Smart and connected products are revolutionizing the structures of various industries by reconstituting/reshaping industry boundaries and in some industries creating new industries. The nature of the industry is determined by the composition and strength of Porter’s competitive forces namely the bargaining power of customers, bargaining power of suppliers, threat of new entrants, threat of substitutes and the intensity of rivalry among competitors in the industry. This therefore implies that the industry structure will change when new technology, customer needs, or other factors shift these five forces. Smart, connected products will therefore substantially affect structures of many industries.
Smart and connected products affect therefore affect the industry structures by influencing the above forces as follows;
The impacts on organizations include:
• Product development- In the past, product development was generational as companies focused on periodic product releases. Looking ahead, design will become increasingly iterative. With “evergreen design,” companies will improve products continuously. Even if the physical product remains unchanged, it can be updated via software in the cloud. As design philosophies change, the composition of the design team is also changing. In addition to mechanical engineers, companies need software engineers and data scientists.
• Marketing and sales- As companies gather and analyze product data, they gain new insights into customer segmentation and product customization. Smart products are a new basis for a direct and ongoing dialogue with consumers. New business models will emerge as products can be offered as a service. Sales and marketing teams will need broader knowledge to position offerings as part of larger smart, connected...
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