Track: Smart Mobility and Smart Cities
Abstract
The advances in the Internet of Things (IoT) and connected objects in recent years have created a paradigm shift in automotive systems, enabling more intelligent, safe, efficient, and comfortable transportation. The majority of the added value of these services was attained by consumers in developed countries. The mass-market consumers in developing countries, known as the Base of the Pyramid (BoP), were primarily excluded from capturing these added values. This study examined startup businesses that provide IoT services to BoP consumers. We conducted a case study in Iran, a country that experienced rapid population growth in the last 40 years, yet due to stagnated economic growth development, smart transportation systems remained unaffordable to consumers. However, in recent years, new IoT startups have emerged in Iran that offer smart transportation solutions. The focus of this study is to understand the adaptations made to the business model of these startups. We surveyed 250 individuals related to intelligent transportation systems namely from academic startups and incubators, automakers, component makers, services, and software solutions. The result of this study helps to provide nuances on business model innovations in the supply-side and demand-side of the value chain that enabled offering technology-based solutions to the mass market.
In this study, we explored startups that offer IoT services to BoP consumers in Iran. Iran experienced a rapid population growth, from 37 million in 1979 to over 85 million in 2021, while the growth of infrastructure remained underdeveloped and traffic contention skyrocketed. The total number of vehicles in Iran skyrocketed from around 4 million in 2001 to 37 million in 2021. While there is a significant demand for smart and connected transportation services, affordability remained low and average price for a car is $6000, and connected and smart cars are scarce. However, in recent years, new IoT startups emerged in Iran that circumvent smartization of transportation through offering $200-$500 IoT-based parts and services to be installed on existing vehicles and enable drivers to capture some values of connectedness. The focus of this study is to understand the adaptations made in the business model of these startups. We surveyed 250 individuals involved with smartization of urban transportation in Iran. These include CEOs or key members of startups involved in five sectors including university and incubator startups, auto manufacturers, parts manufacturing, services and software solutions. We then conducted 60 deep interviews from the sample that covered their business model, the smart mobility industry, to their organizational structure, and personal demographical questions. We used sequential exploratory research method and mapped different components of their business and its different blocks according to its propositions into a 9-block business model canvas (BMC) model of Osterwalder. The outcomes of the study present empirical evidence that leads to the creation of a model in smart mobility businesses that offers value to low income BoP consumers. This study further contributes to smart urban transportation as an important and emerging area and focused on low-income mass market, a segment that largely remained understudied.