The 5 layers of value creation for IoT business models

How come that two companies with the same target use case can have fundamentally different patent portfolio strategies? In this video, Prof. Alexander Wurzer explains a useful layer model to understand how companies can create value in Internet of Things environments.

Source: IP Business Academy

The video explains the 5-layer model by looking at Sonos and Spotify. Both companies serve the same use case: listening to music in the smart home environment. Yet, they follow fundamentally different approaches for their patent portfolios. Sonos thinks from the physical object, the speaker. Spotify starts at the other end of the layer architecture and thinks of itself as a music streaming service that does not care much about the physical objects.

The 5-layer model goes back to the fundamental work of Elgar Fleisch, Markus Weinberger and Felix Wortmann in their paper “Business Models and the Internet of Things”. For a concise summary of the core concepts, watch the video and read the article on the IP Business Academy website.

To all my fellow patent managers, have you used this model in your patent portfolio strategy?

Photo by Ivana Cajina on Unsplash

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By Bastian Best