

build everything

• How can you make the user experience

great?


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Thank You! [email protected]

@travishuch

Let me know if you are interested in participating in our IoT panel discussion at

Subscribed 2014!

mailto:[email protected]

revenue relationships in the internet of things

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