Gary Audin: The Internet of Things Will Change Your Business Model

Source: "Various forms of post-sale maintenance will become more common, and may change how you deal with your vendors.
The Internet of Things (IoT) goes well beyond human Internet users. Some predict that by 2015, not only will 75% of the world population have access to the Internet, so will 6+ billion devices.
Traditional business models focused on the sale of an item, with post-sale revenue coming from maintenance. The maintenance was usually an on-call service without real-time monitoring. Producers of many devices will still follow this business model, however this model is vulnerable to shrinking profit margins in very competitive markets. Nevertheless, the services market for the devices can produce considerably more profit than what is produced by the original device sale.
However, apart from maintenance, post-sale revenue can be generated by supplying elements that are essential to the usage of the underlying device: Think of your printer. Printers are cheap; it is the ink cartridges that cost a lot but are relatively cheap to produce. The profit is in the ink, not the printer. In a similar vein, the iPod was cheap; the profit was in the sale of the music services."

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