The Golden Age of Wearables: Personal Networks, Smart Things & Intimate Knowledge
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Transcript of The Golden Age of Wearables: Personal Networks, Smart Things & Intimate Knowledge
The Golden Age of Wearables: Personal Networks, Smart Things & Intimate KnowledgePaul Brody Americas Strategy Leader, Technology Sector Wearable Technology, Adoption & Monetization Conference San Francisco, 21 April 2015
Page
Here, there, and everywhere, the Internet of Things has arrived in huge volumes
3 Source: Gartner Group estimate of connected devices by category.
Forecast Volume of Connected Devices to 2018 Millions of Devices
Valu
e Ax
is
0
7,500
15,000
22,500
30,000
2016 2017 2018 2019 2020
AutomotiveConsumersGeneral BusinessVertical Business
Page
With every order of magnitude reduction in cost comes an order of magnitude or greater increase in adoption
4
Typcal Platform Cost At Introduction, US$, Log Scale
$1
$1,000
$1,000,000
Mainframe Servers PC Phone Wearables
Estimated Device Installed Base, By Type, Number of Devices
1
100
10,000
1,000,000
100,000,000
10,000,000,000
Mainframe Servers PC Phone Wearables
Page
And these devices are getting very up close and personal with all of us
5
Sensoria Smart SockOmSignal Smart ShirtWrist Bands Galore BSX Insight
Page
What’s fueling this massive growth curve?
6
Technological Change
Business Model Envy
New Market Opportunities
Wishful Thinking
Page
Powerful software and cheap sensors are increasingly competitive with precision sensors & skilled interpretation
7
Intel Basis Peak
• Cardio activity • Total calories • Heart rate
Cheap Sensors Are Everywhere
• LEDs & Image Sensors for O2 Sat • 3 Axis Accelerometers • MEMS Microphones & Speakers
Atlas Wristband
• Form & intensity • Strength training • Heart rate & calories
Page
Powerful computers are now cheaper than dumb ones.
8
At higher end of the market, this shift has already started:
These high powered SOC chips can do far far more than their basic embedded tasks
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
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
Page
New technology architectures mean that powerful cloud services have a marginal cost of zero
9
Traditional cloud services models are built on centralized services.
Distributed systems will harness the vast computing power already out there.
Page
Annuity, service & software business models are (deceptively) attractive to hardware manufacturers
10
$0
$17,500
$35,000
$52,500
$70,000
Whi
rlpoo
Elec
trolu
x
Bosc
h
Nok
ia
Sony LG
Electronics companies are bigger than home appliance makers…2012 Revenue for Major Electronics & Appliance Companies in US$ MM
Detergent and cleaning supplies companies are the most profitable2012 Operating Profit Margin for Major Detergent & Cleaning Supplies Companies
-10%
50%
Clo
rox
P&G
Uni
leve
r
Appliance makers are significantly more profitable2012 Operating Profit Margin for Major Electronics & Appliance Companies in Percent
-10%
50%
Whi
rlpoo
l
Elec
trolu
x
Bosc
h
Nok
ia
Sony LG
Page
Clearly, we’re all in the wrong line of business
11
Organic Soap$16/Bottle
Delicate Detergent$10/Bottle
Cascade Dish Cleaner$20/Monthly Supply
Tide Laundry Pods$20/Monthly Supply
Typical gross margins for cleaning products: >50%
Page
The lure of new markets is most powerful of all, of which three seem the most compelling
12
The Quantified Self The Smart Home The Economy of Things
Page
It’s too bad there’s no evidence that wearables make much of a difference, at least in the fitness department
14
Wearables dirty secret: 50% Lose Interest- Tech Republic, February 2014
My fitness band is making me fat: Users complain of weight gain with trackers
- USA Today, July 2014
Fitness trackers are long on hype, short on credibility.- Wired Magazine, January 2013
Fitness Trackers Only Help Rich People Get Thinner- The Atlantic, January 2015
Page
Most the market for wearables is driven by information seekers rather than the most highly motivated
15 Source; IBM Institute for Business Value, The Future of Connected Health Device,s, 2013
Motivated Healthy
Chronically MonitoredInformation Seekers
Page
Interventions that work in clinical environments don’t seem to work with consumers
16
Less Effective With ConsumersWork In A Clinical Environment
Page
All of that may be about to change: the era of A/B testing is about go from the web shopping cart to your underwear
17
A B
Google Fit HealthKit ResearchKit
Page
With more than a million in estimated pre-sale, the Apple Watch is kick-starting a new era of wearables research
18
Unprecedented user volume.
Apps & Development Tools
Openness for research and analytics
Integration across multiple devices
Page
The second big market calling is the Smart Home. Long promised, and never delivered, it’s getting smarter all the time
19
Direct Control
Z-wave Hub
Efficiency
Nest Thermostat
Well-Being
Misfit Bolt
Page
The biggest market of all is the market for smart, digital assets. The Internet of Things will digitize the physical world
20
Digital ContentFind It
Consume It
Pay For It
Digital Content
Page
The biggest market of all is the market for smart, digital assets. The Internet of Things will digitize the physical world
21
Physical WorldSearch
Utilize
Monetize
Physical World
Page 22
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.
Sun Tzu
Page
Wishful thinking seems to be the foundation for many business models and forays into connected services
25
Device Revenue
Services Revenue
Customer Analytics
VS
Top Concerns for Wearables Users
Data Security
Data Sharing
Data Portability
Mobile Access
0% 20% 40% 60% 80%
34%
59%
63%
77%
Source; IBM Institute for Business Value, The Future of Connected Health Device,s, 2013
Page
Software & Services markets aren’t universally profitable.
27
Where The Money Goes: Online Media Services for a $1 Music Track or App
10%
5%
15%
70%Artist
Transaction Processing
Data Center & Delivery
Everything Else
Page
Five battlegrounds where companies in the wearables space can distinguish themselves and make a difference
29
Sensors Analytics Integration Business Model User Experience
Page
Integration
32
• No single source of truth • No single source of data • No possibility to live in a
walled garden
Openness to integration may outweigh individual
strengths
Page
Business Model
33
• Don’t defer profitability • Leverage sustainable cost
models • Be wary of “two-sided”
business models
Page
User Experience As A Science
34
A/B Testing Methods
Massive Data Sets
Lasting Behavioral Change