What’s Big Data Really Worth?

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We believe that a lot of the value of the Internet of Things (IoT) will come from the value of the data, but with this nascent market we have not yet quantified that value.  But we do have examples from the likes of Facebook or from grocery store giant’s like Krogers.   Krogers has over 50 million loyalty card members and a Gartner analyst estimates that Kroger can generate $100 million a year on data sales to vendors that stock its shelves.   (Source: WSJ’s CFO Journal Blog at http://blogs.wsj.com/cfo/2014/10/13/the-big-mystery-whats-big-data-really-worth/  )    My math wizardry tells me that’s about $2 per customer — this number is relatively low because the  data is mostly used “in aggregate” to stock shelves and not tied to direct-to-consumer marketing (complete details are Kroger secrets though).

Compare that number to Facebook’s average annual revenue of $6.40 per user, which is tied to personalized ad serving and a whole different type of rich data collection.

The value in IoT data will depend on the type of products that are connected.  Arrayent primarily focuses on connected home products, so the data’s value to the manufacturer will be split across multiple segments.  There is much to be learned (and money to be made) on the marketing front from understanding customers usage patterns (what features do they use, do they stop using certain features, is it time to up-sell or replace-sell?). Also, business processes can improved by measuring quality, performance, error codes.   The data can be used to offer higher value “services” such as SLAs on their products.  It is also possible the data could be anonymized and aggregated and sold to third parties such as utility companies to better understand electric grid demand by product type, etc.

-Joe Cowan
IoT Educator and Evangelist at Arrayent