Will HaaS Become The New SaaS?

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WILL NEW BUSINESS MODELS DEFINE IOT’S FUTURE?

Wall Street Journal reporter Christopher Mims did an insightful piece on IoT technology adoption a couple of weekends ago, entitled The Internet of Things Is Here, and It Isn’t a Thing. Mims astutely assessed: “The killer app of the Internet of Things isn’t a thing at all—it is services.” We couldn’t agree more. We actually think HaaS (Hardware as a Service) will become the new SaaS (Software as a Service) and is the future of connected consumer products.

IoT Hardware as a ServiceAs the article vocalized, and what we have been preaching to consumer brands for a long time, is that most people want to solve problems and don’t care or want to worry about the underlying technology or product. And more specifically, they don’t want to have to worry about complex product setup, integration with existing systems and maintenance.

A good example of an established Hardware as a Service business model is home security. And some of the reason for recent increased interest in security systems are because of networked cameras and their great appeal with consumers. The consumers are interested in buying peace of mind, not owning an infrared-capable camera that stores videos in the cloud.

According to a new report by NPD Group, of the 10 percent of U.S. homes currently considered ‘smart,’ monitors or cameras were the most common point-of-entry. Four out of every 10 consumers with interest in building a ‘smarter home’ listed security or safety as their primary reason (the study surveyed 5,600 U.S. consumers in April who were age 18 or over).

In an article about the NPD survey that appeared on the commerce industry website PMNTS.com, the executive director of NPD Connected Intelligence John Buffone, noted: “Smart cameras generate more retail revenue than any other home automation category, and a growing number of consumers are producing recurring revenue through add-on subscriptions that allow longer tenure video storage and provide features, such as the ability to share footage.”

As the market takes shape, Buffone expects “consumers to flank their smart cameras with other security-focused devices, such as smart doorbells; in fact, ownership of smart doorbells has grown by 64 percent in the past year.”

Experiements with HaaS have been going on for some time. In 2000, Electrolux launched a pilot program in Sweden called ‘rent-a-wash’ where 7,000 households were given
free clothes washers with ongoing maintenance included. Consumers paid for how many loads they did which was tracked by their electric utility and reflected on their electricity bill.

Finally, as Mims further assessed in his WSJ article, the focus on HaaS is also helping manufacturers “clarify their offerings” a.k.a. focusing on solutions and user experience instead of products. Mims’ bottom line: “No one is going to sell grandma a new smart connected anything, but selling her children ‘peace of mind’ for a monthly fee? That sounds like the next Uber, or at least the next Sonos.”

Until the Internet of Things revolution, many manufacturers of consumer products would look at any direct consumer interaction as a cost center and not an opportunity for monetization or brand building. With IoT that is changing and Arrayent has helped more than 12 big consumer brands embrace that change in bringing over 65 of their products to market across five continents. This change doesn’t need to be scary. In fact, the companies who are experimenting now will most likely be the ones who will lead the industry when all products are connected. Contact us to start the discussion for your company and see how you can take advantage of our experience to start developing connected product of your own.

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