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The massive amount of data being collected by software, hardware, and services is reaching unprecedented levels. As new innovations and products come to market each day, more companies—both industry giants and young startups—are vying for new ways to strike the Internet of Things (IoT) market-share gold.

Every technology that plays in the IoT is collecting data of some type. Behavioral and financial information, even personal preferences, can be aggregated to improve a consumer's experience. Though that may seem more advantageous to the industry giants (given the amount of data they possess), the smaller, nimble players can use this to their benefit.

Small players can employ this slice of data intelligently within their specific context—multiplying the effectiveness of any data they gather. Harnessing this data quickly and relevantly will be necessary to differentiate across the ecosystem, and doing so will help to capture unique user information and industry benchmarks to gain a competitive edge.

Opportunities for Smaller Players

The potential opportunity for the smaller players is huge. Industry leaders, such as ARM, Google, IBM, and Apple, know this as they continually acquire younger, high-growth IoT startups—exemplified by Amazon's recent acquisition of IoT startup 2lemetry—to take it off the board and collect its user data.

Google was one of the first to kick off a major IoT acquisition strategy with its acquisition of Nest Labs in 2014. Some may even argue that the smaller player's long-term success in the IoT will be dependent on its ability to partner, coexist, and integrate with the bigger players while adding its own proprietary data layer.

It's true that the IoT requires some level of cooperation—and will force old and new to play nice at times—but there's still a unique opportunity for the smaller players. The rise of the Internet, and the data that drives it, was never about mass aggregation to constrain the market... It's more the ability for new players to conceptualize their data and take advantage of the ongoing flow of information and services passing through the IoT.

As the Web continues to become more fragmented, the companies that get the most from their data is going to control their market. If you have access to an endless supply of user data, you can better understand your customers' demands and easily offer multi-tiered offerings sold through devices, based on their product data and user preferences.

Put on Your Thinking Cap

The real opportunity now extends beyond just monetization.

Success becomes dependent on a company's ability to think intelligently about the unique data and information captured and use it to carve a niche in the IoT ecosystem and become a threat to other players.

The future is not only about adding services on top of IoT devices, hardware, and the like; it's dependent upon achieving monetization for these services on a higher level of granularity.

Consider how wearables like Nike+ have struggled to monetize, and how the long-term success of the Apple Watch is far from guaranteed. At the same time, companies like SmartThings and Nest have emerged, primed with their modern-day slingshots: Using their technology not just as a product to make sales but also a data-based medium in very specific contexts enables those companies to create personalized value for their customers.

For example, SmartThings has successfully created an intuitive platform conducive to achieving continuous user value and monetization. It provides one commerce hub that connects and integrates with several devices to create a "smart home," acting as an aggregator of sorts. By harnessing the power of its user data, SmartThings is able to control, monitor, and customize its products and services based on specific user preferences.

Monetizing Across the Value Chain

As multiple players come to market, intermediaries will also re-emerge. Acting as the middle man, they'll aggregate various new products and services on the buyer's behalf to help monetize across the chain. These new value chains will comprise of three flows (goods/services, information, and incentives). By smartly managing those flows, they can create whole business models.

In partnering with various companies and using the data available, intermediaries can help buyers navigate the endless supply of services and enable businesses to reach a new pool of customers. Intermediaries also have the advantage of understanding local markets and buyer behaviors, and helping companies to motivate regional demand and dominate international markets.

* * *

The ability to employ the granularity of the data that IoT devices collect will be the driving force behind the ability of "Davids" to topple the "Goliaths." Demand won't just be for the giant companies but for the players that take a personalized approach to servicing their customers.

The companies with the ability to intelligently harness the data at their disposal will gain the competitive advantage.

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ABOUT THE AUTHOR
image of Michael Ni

Michael Ni is CMO and senior vice-president of Marketing and Products at Avangate, a cloud commerce provider enabling online software sales for software, SaaS, and online services businesses.

LinkedIn: Michael Ni