Smart City: Monetization Models Yet To Evolve

by CXOtoday News Desk    May 28, 2015

 

smart city

With half the world’s population expected to live in cities in the next decade, there is a need for sustainable solutions that ensure smart liveable conditions. Characterized by the Internet of Things, Smart Cities are considered viable solutions to tackle the increasing needs of energy, water, space and transport.

Underlining these requirements is the fundamental necessity for the right infrastructure, which Cisco has been emphasising on.

Cisco, which has partnered with the government of India in its 100 smart cities project, is already in the process of preparing blueprints and visioning development of technologies.

NASSCOM says the government’s smart cities program can create business opportunity to the tune of $30-40 billion for the IT sector over the next 5-10 years. The government has earmarked 48,000 crores for development of smart cities.

Also read:  IT Firms Seek Opportunity In India’s Smart Cities Project

“Once the base infrastructure is laid, it opens doors for writing applications and then connect the apps to the end user. Our focus is mainly on programmatic interface network. There is value in the architecture. It is not just about particular usage at a particular time,” Amit Phadnis, president, Engineering and India site leader, Cisco.

Cisco says that in a decade, the Internet of Everything (IoE) will be a $1.5 trillion-a-year business globally.

Monetization plans still work-in-progress

Speaking at Cisco Connect in Bengaluru, Phadnis felt that what was once tha visionary notion is now the new normal. “Companies, governments and citizens are embracing the digital opportunity, harnessing the power of Internet of Everything to change the way they operate,” he said.

Organized in India for the first time under the theme, Winning in The Digitized World’, Cisco Connect aimed at helping customers develop the right digital strategy.

He said that while companies are already involving themselves in smart cities projects which are basically about connected devices, the monetization part is yet to be addressed fully.

“The way we are looking at it is that the government will help push tenders and service providers will come in. They need to be aided with capital. We will help them with capital to create infrastructure. Then we will create an ecosystem of app developers who will ride on this infrastructure to reach end consumers,” said Phadnis.

As data analytics assumes importance, it opens up information for app developers and that can be used to create value added services. Though these are some of the monetization opportunities, there has been no concrete results on that front as of now.

“Essentially what we are talking about is that currently infrastructure owners and app owners are two different entities. But if one gets the infrastructure right, the ability to add value to apps and monetize the same will go up,” he says.

He is optimistic that the stage will change in the next 2-3 years.

“The business model for monetization is still a work in progress at this point in time. The reality is that opportunity is big and digitization is disrupting business models at a rapid pace. But it will take at least 2-3 years for monetization plans to pan out,” he says.

Digitization

Unarguably, digitization is both an opportunity and a challenge. The companies that have innovated and evolved with the times are sustaining, while others who failed to compete are either struggling to survive or have disappeared.

Phadnis feels India can’t just ape China or other countries, as the expectations and needs are quite different. “We have to leapfrog to catch next age trends. When we transform, we will have the ability to leap,’ he says.

“If you digitise the base infrastructure, the same can be used to offer different services and hence expand business horizon,” he says adding, if a company was to manufacture different models of cars it used to take years but with digitization it can be done in a week.