Evolution or revolution? How smart connected products transform the market
We are in the midst of the third wave of the IT revolution. In the past 50 years, information technology has already radically reshaped competition and strategy twice. The first step was the automation of manual processes. In the second step, data collection and analysis were renewed from the ground up.
These two waves of the IT revolution led to an immense increase in productivity and economic growth. Yet, while the value chain was transformed, the produced goods themselves did not change much.
In the current third wave, IT is becoming an integral part of manufactured products. Sensors, processors, software and connectivity are integrated into products and linked to a product cloud. The cloud stores and analyses data, controls applications and significantly improves product functionality and performance.
In this blog post, we have summarised how the third IT and its resulting “smart connected products” will develop and which experiences our projects in the area have taught us so far.
August 4, 2022
Connected products – what are they, anyway?
A coffee machine that can be programmed via app to provide coffee at a set time each morning. The completely autonomous, self-optimising production line. Both are examples of smart connected products that are already part of our everyday lives. They are characterised by their connection to the internet, or the Internet of Things (IoT), and are constantly learning and evolving based on the collected and analysed data.
Smart connected products essentially consist of three components:
Physical components: mechanical and electrical parts of the product
Smart components: sensors, microprocessors, data storage, controls, software and usually an embedded operating system as well as an advanced user interface
Connectivity components: connectors, antennas and protocols that enable wired or wireless connections to the product
Smart components reinforce the capabilities and value of the physical components, while connectivity reinforces the capabilities and value of the smart components.
How much of the product functionality should be embedded in the actual product and how much should be embedded in the cloud depends largely on the use case, but also on the required response time, network availability and the frequency of planned updates, among others.
All this sounds complex? It is. But the challenges involved go far beyond programming, user experience and design.
Opportunities and possibilities of smart connected products
Time to make the complexity a little more transparent. The capabilities of smart connected products can be divided into four levels: monitoring, control, optimisation and autonomy.
Each area builds on the previous one, while “autonomy” is still quite visionary.
Smart connected products enable comprehensive monitoring of the condition, operation and external environment of a product. If this data is stored centrally and combined with other data sources, a variety of benefits and possibilities arise for both the user and the manufacturer of the product. For example, ZEISS TEMPAR go » monitors the environmental parameters of measuring rooms via a network of sensors and alerts users in case of any deviations from the set standards.
Connecting to a product via an external device offers the opportunity to control and personalise interactions with the product in many new ways. Whether it is a simple setup process via smartphone (see ZEISS Hunting ») that saves you countless manual button clicks, or the ability to control products remotely from a completely different location (see Nerve by TTTech »), smart connected products make controlling much easier.
Real-time monitoring data on product condition and control enables companies to optimise the availability of their products. This is possible through preventive maintenance work in case of imminent failures. Remote maintenance also allows individual parameters to be optimised or software updates to be installed (see Bekum Control 8.0 »).
The last level is autonomy. In a simple form, it can already be found in many households, such as the autonomous robot vacuum. By combining monitoring, control and optimisation functions, it replaces manual vacuuming. However, autonomous products can also act in combination with other products and systems. The value of the capabilities grows exponentially the more products are interconnected.
Challenges for the designer
The field of product design » in particular has changed a lot due to the emergence of smart connected products. In the past, it was purely a matter of designing hardware, i.e. a combination of mechanical and electronic components. Today, on the other hand, it is a matter of designing functioning systems. However, these systems are not only part of the product – they are the product.
One example is ZEISS Hunting (see graphic), where various connected products such as riflescopes or thermal imaging cameras provide the ultimate hunting experience in interaction with the hunter’s equipment thanks to a WiFi and Bluetooth connection to the ZEISS Hunting app ».
Serious management of such systems is only possible with an interdisciplinary design team. The cooperation of product designers » (hardware) and user experience designers » (frontend, or system interface design) is essential for high-quality implementation. An example of this is our augmented reality motorcycle helmet », where AR, motorcycle helmet, smartphone and real-time data support motorcyclists with navigation, safety features and connectivity – automatically adapted to their speed.
These two design teams also work closely together with the (client’s) hardware and software development teams. Coordinating hardware and software development presents the next challenge for project management: software development is typically much faster than hardware development. It can happen, for example, that the programming is completed, but hardware parts change at a later point in time. The code then has to be revised accordingly.
The longer duration of hardware development stems from the fact that it is a trial-and-error process with constant adjustments and optimisations. For example, hardware parts are exchanged for lower cost options or those with better performance. Therefore, corresponding updates have to be made to the software. For that reason, consistent communication between the two teams is particularly important. This is where our consulting and PM experts from PESCHKE come in to provide ideal support thanks to their experience in the development of connected products.
Another important area that should not be neglected is marketing strategy and content creation ». Smart connected products enable companies to build new types of customer relationships that require new marketing practices and capabilities. By collecting and analysing product usage data, companies can gain new insights into the value that products create for customers and how to better communicate that value through positioning and offers.
New business models thanks to smart connected products
The transformation from product to system results in new business models beyond the sale of hardware products. This includes various services that represent a clear extension of the value chain through the product. Examples of this are a predictive maintenance package, which the customer can additionally buy, or services for data protection and backups. Of course, their design has to match the rest of the system in order to guarantee a consistent brand and user experience.
Whereas up to now the responsibility for maintenance, servicing and usage costs was transferred to the customer upon purchasing the product, the new model sells products as a service. The manufacturer thus remains the owner of the product and assumes full responsibility for the costs of product operation and service in return for an ongoing fee. Compared to the traditional ownership model, the customer pays gradually instead of upfront.
Market competition is changing
Not only the structures of the industry are changing fundamentally, but also how competitors compete on the market. Companies are facing new opportunities, but also threats. Smart connected products have the potential to shift competition and create many new possibilities for differentiation and value-added services.
As industry boundaries are shifted and redefined, entirely new industries emerge. Through the added value, newly defined business channels, and the data generation as well as use that smart connected products bring about, they raise the fundamental question, “What kind of business am I?”
It is better to ask this question sooner rather than later, in order to take the necessary steps to stay ahead of one’s competition. After all, the third wave of the IT revolution will not only lead to incremental improvements in product capacity and performance, but will also radically improve our ability to meet business and human needs. And nobody wants to lag behind customer needs.
Smart connected products in a nutshell
Connected products are bringing about a lot of change: the way value is generated for the customer, how companies compete with each other and where the boundaries of competition lie. These changes will directly or indirectly affect every industry.
Connected products are not only transformative, but also smart – and so are those who work with them. With our experience in the development of various smart connected products from a wide range of industries, we accompany our clients from the design of initial concepts to the creation of product launch campaigns and the development of after-sales solutions. Our strength lies in clearly defined services and the associated competencies that we combine under one roof.
If you are looking for designs and advice on smart connected products, you have come to the right place. Just send us a message to discuss your ideas with us – time to get several steps ahead of your competitors!
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