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The business models most companies have for the Internet of Things just won't work: they are based on unrealistic assumptions about markets and strategy and the longevity of their own business. Herewith, a few suggestions on how to Peer To Peer (p2p), open source, and better software development to get it right.
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Wednesday, October 23, 13
The Next 10 Billion: Risks & Opportunities In The Internet of ThingsPaul BrodyVice President & Global Industry Leader, ElectronicsIBM Global Business Services
Wednesday, October 23, 13
Page © IBM 20133
Fixing The IoT Value Proposition
Fixing The IoT Business Model
Will it all be worthwhile?
IoT: We’re Doing It Wrong
Waves of Innovation & Growth
Wednesday, October 23, 13
$0
$75,000
$150,000
$225,000
$300,000
IBM System/360 PDP-11 IBM PC 5150 iPad Mini SmartThing PresencePage © IBM 2013
Though processor power has been doubling every 18 months or so, big new waves of computing have occurred at order of magnitude reductions
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Wednesday, October 23, 13
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$1,000
$10,000
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IBM System/360 PDP-11 IBM PC 5150 iPad Mini SmartThing PresencePage © IBM 2013
Though processor power has been doubling every 18 months or so, big new waves of computing have occurred at order of magnitude reductions
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Wednesday, October 23, 13
Page © IBM 2013
Every time an order of magnitude price reduction has been achieved, there has been a corresponding order of magnitude increase in demand and an entirely new wave of computing
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Cumulative Shipments By Quarters After LaunchMillions of Units
Data Source: Asymco, with permission
Wednesday, October 23, 13
Page © IBM 2013
Every time an order of magnitude price reduction has been achieved, there has been a corresponding order of magnitude increase in demand and an entirely new wave of computing
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1 5 9 13 17 21 25 29 33 37 41 45
PCAndroidIOS
Cumulative Shipments By Quarters After LaunchMillions of Units
Data Source: Asymco, with permission
Wednesday, October 23, 13
Page © IBM 20138
Fixing The IoT Value Proposition
Fixing The IoT Business Model
Will it all be worthwhile?
IoT: We’re Doing It Wrong
Waves of Innovation & Growth
Wednesday, October 23, 13
Page © IBM 2013
So far, the Internet of Things has not yet taken off with consumers or enterprises
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Proportion of Heavy Industrial Equipment That Is Networked
10%30%
Proportion of Smart TVs being used for Internet Viewing
Icons from the Noun Project, creative commons license. Data from IBM research as of 2013.
Wednesday, October 23, 13
Page © IBM 2013
Some very high value industrial value propositions have been instrumented and engaged
10 Image sources: wikipedia, IBM
Wednesday, October 23, 13
Page © IBM 2013
In general though, a variety of factors have come together to slow the rise of the Industrial Internet
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Technology Standards
Risk Aversion
Business Model Design
Image sources: wikipedia, IBM
Wednesday, October 23, 13
Page © IBM 2013
Consumers too have embraced some items like fitness trackers and a few other items, but traditional manufacturers have largely failed to interest them in smart refrigerators
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YES: To Smartphone Accessories NO: Smarthomes & appliances
Wednesday, October 23, 13
Page © IBM 2013
The slow take-off in IoT can be attributed, in part, to incorrect assumptions that developers are making about what creates value in smart, connected devices.
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Value Through
Networking
Value from the networking and integration but not from individual devices
Energy Efficiency
ROI
Efficiency of the whole home would cover the cost of new devices and pay connection cost
Ecosystem Control
Opportunity
One manufacturer could build an ecosystem and then “tax” it as Apple or Microsoft do
Image sources: wikipedia, IBM
Wednesday, October 23, 13
Page © IBM 201314
Fixing The IoT Value Proposition
Fixing The IoT Business Model
Will it all be worthwhile?
IoT: We’re Doing It Wrong
Waves of Innovation & Growth
Wednesday, October 23, 13
Page © IBM 2013
What will it take to get the value proposition right for the Internet of Things?
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BETTER FUNCTIONALITY BIG RETURNS SIMPLE INTEGRATION
Wednesday, October 23, 13
Page © IBM 2013
Making products better is more important than simply connecting them.
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With so much computing power at our disposal, intelligence should be used to make the core product function better, not merely connected:
Better cookingHigher YieldsCleaner clothesIncreased safetyBetter product reliability
Wednesday, October 23, 13
Page © IBM 2013
On the consumer side, the Nest Thermostat is one of the most elegant examples
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Wednesday, October 23, 13
Page © IBM 2013
The most compelling reason to instrument technology will be to increase the return on assets
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0%
10%
20%
30%
40%
Dow Chemical Boeing Nationwide LCBO Other 105 companies
Savings From Shift To Managed Printing & Copying
30%Savings
Data: Photizo, IBM business partner in printing & copying
Wednesday, October 23, 13
Page © IBM 2013
In the case of consumers, this means instrumenting everything from appliances to cars to real estate to enable the sharing economy
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RENT YOUR HOUSE
RENT YOUR CAR
RENT YOUR APPLIANCES
Images from Flickr’s creative commons. Rental property from PBDK, airport parking from Hunter-Desportes, and washer dryer from somegeekin and US CPSC
Wednesday, October 23, 13
Page © IBM 2013
In the case of consumers, this means instrumenting everything from appliances to cars to real estate to enable the sharing economy
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RENT YOUR HOUSE
RENT YOUR CAR
RENT YOUR APPLIANCES
Images from Flickr’s creative commons. Rental property from PBDK, airport parking from Hunter-Desportes, and washer dryer from somegeekin and US CPSC
DISCOVER
USE
PAY
Wednesday, October 23, 13
Page © IBM 2013
The final key to success in the IoT era will be enabling integration without ecosystem control
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DISCOVER
USE
PAY
Wednesday, October 23, 13
Page © IBM 2013
The final key to success in the IoT era will be enabling integration without ecosystem control
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DISCOVER
USE
PAY
Wednesday, October 23, 13
Page © IBM 2013
The final key to success in the IoT era will be enabling integration without ecosystem control
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DISCOVER
USE
PAY
Wednesday, October 23, 13
Page © IBM 2013
The final key to success in the IoT era will be enabling integration without ecosystem control
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DISCOVER
USE
PAY
Wednesday, October 23, 13
Page © IBM 2013
The final key to success in the IoT era will be enabling integration without ecosystem control
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DISCOVER
USE
PAY
Wednesday, October 23, 13
Page © IBM 2013
Consumers have raced ahead of enterprises, and made services like If This Then That (IFTTT) represent the future of cross-platform, self-service integration of the physical & digital
26
Wednesday, October 23, 13
Page © IBM 2013
Consumers have raced ahead of enterprises, and made services like If This Then That (IFTTT) represent the future of cross-platform, self-service integration of the physical & digital
27
Wednesday, October 23, 13
Page © IBM 201328
Fixing The IoT Value Proposition
Fixing The IoT Business Model
Will it all be worthwhile?
IoT: We’re Doing It Wrong
Waves of Innovation & Growth
Wednesday, October 23, 13
Page © IBM 2013
Current thinking about business models isn’t realistic
29
Wednesday, October 23, 13
Page © IBM 2013
Product revenue and cost timelines are hopelessly mis-aligned in many IoT business models
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Introduced: 2005Discontinued: 2008
Still Being Supported
Generates No Revenue
Wednesday, October 23, 13
Page © IBM 2013
Few enterprises are likely to have the will or the means to sustain business models that span decades
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0
30
60
90
120
London Underground IBM US Home Commercial Jet US Car US Company Laptop Smartphone
Entity Longevity - Actual or Average In Years
Wednesday, October 23, 13
Page © IBM 2013
Three possible keys to a better business model
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Get It Right The First Time
Embrace Peer To Peer
Go Open Source
1
2
3
Wednesday, October 23, 13
Page © IBM 2013
The illusion that software fixes are free is dangerous. Companies need to think more “Deep Space Probe” and less “Fix It In Production”
33 Image sources: wikipedia, IBM
36 Years Old
1 MHz CPU
11kb Data TX Rate
Wednesday, October 23, 13
Page © IBM 2013
Peer To Peer Networking: It’s not just for copying music. It’s a mechanism to radically reduce the cost of distributing data and connected devices.
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EXPENSIVE CHEAP
Wednesday, October 23, 13
Page © IBM 2013
Going open source builds communities and trust that will give your products longevity without added cost and come with other benefits as well
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0
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16,000,000
2.6.11 2.6.14 2.6.17 2.6.20 2.6.23 2.6.26 2.6.29 2.6.32 2.6.35 2.6.38 3.1
Linux Kernel, Millions of Lines of CodeBy Release Since 1991
Data Source: Linux Foundation
Wednesday, October 23, 13
Page © IBM 201336
Fixing The IoT Value Proposition
Fixing The IoT Business Model
Will it all be worthwhile?
IoT: We’re Doing It Wrong
Waves of Innovation & Growth
Wednesday, October 23, 13
Page © IBM 201337
Wednesday, October 23, 13
Page © IBM 2013
Thank You & Let’s Stay In Touch
38
Email [email protected]
Linked In Profile : http://www.linkedin.com/in/pbrody
Reading List Delicious : http://www.delicious.com/prbrody
IBM on Twitter @IBM_Electronics
Twitter, Sina Weibo @pbrody
Wednesday, October 23, 13
The Next 10 Billion: Risks & Opportunities In The Internet of ThingsPaul BrodyVice President & Global Industry Leader, ElectronicsIBM Global Business Services
Wednesday, October 23, 13
