Semicon west monetizing the internet of things
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Monetizing The Internet Of Things: A Convenient How Not To Guide Paul R Brody Prepared for Semicon West July 2015
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Transcript of Semicon west monetizing the internet of things
Monetizing The Internet Of Things: A Convenient How Not To Guide
Paul R Brody Prepared for Semicon West July 2015
The future is already here, it’s just not evenly distributed.
William Gibson
© 2015 Ernst & Young LLP Images creative commons, flickr
We started making devices digital because they’re cheaper that way
VS
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© 2015 Ernst & Young LLP Image from technologizer.com, Panasonic
The result was a world of smart things that weren’t especially clever at all
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© 2015 Ernst & Young LLP
Things have kept getting smarter, but we don’t seem to be very happy with how they’re turning out.
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➡ Lots of smart appliances now available
➡ Very few stand-out success stories
© 2015 Ernst & Young LLP
Three substantial problems have delayed the arrival of a more useful Internet of Things
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Failing the jobs to be done test
No meaningful ROI
No credible level of security or privacy
© 2015 Ernst & Young LLP
The biggest failure in the Internet has been the failure to focus and improve upon the “job to be done” by the device
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Features of a new $1,700 “Smart” Washing Machine:
•Start, stop, and check status remotely •Notification when laundry cycle is complete •Assign tasks to other family members •Remind you to do the washing
© 2015 Ernst & Young LLP
ROI is important, and costs are too high while returns are far too low to justify replacing existing capital equipment
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Case Examples: ROI on Smart Sensor Use Cases
$0
$75
$150
$225
$300
Maintenance Energy
Tag CostReturn
Maintenance • 5% annual chance of mechanical problem • Average truck roll costs $100, 1.5 per repair • Smart systems eliminate some repairs and
reduce average truck rolls total to 1.0/repair • $25 tag cost on BOM, 10% annual ROI
Energy • $250 for a smart thermostat at home • Average of $141/year in savings reported for
Nest thermostat users • 56% annual ROI on average
© 2015 Ernst & Young LLP
As for security and privacy: it’s a disaster and there are no participants left who have any credibility in this space
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•Security is an after-thought in most smart product design today
•The foundations of many of these designs are dated to begin with
•Feature bloat adds bugs and security risks.
Show me the money.
Jerry McGuire
© 2015 Ernst & Young LLP
Two technological revolutions are emerging that will reshape how we design and build smart devices
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The Block Chain (underlying technology for BitCoin):
Cheap system-on-chip computers designed for Android Phones:
© 2015 Ernst & Young LLP
The first transformation in computing involves hardware.
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Embedded Computing on
Devices
Modern Era
General Purpose Computing Everywhere
Post-Modern Era
© 2015 Ernst & Young LLP
It’s now cheaper to make things smart than it is to make them stupid.
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Powerful System on Chip costs are dropping so quickly, they are converging with traditional embedded chip costs:
Non-Recurring Engineering Cost for Customized Embedded Chips
Shift to SOC with software customization here
Illustrative: As SOCs drop in price, customization will shift to software, not hardware
Time + + + +
Embedded Unit CostAverage Embedded CostAverage SOC Cost
At higher end of the market, this shift has already started:
These high powered SOC chips can run the full Block-Chain stack including doing transaction processing (mining).
Apple Lightning HDMI Adapter
• Full ARM SoC with over 256MB of RAM
• Boots OS X Core when plugged in
• Conducts software conversion of MPEG to HDMI in real time
© 2015 Ernst & Young LLP
By 2020, billions of ordinary devices will in fact have far more computing power on them than is actually necessary
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Global Installed Base of Computing Devices Millions of Units in 2015
1
10
100
1,000
10,000
AWS Servers PCs SmartPhones
2,222890
5.6
Global Installed Base of Computing Storage Estimated Petabytes in 2014-5
1
100
10,000
1,000,000
Dropbox Facebook Microsoft AWS PC Storage
890,000
900300300
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Installed base and company data center sizes are estimates based on limited public information. PC & Smartphone shipments from statistia.com. Storage data estimated assuming 1TB per PC.
© 2015 Ernst & Young LLP
Alongside the revolution in hardware, a revolution in software is brewing at the same time: BitCoin
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Secure
Transparent
Open
© 2015 Ernst & Young LLP
BitCoin is the re-invention of the most basic workload in the world of modern computing: transaction processing.
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The Block Chain
CICS in 1966
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As a transaction processing engines go, the BlockChain is a terrible design and horribly inefficient.
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Slow Redundant Wasteful
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Why use the Block Chain? In a word: trust. You don’t need it.
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© 2015 Ernst & Young LLP
The core functionality of BitCoin, known as the BlockChain is now being re-purposed into all kinds of applications.
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Application Development EnvironmentsMarketplace InfrastructureSystems of RecordDistributed Social Networks
© 2015 Ernst & Young LLP
Modern Era
At the intersection of these two trends is a new world order.
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Expensive Computing
Post-Modern Era
Free Computing
High Trust Environment
Centralized Internet
Low Trust Environment
Distributed Internet
© 2015 Ernst & Young LLP
There are two key take-aways from the intersection of these technologies
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1 No business case is required to make devices smart
2 The Cloud applications required to integrate & manage these devices are, if properly architected, free
© 2015 Ernst & Young LLP
Smart devices will connect assets to marketplaces and help us make better use of what we’ve already got.
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Typical Productive Asset Utilization Levels
0%
25%
50%
75%
100%
Lawnm
ower
Dishwas
her
CarOffic
eTa
xi
Airplan
e
60%50%
20%
4%4%1%
In commercial real estate alone, the opportunity is enormous:
50% Properties used IoT systems to allocate and manage space instead of long term leases.
Average lease prices based on time & location would plunge.-42%
In savings for consumers and businesses leasing real estate space.
$128 Billion
Case study data from the IBM Institute for Business Value, “Economy of Things” report.
Slowly going forward ‘cause we can’t find reverse.
The Firm
© 2015 Ernst & Young LLP
As with each new wave of technology, we should expect a 10X increase in device volume
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$0
$125,000
$250,000
$375,000
$500,000
Mainframe Mini PC Phone Thing
$50$500$5,000$50,000
$500,000>> Thousands
>> Tens of Thousands
>> Hundreds of Millions
>> Billions
© 2015 Ernst & Young LLP
The rise of IoT will very likely upset the balance in the semiconductor industry
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Era of embedded computing is over.
The new data center is everywhere.
Security through transparency.
Entirely new customer base.
Life cycles are going to get longer.
