The IoT platform market has been growing at a record pace. Just a couple of years ago, the market only counted a few early vendors that were starting to court enterprises and device manufacturers. Today, the IoT platform space is a hyper competitive market encompassing a broad set of companies from telecommunication operators to platform as a service (PaaS) providers.
Traditionally, the initial wave of innovation and early adoption in an enterprise software market is driven by innovative start-ups that are able to move faster than the incumbents. As the market develops, incumbents enter the fray, relying heavily on acquisitions helping to consolidate the market. That wave of mergers and acquisitions activity is a clear sign of a mature enterprise software market that is approaching its peak. Subsequently, the market evolves into a phase dominated by the incumbents and a handful of startups that survived the mergers and acquisitions phase and became strong independent companies.
The enterprise IoT platform space is challenging the traditional enterprise software market cycle. Almost since its inception, incumbents like GE, Microsoft, IBM, and Amazon are leading the innovation in the enterprise IoT market. More importantly, despite a handful of early platform vendors like Xively or ThingWorx, the IoT platform market is lacking start-ups that can claim significant market share. Here we look into several ways for startups to compete in the IoT space.
Understand Your Advantages
The very first step to successfully launching, growing, and scaling a tech startup in a market dominated by one or more of the four horsemen (or a similarly gigantic company) is to ensure that you clearly understand the unique advantages that you have as a small start-up as compared to your massive competitors.
Enormous businesses like Facebook and Google have the following key strengths:
They have vast resources (money, personnel, social capital);
They can outspend virtually all competitors on marketing and advertising;
They have far more recognizable brands and established customer loyalty than smaller players;
They can use mass economies of scale to undercut others on pricing; and
They can buy more advanced technology than less well-funded companies.
However, small(er) tech start-ups enjoy various benefits and privileges that bigger businesses do not:
Startups can pivot much more quickly and effectively, adjusting faster and more precisely as markets change.
They can be far more customer service-oriented as their small numbers allow and encourage personal interaction with users;
The lack of bureaucracy means that they can adapt their products and services to customer requests much more effectively;
They have a greater capacity to develop one-on-one, real relationships with clientele, which can be crucial to customer retention
Once start-up recognizes the ways in which their startup can effectively position itself in terms of capitalizing on its unique strengths and advantages, then it’s time to take some action.
Offer Unparalleled Customer Service
If you’re running a startup that all-of-a-sudden might have to start competing with the likes of Apple, Amazon, etc. then you absolutely must commit to designing and delivering world-class customer service to each and every one of your clients.
Founders always recommended to ensure that customer support personnel:
Act politely, courteously, and with genuine effect;
Respond quickly to user requests for assistance;
Seek out client feedback to improve customer service;
Periodically reward customers for their loyalty and app ratings/reviews; and
Provide customers with lots of free, helpful information (e.g., FAQs sections on websites).
Strategically Partner with the Invaders
New ventures can often benefit greatly from partnering with the larger company (or becoming a subcontractor) by identifying what your company can bring to the relationship that increases the success of both entities”.
Although the appropriateness of this approach will depend on a case-by-case basis, it can sometimes help a startup company not only avoid being “swallowed up” by a mammoth player but also acquire new business and an enhanced reputation. An example of a company that went this route is Zoho, a cloud-based business apps provider.
Being forced to potentially compete with Google back in 2010, Zoho partnered with 1&1 Internet in order to create an arrangement whereby Zoho’s office productivity apps were made available to the web hosting giant’s 9 million+ users. Zoho actually went a step further by launching new apps, including its ZohoCRM, in Google’s own apps marketplace, where it eventually became one of the most popular apps in its niche.
Recognize Competitor’s Key Strength To Stay Relevant
There are other factors that can help IoT platform startups to remain competitive in the enterprise. However, recognizing the unique strength of the enterprise IoT platform ecosystem is vital to developing comprehensive business models that allow startups to become and stay relevant in this important enterprise software market.