The other day I was speaking to one of my best friends. He was telling me about a company he was consulting with that builds a home appliance. Traditionally, they’ve sold their appliances through resellers. Lately, those resellers have been posting those appliances on Amazon, performing a task that the appliance manufacturer felt they could do themselves. So they went to my friend’s consulting firm to help them with their e-commerce strategy. Makes sense.
As this company (and many others like them) has been pursuing a digitization effort, they’ve also gain an interest in the concept of the Internet of Things – where your physical devices have software running on them and are potentially connected to the cloud/internet. Naturally, that appliance company wanted to provide a cloud connected home appliance for their customers. Sorta makes sense.
Now – as those appliances get connected, its important for that manufacturer to provide another experience beyond the what they previously provided – they need to provide an digital version of the appliance (what many call the digital twin), so consumers can see the current status of the home appliance and perhaps even control that appliance. What more control can they provide beyond what already exists? How do they deliver a differentiated digital experience? The company’s decision, along with many of their peers, is to help make the rest of the home connected. This company wants to provide a hub, where any other home appliance or other appliance this company makes can connect to. This manufacturer thinks the hub has a lot of value as they can capture more data, develop a differentiated digital experience, create lock-in on the rest of the home appliances they sell, and create a whole new business line. Now, this doesn’t make sense.