How Hardware-as-a-Service will save IoT

How Hardware-as-a-Service will save IoT

How Hardware-as-a-Service will save IoT
Here’s the dirty little secret about the Internet of Things: The Things might not work, and you might not use them.

As a consumer, many of your gadgets will collect dust tucked away in a drawer (I must admit, I have a large box full of wearables and other things with which I don’t know what to do). As a business, many of your devices will not perform as well as expected, turning into maintenance-heavy money pits.

This is because it’s hard to gauge the usefulness of a new, innovative hardware Thing. Some won’t be useful; others will stop working. Even the ones that you love, the hard-working devices that serve you every day, will soon become obsolete, replaced by newer, better, shinier Things.

And so we keep buying these new Things, seduced by their promises — and later often find ourselves saddled with buyer’s remorse.

But soon, thanks to a concept called Hardware–as–a–Service (HaaS), we’ll have fewer of these regrets, because we’ll own fewer of these Things. Thanks to HaaS, the way individuals and businesses consume hardware products is changing.

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Hardware–as–a–Service, which clearly has roots in Software-as–a–Service, is a business model where companies sell packages that include hardware, software, maintenance and, sometimes, installation, for a monthly fee. Under HaaS, customers pay for services, not Things; consequently, HaaS contracts often include a service-level agreement (SLA).

Here are some examples:

Vivint is a smart-home company that offers security sensors, smart locks, thermostats, installation, servicing and 24/7 customer support for a monthly fee. Most of this hardware is made by the company. Plans start at around $60/month, with a free trial period and minimum contract length. With more than 1 million customers and $650 million in revenue, their strategy seems to be working.

Hitachi recently announced a “trains as a s ervice” contract with Virgin in the U.K. for 65 new high-speed Hitachi trains. Under that deal, Hitachi maintains ownership of the trains, and is paid based on their trains’ reliability.

In fact, transportation is the leading edge of HaaS. Bike-sharing programs like NYC’s Citi Bike provide access to bicycles for as little as $15/month. In many cities, car-sharing programs like Zipcar and car2go have replaced the need to own a car. Uber recently launched $5 rates to provide an everyday transportation option for commuters, further reducing car ownership needs.

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Even the large tech companies are starting to get on board. Earlier this month, Microsoft launched “Surfaces- as– a– Service,” allowing business customers to pay a monthly fee for a Microsoft Surface, unlimited phone/in-store support and hardware upgrades. HP is reportedly exploring HaaS plans for their device product lines. And some analysts believe that an “Apple- as– a– Service” subscription-based revenue model is the answer to that company’s woes.

Hardware–as–a–Service is here because it makes sense. Almost all hardware is a depreciating asset: why would we want to own it? For example, a new car loses nearly 10 percent of its value when driven off the lot. In these cases, it makes simple economic sense not to own.

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