![]() Users are keen on convenience in this market, and integrating across multiple smart home devices would allow the Hue to become a stickier product in people’s homes. To continue the success of the product line, the company should continue to build out integrations with other IoT products, similar to what they’ve done with Alexa. Phillips should continue to invest in smart home integration & bulb technology In addition, these light bulbs have a considerably greater lifetime, offering a vastly different value proposition than their previous light bulb solutions, as they will now need to be replaced far less often. While Philips does not directly receive the payment for energy usage, their pivot to this new product line will lead to them getting a greater share of consumer spending overall in this segment. In this model, Phillips offers a superior, differentiated product at a drastically higher fixed cost, but the design of the light bulb is such that the ongoing energy costs are considerably lower. While previous versions of light bulbs had a considerably lower upfront purchase cost, they were less efficient overall, leading to higher monthly energy payments to use the light bulbs (the variable costs). In the light bulb model, the user also has some semblance of fixed and variable costs (the device itself and the energy it uses). The light bulb business model is similar to that of the razor-razorblade model, where a user has an upfront device cost (the razor) and then an ongoing variable cost based on usage (water and blades in this example). This new product represents a deviation from Phillips’ previous business and monetization model for light bulbs. Switch to smart light bulbs evolves business model for Phillips Finally, these light bulbs are more energy efficient than traditional light bulbs, driving considerable cost savings for the customer 7. This creates a more interconnected smart home ecosystem, increasing overall convenience for smart home advocates as they can use Alexa to control lights as well. It’s also integrated with Amazon’s new smart home device, Alexa. All of this can be done from a mobile device. In addition, you can customize the color, intensity, and brightness for each bulb, allowing users to get creative for different rooms. The product also allows for automated dimming 7. ![]() With the technology-enabled Phillips Hue, users can control lights remotely from their mobile device and can set schedules for when lights should turn on or off. These new light bulbs provide a considerably differentiated product for its customers. The recent regulatory changes, coupled with the advent of smart home devices, led Phillips to create a new product of light bulbs that leverages smart technology. One company at the frontier of IoT adoption in the light bulb industry is Phillips. Pathways to Just Digital Future Watch this tech inequality series featuring scholars, practitioners, & activists Phillips is one company that has adopted IoT in its light bulb business With the recent mandate in 2014 to stop production of incandescent light bulbs 6, smart light bulbs have surfaced as one of the interesting applications of IoT within the smart home segment. Users can now lock their front door from their office, and can configure their residential security system from the road. One of the main applications of IoT is for smart homes 4, which is the second biggest area of IoT adoption behind smart energy 5. IoT is rapidly evolving a number of industries traditionally untouched by the Internet, with the overall market projected to grow to $7.1 trillion by 2020 3. IoT is growing rapidly, with smart homes a major application area A recent Gartner report found that 43% of enterprises plan to adopt IoT into their business models, which is expected to increase to 64% after this year 2. As a result, the entire paradigm of how we interact with the Internet and the modern world will drastically change – driving the establishment and rampant adoption of the Internet of Things (IoT). This trend has continued to compound in recent years. In 2010, the number of computers on the Internet exceeded the global population 1, driving increased interaction with Internet-enabled devices. As the number of mobile-enabled devices increases and companies aggregate and analyze more and more data, this level of innovation will accelerate further. Innovation in the digital technology space has changed the way people and companies interact with the world. Internet of Things changing way we interact with the modern world
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