M2M valuation

Connected device applications are not all equal. Consumer-oriented devices may have a revenue generating life of 2-3 years while cars and industrial machinery a life of 5-8 years. In extreme cases, utility-like devices related to smart grid or smart city transport may be operational for even longer periods of time.

As a result of these variations, business developers and CFOs need suitable tools to manage both the risks and the rewards associated with different application opportunities. This is where valuation techniques become useful. They not only help to quantify new opportunities but they can also drive business model innovation.

Two Aspects to Business Model Innovation

New business models and business model innovation have become very topical in the M2M industry over the past year. Now, companies are talking less about eye-catching use-cases and more about the business of commercializing the most promising ones. The IoT market, currently preoccupied with cool and quirky devices, has yet to make this transition.

For any company in the M2M market, there are two aspects to business model innovation. The first deals with business-unit organization at a corporate level. The second applies to any special approach that is needed to capitalize on a specific market opportunity.