Hardware-as-a-Service: On the Cusp of an Epic Market Transition

The proliferation of the subscription economy, cloud technology, and the Internet of Things over the past decade has led to a significant shift in customer expectations, forcing device manufacturers to rethink the services they provide and transform their go-to-market strategy.

Customers today are looking for more flexible purchasing options for the products they use, shifting from ownership to access. They require models that will allow them to scale quickly based on their needs, or that are directly linked to their actual usage. In addition, many customers no longer simply want to buy a product, but instead require integrated solutions that bundle services with products. To keep up with these evolving expectations, device manufacturers are transitioning from one-time CapEx sales to cloud- and services-centric models.

The name may vary depending on the industry (Equipment-as-a-Service, Device-as-a-Service, Machine-as-a-Service, and Silicon-as-a-Service are just a few examples), but the underlying concept is the same: Anything-as-a-Service, or XaaS. 

As hardware is being commoditized and margins are under constant pressure, these Hardware-as-a-Service business models create a whole new set of opportunities for device manufacturers, enabling them to shift from selling products to selling services based on physical devices. This [workplace] transformation allows manufacturers to build long-term, sustainable relationships with their customers and develop predictable recurring revenue streams that will last for years to come.

Of course, transforming your go-to-market strategy cannot happen overnight. There are several steps that you should take to smooth the transition, from selling complementary cloud-based services to enriching your products’ capabilities by enabling premium device features on a subscription basis. In the latter model, you can keep selling your products as CapEx but allow customers to unlock premium features for a monthly or annual subscription fee. Starting with these simpler models not only allows you to accelerate your time to market, but also helps your organization adjust to providing new subscription-based products and services.

‍Empower your channel partners

‍Collaboration with channel partners has always been an excellent means of scaling. With services, channel partners are in a unique position to add even greater value. By bundling your products with their managed services, you open up a whole new realm of possibilities for your customers. Both you and your partners benefit from a faster route to market, with new services for your products generating new opportunities for establishing recurring revenue streams.‍

Focus on the customer

‍While the XaaS economy has great potential, your business models must be carefully crafted to fit your customers’ needs without confusing or overwhelming them. Every case is different, but a focus on customer value is key across the board. Always remember that your long-term partnerships with your customers are more valuable than short-term revenues.‍

How Xyte can help‍

Xyte enables device manufacturers and their channels to transform their business models, facilitating the shift from one-time sales to recurring revenue and as-a-Service offerings by providing them with a complete suite of cloud-based tools to easily cloudify and commercialize their devices.

Increasing operational efficiency is simple with Xyte’s built-in Support Center and integrated billing engine, which allows manufacturers to reduce inventory complexity by configuring and dynamically managing premium feature subscriptions. 

Furthermore, Xyte enables manufacturers to connect with their channel partners through the platform for deeper collaboration: partners can bundle their services with the manufacturer’s products and offer complete Solution-as-a-Service.