More Related Content Similar to Semicon west monetizing the internet of things (20) More from Paul Brody (20) Semicon west monetizing the internet of things1. Monetizing The Internet Of Things:
A Convenient How Not To Guide
Paul R Brody
Prepared for Semicon West
July 2015
2. The future is already here,
it’s just not evenly distributed.
William Gibson
3. © 2015 Ernst & Young LLP Images creative commons, flickr
We started making devices digital because they’re cheaper
that way
VS
3
4. © 2015 Ernst & Young LLP Image from technologizer.com, Panasonic
The result was a world of smart things that weren’t
especially clever at all
4
5. © 2015 Ernst & Young LLP
Things have kept getting smarter, but we don’t seem to be
very happy with how they’re turning out.
5
➡ Lots of smart appliances
now available
➡ Very few stand-out
success stories
6. © 2015 Ernst & Young LLP
Three substantial problems have delayed the arrival of a
more useful Internet of Things
6
Failing the jobs to be done test
No meaningful ROI
No credible level of security or privacy
7. © 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
7
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
8. © 2015 Ernst & Young LLP
ROI is important, and costs are too high while returns are
far too low to justify replacing existing capital equipment
8
Case Examples: ROI on Smart Sensor Use Cases
$0
$75
$150
$225
$300
Maintenance Energy
Tag Cost
Return
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
9. © 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
9
•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.
11. © 2015 Ernst & Young LLP
Two technological revolutions are emerging that will
reshape how we design and build smart devices
11
The Block Chain (underlying
technology for BitCoin):
Cheap system-on-chip computers
designed for Android Phones:
12. © 2015 Ernst & Young LLP
The first transformation in computing involves hardware.
12
Embedded
Computing on
Devices
Modern Era
General Purpose
Computing
Everywhere
Post-Modern Era
13. © 2015 Ernst & Young LLP
It’s now cheaper to make things smart than it is to make
them stupid.
13
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 Cost
Average Embedded Cost
Average 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
14. © 2015 Ernst & Young LLP
By 2020, billions of ordinary devices will in fact have far
more computing power on them than is actually necessary
14
Global Installed Base of Computing Devices
Millions of Units in 2015
1
10
100
1,000
10,000
AWS Servers PCs SmartPhones
2,222
890
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
900
300300
40
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.
15. © 2015 Ernst & Young LLP
Alongside the revolution in hardware, a revolution in
software is brewing at the same time: BitCoin
15
Secure
Transparent
Open
16. © 2015 Ernst & Young LLP
BitCoin is the re-invention of the most basic workload in the
world of modern computing: transaction processing.
16
The Block Chain
CICS in 1966
17. © 2015 Ernst & Young LLP
As a transaction processing engines go, the BlockChain is a
terrible design and horribly inefficient.
17
Slow Redundant Wasteful
18. © 2015 Ernst & Young LLP
Why use the Block Chain? In a word: trust.
You don’t need it.
18
19. © 2015 Ernst & Young LLP
The core functionality of BitCoin, known as the BlockChain
is now being re-purposed into all kinds of applications.
19
Application Development Environments
Marketplace Infrastructure
Systems of Record
Distributed Social Networks
20. © 2015 Ernst & Young LLP
Modern Era
At the intersection of these two trends is a new world order.
20
Expensive
Computing
Post-Modern Era
Free
Computing
High Trust
Environment
Centralized
Internet
Low Trust
Environment
Distributed
Internet
21. © 2015 Ernst & Young LLP
There are two key take-aways from the intersection of these
technologies
21
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
22. © 2015 Ernst & Young LLP
Smart devices will connect assets to marketplaces and help
us make better use of what we’ve already got.
22
Typical Productive Asset Utilization Levels
0%
25%
50%
75%
100%
Law
nm
ow
er
D
ishw
asher
C
ar
O
ffice
Taxi
Airplane
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.
24. © 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
25. © 2015 Ernst & Young LLP
The rise of IoT will very likely upset the balance in the
semiconductor industry
25
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.