Thursday, July 18, 2019

Smart and connected devices change everything

In my last post I wrote about a big transition in innovation that will occur in the near future - when the tipping point is reached and most innovation is focused on smart, connected devices as opposed to dumb products.  Currently, most of the innovation that is created is focused on new software applications or on new physical products, but with little integration between them.  In the near future, we'll see a convergence to the point where smart, connected devices become the norm.

What powers these smart, connected devices?  Sensors and IoT capabilities, which can gather data or receive data, along with some basic intelligence on the device.  Given Moore's law we can assume that systems on a chip become exceptionally inexpensive, and the last major hurdles to lots and lots of smart connected devices are power and connectivity.  Connectivity will get solved as 5G rolls out - in the meantime connectivity will be provided by WiFi or other means.  Once really low power chips are ubiquitous or chips can be passively powered, every device can be a smart connected device.

Forget IoT?

The headline suggests that I think we should forget IoT, the ubiquitous internet of things.  I think we should forget that because IoT is a feature and a platform that will provide capabilities that we have yet to consider, but we should focus more on the opportunities and benefits that IoT capabilities and ubiquitous connectivity provide.  As 5G and IoT capabilities unfold, and low power or smart power comes into existence, almost any device can become smart and connected, sharing data with an advertiser, a data collection company, the manufacturer, all of the above, or some other company.  This is when we enter the era of Really Big Data (RBD).

People today talk about Big data - data lakes, data estates and so on.  What happens when the majority of the devices you own - and I'm not talking about iPhones or PCs that are meant to process information but your average consumer device - has the capability to publish data?  Suddenly millions of everyday salt shakers, plastic tumblers, yard ornaments and more are recording and publishing data.  We are only a few years from this reality.  When this happens, we'll see that the data generated by these devices, collected and harvested and analyzed, is far more valuable than the devices themselves.

Smart, connected and free

We'll need to innovate in a market where many low cost devices are smart, connected and may need to be free, where the revenue is recouped in gathering, aggregating and monetizing the data streams.  This of course changes the entire business model.  We'll have to innovate our business models to account for a shift from a one time purchase to a range of revenue recognition models, and most companies that today rely on shipping metal or plastic for a revenue stream will need to become companies that make money from the data they generate or the ads or other means of monetizing data.  In other words, every company, regardless of what they make, becomes a data company.

Innovation shifts to the intangible

In this outcome, innovation is no longer the responsibility of the R&D team.  Innovation is the responsibility of the strategic team, the business teams and the data scientists, because the physical features of the product are much less interesting than the data that can be generated and how the data and relationship with the customer is monetized.

In other words, the way you innovate will change, who innovates will change, and the outcomes you generate will change.  Oh, and at least a portion of your business model and revenue recognition models will change, and you'll either need to become much, much better at managing and monetizing data or create relationships with partner companies that can do this for you. 
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posted by Jeffrey Phillips at 4:48 AM


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