Digital smart products leads to new business models
Terms such as "functional products" and "smart products" is something we will become increasingly aware of as the physical products are integrated with software and related services. A technological revolution is waiting in the field predicts three researchers from Luleå University of Technology in the journal Ericsson Business Rewiew
"Goodbye to the industrial age" is the title of an article in the Swedish electronics group Ericssons Business magazine rewiew. It is written by Professor Lennart Karlsson and researchers John Lindstrom and Magnus Löfstrand within the department of Product and Production Development and WINN Excellence Center Faste Laboratory at Luleå University of Technology. The authors argue in the article about how the digital revolution is opening new opportunities to produce, distribute and consume products and compare it with the industrial revolution 150 years ago. Instead of selling a physical product, companies can sell its function, leading to new business models where companies can start charging for "soft" elements such as services and knowledge.
- For example, it could be that a customer make an order for engine power to his car for an hour ahead, says Professor Lennart Karlsson.
The transition to selling functions instead of products means however a lot of challenges, where connectivity is something of a watchword. It's about takeing sufficient measures to ensure that communications in complex environments is possible, as well as monitoring of techniques could be adapted to different circumstances.
What is driving this trend, according to the authors, is that the players in a global market are taking advantage of lower labor and production costs. It increases competition domestically and forcing companies to rethink. What it takes to sell a feature rather than a product is developed by the three LTU researchers in Ericsson Business rewiew.
