• Xyte claims to be the creator of the first “servitization platform” in the industry for hardware and gadget makers.
  • Businesses that choose HaaS may so concentrate on their core skills instead of worrying about the cost and inconvenience of purchasing, setting up, and maintaining specialized equipment.

Xyte Technologies Ltd., a business that projects itself as a hardware-as-a-service (HaaS), announced the conclusion of a USD 30 million early-stage fundraising round.

Intel Corp. and other vital players, including Samsung Next and current investors S Capital and Mindset Ventures, have contributed USD 20 million to the Series A financing. Furthermore, USD ten million was provided as venture lending from BlackRock Inc.-managed funds and accounts.

Xyte claims to be the creator of the first “servitization platform” in the industry for hardware and gadget makers, with the audacious goal of facilitating their shift from conventional one-time sales to an as-a-service business model.

According to the startup, HaaS makes it simpler for small and medium-sized companies and larger corporations to develop new hardware and device subscription-based offerings that include both their products and extra services in exchange for recurring payments.

When using the hardware under the HaaS model, the user pays a regular subscription charge rather than purchasing it all at once. The hardware manufacturer may conceive of any feasible payment model, including a monthly fee, a usage duration fee, a telemetry-based fee, a service or feature-based fee, or any other alternative.

The manufacturer or managed service provider is in charge of monitoring, maintaining, updating, upgrading, and replacing the hardware as needed because the customer does not actually own the device or gear. For many clients, it offers an alluring alternative because it allows them to obtain the newest hardware products without paying a hefty upfront cost.

An additional advantage is that obsolete or broken hardware may be swiftly and inexpensively decommissioned and replaced. Businesses that choose HaaS may so concentrate on their core skills instead of worrying about the cost and inconvenience of purchasing, setting up, and maintaining specialized equipment.

By no means is it an original idea. In essence, public cloud infrastructure providers like Microsoft Corp. and Amazon Web Services Inc. rent out their cloud-based servers to clients. Traditional information technology providers, including Dell Technologies Inc., have also adopted this approach. For instance, customers can pay a regular subscription fee to have Dell’s most cutting-edge servers and storage arrays installed in their own data centers, with regular maintenance and updates handled by Dell’s personnel through the company’s APEX-as-a-service program.

While many of the biggest producers of devices and hardware have already adopted the hardware-as-a-service model, smaller businesses find it far more challenging to do the same. However, it’s becoming more and more obvious that they will have to in order to stay up to date with developments in the sector.

The HaaS model offers several advantages, such as increased revenue that is predictable and recurring, as well as chances to upsell more services and enter new, competitive markets. Longer-lasting ties with customers will also help manufacturers since customers are more likely to remain loyal to a supplier if it means they can always get the newest gear.

Omer Brookstein, Co-founder and CEO of Xyte stated that OEMs have several difficulties while creating their own HaaS business model. He noted that the most evident one is the requirement to build a whole cloud-based infrastructure for handling the hardware and whatever business plan they choose to employ. Since software is not typically the primary focus of hardware makers, using an off-the-shelf solution makes sense.

Brookstein mentioned the prevalence of less obvious hurdles, such as the financing requirement. He also explained, “The return on manufacturing costs is delayed with a subscription-based model, so companies need credit to transition. But sufficient credit lines are difficult to procure when there’s uncertainty surrounding product viability and profit timelines.”

According to Brookstein, because the subscription model is far more complicated than traditional sales, businesses also have trouble avoiding issues like invoicing and billing customers and filing taxes. Because of this, companies need advanced operations features in their hardware-as-a-service software.

It is easier for hardware and device manufacturers to implement usage-based pricing and other business models due to the Xyte Device Cloud servitization platform. Explicitly designed for original equipment manufacturers, it allows them to oversee every stage of a connected device’s lifecycle, from the time it leaves the factory to the time it is installed on the customer’s property.

According to Brookstein, any organization can simply connect its gear and devices to Xyte’s robust cloud platform without having to write a single line of code. “An OEM can have its own, fully-branded as-a-service platform for end customers and channel partners in a matter of weeks,” he said.

The CEO added that as a bonus, Xyte has teamed up with top financial institutions, including banks and specialized leasing businesses, to give them the information they need to issue loans to hardware manufacturers in far better conditions.

Holger Mueller of Constellation Research Inc. stated that everything in the tech sector is propagating toward an as-a-service model.  Holger Mueller stated, “Customers prefer it because it gives them the elasticity they need from both a commercial and an architectural perspective. But it’s very difficult for hardware and device manufacturers to enable such a business model by themselves, as doing so requires significant expertise. This is where Xyte’s platform can prove its worth, enabling HaaS for every product from production to obsolescence.”

According to Brookstein, the capital from this round will be utilized to extend the HaaS concept throughout North America and Europe. “We are determined to continue supporting connected-device manufacturers in every industry,” he said.

Xyte asserts that it impacted the robotics, automotive, and medical device industries. Legrand SE and Schneider Electric SE are two of its clients.

According to Roi Bar-Kat, the Israeli country Manager of Intel Capital, device and hardware makers are increasingly required to use the HaaS model. “Xyte is equipping forward-thinking OEMs with an indispensable software stack to meet that need, and we are confident it will play a pivotal role in shaping the ecosystem and enabling device and hardware manufacturers to flourish,” he added.