Picture this: You wake up in the morning and turn your water purifier on. You pay for the amount of water purified, not for the purifier itself.
Not just that, your purifier can read how much water you have consumed, predict its servicing needs, and connect you to the maker of the machine directly, without having to deal with middlemen and service providers.
Your washing machine tells you if the drum is going to break in the near future, before you actually get stuck with a breakdown. And you pay for the loads of clothes washed, but not for the machine itself.
When you move houses or cities, you just take your subscription with you, without worrying about shifting your gadgets.
If it sounds like a futuristic cross between Hunger Games and a theory of non possession, then maybe you aren’t ready for the world the Internet of Things can unlock. And you definitely haven’t heard of product-as-a-service.
iBot, an IoT company that is headquartered in Las Vegas is doing exactly that. Founded by former SAP employee Ravi Subramanyam, the company has built a chip that, when attached to regular home gadgets, can turn them “smart” and hook them up to the cloud, unlocking a host of opportunities for manufacturers and users.
iBot developed its smart chip, the iQu, in Bangalore and manufactured it in China.
Using IoT to turn homes “smart” isn’t anything new. Everyone from scrappy startups to traditional behemoths like Infosys are spending time, money, and resources to crack the code of how to turn our homes into backdrops of an Arthur C. Clarke novel.
What iBot is doing, however, is taking the idea beyond selling to consumers and going directly to the source – manufacturers and OEMs – with the promise of better sales, customer intelligence, and an eventual eradication of the need to discount.
In the long term, it is planning to do away with the concept of gadget ownership and replace it with payment for utilities.
“The market in India is so price sensitive that the only way OEMs are able to do business today is by discounting their products, and it can hit a point where they might not make much money on sales anymore,” Ravi told Tech In Asia.
“So instead of discounting a water purifier ridiculously and selling it on an online platform, they actually prefer to go with the pay-as-you-use model.”
Turn things “smart”
iBot has signed up about 12 clients so far, including water purifier makers Eureka Forbes, a Schneider electric subsidy called Luminous Power Technologies, and coffee and tea vending machine makers Atlantis.
Most of them are in the test phase, where manufacturers are experimenting with the use of iBot-powered machines before rolling them out in the market. Ravi said the first market rollout could be as soon as next week, with Luminous Power.
Ravi’s plan is to change consumer behavior and the way manufacturers interact with the end user. With Eureka Forbes, for example, once a consumer is able to opt for the product-as-a-service plan, she won’t need to pay for a water purifier, or own a machine per se. The manufacturer will install a purifier in her home, but will continue own it, while the consumer pays the company on the basis of the volume of water she consumes.
The intelligent chip installed in the machine connects it to the manufacturer directly, telling it what usage patterns are, whether the unit needs servicing, or even about how many times the consumer requested service.
That kind of data could be a goldmine for OEMs that are striving to determine consumer behavior, but currently are at the mercy of dealers and middlemen for that information.
For a customer, it promises better after-sales service – Ravi claims the predictive chip can warn the manufacturer of any upcoming breakdowns. It also does away with the need to own and buy gadgets, or worry about moving them when users move homes.
“The consumer mindset is also changing,” Ravi says. “They treat things as utilities rather than an asset. Frankly, when you buy a washing machine, do you care about owning the machine, or do you care about getting the job done, which in this case is washing clothes?”
Ravi didn’t say how many different gadgets were being tested by various clients currently, but said he targets fifty thousand units of shipments by this year.
“We are adding about two to three different leads to our sales force every day.”
Manufacturers are charged on a subscription model. There is an installation fee and then a monthly rental that OEMs pay iBot.
The one-time fee could be anything from US$50 to US$200 based on the type of machine. The subscription is anywhere between US$5 to US$10 per month.
Manufacturers have been buying iBot’s intelligent chip for about a year. Ravi and his team worked on the technology for about three years before the roll out, bootstrapping the company before they found an investor at the Consumer Electronics Show of 2014.
The European investor wrote them a check of US$1 million, which Ravi used to build a team. iBot currently employs about thirty people, most of whom are in their development center in Bangalore.
The company is also talking to clients globally, including in the United States.
“In the United States we are mainly aiming for partnerships with snack vending machine owners. We are chasing the agriculture segment in South America. It’s not the same set of customers we are going after in each country,” Ravi said.
But what about money? In these days of billion-dollar fundraising, US$1 million raised two years ago sounds meager.
The entrepreneur in Ravi would rather go old school, though.
“I’m a big fan of old fashioned economics. Right now we are more focused on building the company and increasing the value equation.”
This post first appeared here.