What are connected products?
Connected products improve the customer experience and allow companies to collect useful data.
Although often used interchangeably, smart products and connected products are two different things even though there are shared points between the two.
Let's see it in detail.
A definition of connected products
Since “connected product” refers to a variety of different things, there isn’t an official definition for this term. However, we can say that “connected products” are physical objects which can connect to the Internet, other networks, and devices. Thus, they can be controlled or monitored remotely, and they can also collect data.
Common examples of connected products are:
- Wearables (fitness trackers, smartwatches)
- Home appliances
- Connected apparel
- Smart cars
Difference between connected products and smart products
Smart products are products that have a certain amount of automation built in, that allows them to undertake certain tasks independently. This could be a thermostat that is programmed to maintain a certain room temperature, or a smart coffee maker that can be programmed wake you up with a fresh cup of coffee in the morning. Connected products do not necessarily have an intelligence of their own; rather, they rely on a connection/network to provide some sort of value-added functionality.
A connected electricity meter will report back to the energy company the amount of electricity that has been consumed and ensure the home owner only pays for exactly what they consumed, and the water company no longer needs an army of staff checking electricity meter. While both are designed to make our lives easier, connected products are designed to collect information.
In other words, smart products tend to be focused more on the user experience and awareness of the local context, while connected products focus more of the value of connecting to a wider network and deriving value from Big Data.
It's a subtle difference, so let's take a practical example.
Think about a light bulb. A network of connected light bulbs in an office might be controllable remotely via an app, they may collect data on their use and be remotely turned off at the end of the day A smart light bulb might be controlled locally by voice commands or be triggered by a motion or light sensor. Unlike the second lightbulb, the first one doesn’t necessarily need an “internal intelligence” to work. At the same time, the smart light bulb doesn’t necessarily collect data about the usage.
Products can be both ‘smart’ and ‘connected’. A smart connected light bulb could turn on and off as a person enters or leaves a room, in order to save energy, but by being able to connect to other devices in the cloud it can use data from the persons smartphone or image recognition from a security camera to determine who the person was and set the lighting to the personalized settings of the specific person that entered the room.
How do they work?
Connected products generally include 3 types of components:
- physical components (parts)
- smart components (sensors, microprocessors, softwares, operating systems, etc.)
- connectivity components (ports, antennae, protocols, cloud, applications, etc.)
These components allow the product to collect, analyze and send data via the network.
The most common types of network used by connected products are Wi-Fi , Bluetooth and cellular networks. They have different features, making them more or less suitable for the product.
For example, Wi-Fi is common for home automation products because it has a relatively long-range. On the other hand, Bluetooth is good for wearables since it has a very low power consumption. While cellular networks are frequent in connected cars for their wide coverage area.
Once the sensors have collected the data, the applications process and analyze it. Applications can be either in the cloud or on the device itself.
The advantage of using apps relying on the cloud is that they are accessible from anywhere and can be updated more easily. The disadvantage is that they require an internet connection, which can be a problem for some types of products.
Applications on the device, on the other hand, don't require an internet connection to work but are more difficult to update.
The choice of whether to use applications on the device or in the cloud depends on the type of product and the needs of the company. For example, for a connected car an application that works offline is probably more suitable than one that can be updated easily. But for a connected light bulb, the opposite is probably better.
While connected products may include sophisticated sensors, processors and connectivity, connected products may delegate this functionality to other devices, such as smartphones. In reality all that a connected product needs is a digital identity that can be read by another device. In the case of connected fashion, most products employ either an NFC tag or QR code which can be read by a smartphone, transforming the product into a connected product.
The benefits for companies
Nowadays, one of the most valuable assets for companies is data. Thus, connected products are a powerful tool since they can collect a large amount of information.
And how can companies use this information?
Companies can have a deeper understanding of customers' habits, as a consequence they can make products and customer service more suitable for actual use or customers' wishes;
By collecting data about how consumers use their products, companies can identify ways to reduce waste and optimize their production processes.
New revenue streams
For example, fashion and luxury brands could use connected products to offer subscription-based services or product-as-a-service solutions to their customers. These types of services would not only be a new source of revenue for companies, but they would also create a closer relationship between the brand and the customer.
Better customer experience
Collected data helps companies to create an improved relationship with customer, generate new value and increase positive experiences linked to their products and brand.
Connected products and the circular economy
Connected products fit together well with the adoption of circular economy practices:
- they are great for offering rental services for high-end products.
This service is particularly interesting for those customers who don't want to buy a garment or an accessory but only want to use it for a special occasion;
- they ensure transparency in the second-hand market.
The data collected by connected products can be shared with customers, helping brands to fight counterfeiting and to increase transparency. For example, companies can create a digital passport for each product that would allow customers to track its life from production to sale.
The future lies in customer relations
Beyond what we have said so far, the true power of connected products lies in their ability to link the physical world to the digital world. It is not just collecting data or remote control. They allow an amplified user experience. In essence, connected products have a whole new set of functions and capabilities that traditional products do not have and that transcend reality.
Products are not just objects, but portals for services and experiences. Therefore, the success of a product is no longer exclusively dependent on "quality" but on its ability to create good customer relations.