Smart, connected products aredifferent with Internet of Things which provides low-cost connectivityeverywhere. Meanwhile, in smart, connected products, it is the products themselvesare enabling revolution. Smart, connected products have similar components toexisting products, but also have new features like sensors and software thatmake them more intelligent. Currently, users can control the products throughvarious interfaces. Inaddition, many products are connected to the internet and the “product cloud”which runs remote software connected to the products.

For example, Tesla,which is a leader in the smart, connected car market, has develop cars whichcan be continually improved and optimized through software updates made through the cloud, insteadof visiting the dealer.Smart, connected products havethe capabilities to monitor and report on themselves and their environment;enable users to control through software embedded; optimize product operation,capacity utilization, and predictive maintenance using algorithms andanalytics; as well as combine other capabilities that will enable autonomousoperation, self-coordination, and self-diagnose. These capabilities of smart,connected products give an opportunity to increase profitability and growth,such as new approaches for differentiation and segmentation; componentstandardization that will lower the cost because most of functionalities aredriven by software; higher barriers to entry the market for competitors. On theother hand, smart, connected products also bring out the following challenges: highfixed cost such as software development and building the product cloud; promoting”arms race” that will lead to higher cost and low profitability; decline in productdemand due to infrequent use and increase of product sharing; as well as new industryentrants. Data is a critical newresource in smart, connected products.

Therefore, companies must store andmanage product, external, and enterprise data, then aggregate them into a “datalake”. Besides, companies must also analyze and act on the data to create acompetitive advantage. Selling smart, connected products can affect everyaspect of value chain. These are several impacts of smart, connected productson value chain, i.e. product designwill become constant and if the physical product remains unchanged, it can beupdated through its software (product development); companies also gain newknowledge about customer segmentation and product customization (marketing andsales); product components become simpler as functionality changes frommechanical parts to software (manufacturing); it becomes possible to provideremote service and sensor data can predict when parts are about to break which enablespredictive maintenance (after-sales service); and companies are now required toembed the security in product design and every value chain (security).

Smart, connected products are driving manufacturing companies to becomeboth hardware and software companies. Manufacturing companies must develop four newfunctions, i.e. unified dataorganization which captures, aggregates, and analyzes data for organizations; tighterIT and R&D collaboration; Dev-Ops groups which manage the product cloudsince the products stop functioning if the product cloud fails; customersuccess management which ensure that customers obtain full value from theirproducts.

In addition, smart, connected products are also driving efficiencyand productivity improvements in the service industries such as airlineindustry, healthcare, and even parking garages.


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