This is the second in a series of publications on how companies can capture the value of the data generated by the Internet of Things (IoT) and how data ecosystems will play in defining the future of competition in many B2B industries.

Data ecosystems — orchestrated by the likes of Amazon, Google, and Netflix — have demonstrated that they can create enormous value for B2C businesses. For B2B companies, however, developing data ecosystems is more complicated, given that vertical-specific solutions and hundreds of IoT platforms compete for dominance. What’s more, the value of data in B2B is also more difficult to extract; companies need domain expertise to develop new solutions and services as well as the customer relationships required to monetize them. That said, the times are changing fast. The installed base of IoT-connected devices will soar from about 11 billion today to 125 billion in 2030, according to DBS Bank, and the volume — and value — of data created by B2B industries will far eclipse those generated by mobile devices and people surfing the web.

BCG has already published articles about the increasingly prominent role of ecosystems in business and how companies can manage them. There’s no question that B2B companies will build data businesses that generate high-margin recurring-revenue streams and create competitive advantages; some already have. This report explores which companies, thanks to their business mixes and market positions, have the right to win (but not a guarantee) in industrial IoT markets as machine-generated data is unlocked at scale for the first time, enabling a new logic of competition.

Specifically, in our study of dozens of actual IoT business models and examples, we looked at the following questions:

• Where is there sufficient potential for IoT solutions and services to create value for customers? Under what conditions could rapid adoption of such solutions and services occur?
• What structural factors determine an individual company’s right to win as a provider of IoT solutions, services, or platforms?
• How can companies monetize their IoT investments and data?
• How can IoT platform and ecosystem providers attract customers and ecosystem participants?