Monetizing The Internet Of Things: A Convenient How Not To Guide
Paul R Brody Prepared for Semicon West July 2015
© 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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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
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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
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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
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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
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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.
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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:
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The first transformation in computing involves hardware.
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Embedded Computing on
Devices
Modern Era
General Purpose Computing Everywhere
Post-Modern Era
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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
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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.
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Alongside the revolution in hardware, a revolution in software is brewing at the same time: BitCoin
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Secure
Transparent
Open
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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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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
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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
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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
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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.
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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
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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.
@pbrody linkedin.com/in/pbrody [email protected]
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