Internet has enabled a new type of business opportunity where an internet based “business system” is used to collect, organise, manage and market a lot of small and local businesses or individuals, across boarders. Popular examples today are taxi, food delivery and renting of private homes. This is obviously a very efficient way of re-organising a business (think replacing hundreds, thousands or millions of business systems and people) and it provides the users with some really neat new features (think use the same taxi app wherever you go, get rated drivers and pay automatically from your credit card). It also provides the people who actually deliver the services advantages (think efficient marketing, rated customers and maybe low barriers to start their business). The most common issue raised by Uber drivers and hotels that I have been talking to lately is that the commission is high (maybe 20-25%). No wonder that investors are working hard to figure out who the winners will be in different market segments.
The hotel booking market is another one where the internet giants have added great value and taken over huge parts of the global market. I use Hotels.com and others might use Booking, Momondo, Trivago, Expedia or Agoda to name some. But few are aware that almost all are owned by Expedia or Priceline (Expedia has spun out TripAdvisor to Nasdaq so let’s leave them out for now) who together turn over some $20B with some 40.000 employees. Expedia and Priceline control over 90% of external hotel bookings in Sweden (Sydsvenskan Oct 2017). The combination of price pressure and high commissions makes life difficult for hotel owners and many fear the next recession.
I’m missing a sober debate about these types of businesses because it is easy to see potential problems around the corner. Very successful internet services tend to have very little competition when market dominance is created, and economies of scale and strong internal currency based on their stock market valuation makes it almost impossible to build an alternative. Monopolies or oligopolies and market economy don’t go hand in hand, which is why this is serious. Another area to consider is how these businesses impact the local society. Just because we can create an internet “business system” for renting out apartments globally, it might be that it goes against laws, culture and objectives in a local community. On that note I’ve come across neighbours who find the building they own together almost turned into a hotel, parts of cities where schools, shops and such services have closed since too few locals remain, tax related issues and sometimes very low salaries and poor working conditions. When Uber Pop was shut down in Sweden 2016 at least 60 drivers were reported convicted for illegal taxi driving (I’ve heard some lost their driving licenses) and I hope that Uber helped them in a similar way a local employer would have had to do. A journalist from Breakit worked two weeks in May 2017 for Uber Eats in Sweden and after 18 hours of bicycling and 172 km on his own bike he made around $5/hour before tax (the compensation has been changed after the publicity). Does these internet businesses have the same objectives as we have locally when it comes to sustainability, work ethics, city planning, social responsibility, equality, privacy, tax and so on? Our national tax systems are not ready for global internet companies (Sweden is supposed to lose hundreds of millions of $ from them) and the international bodies including EU have not sorted this either.
Please don’t get me wrong! I love Uber, Hotels and Airbnb and use them frequently especially when travelling between countries. And I love technology driven innovation. But I do believe we have to take control over the society we live in, ask questions, discuss and ensure it becomes and stay what we want it to be. So even if we can, maybe we shouldn’t do everything technology allows us to do.
Even if we can, maybe we shouldn’t…
February 17, 2018
Leave a Comment » | 
Business Models, Consumer market | 
Permalink
Posted by magnusmelander
Digital Transformation, not Digitalisation, is what’s new
July 7, 2017
Digitalisation is frequently used as the name of the game today. But digitalisation, i.e. conversation from analog to digital representation of information, started some 60 years ago and has been going on ever since. When a process is fully digitalised, from end to end, the process will be much more efficient than before. But most processes today are only partially digitalised which is like building a bridge and leve some meters here and there. Let’s take the example of a smart electricity meter, where the collection of usage data is digitalised and hopefully the receiving systems at the energy company. But then the processed details often are put on paper and sent to the customer who hopefully pays in a digital fashion or god forbid calls customer service.
It is IoT that adds the last meters of the digital bridge. By connecting the real world to the Internet where we already have people and organisations we can start complete the digitalisation of our processes – a sensor that tells when a door is open, where a car is located, when it’s time to repair a fridge or when the level of carbon dioxide is too high. And this is exactly what the more progressive organisations are working on right now. And since organisations and processes are quite unique there are a huge amount of opportunities for companies to develop algorithms to support specific processes. I already have many members in my alliance for Swedish IoT startups working with machine learning including Ekkono, Watty, Aifloo, CombiQ, BellPal and Imagimob.
The effects of Digital Transformation will be massive in all industries and large-scale redundancy will definitely hit white-collar employees as organisations get their act together. I miss awareness and a serious debate about this in Sweden since it limits our chances to come out of this transition strong, the longer we wait to address the challenge.
Leave a Comment » | AI, Business Models, IoT, M2M | Tagged: Digital Transformation, digitalisation, Digitalization, Machine Learning | Permalink
Posted by magnusmelander
Respect!
December 10, 2016
Technology driven innovation continues to challenge and change our world. Internet is the single most important enabler and the last big thing is the smart phone, which gave us new ways of using the Internet including apps. The iPhone is about 10 years old now and it’s time for the next big thing: connecting things to Internet, where we already have people, organisations and services. This will once again change lives, organisations, industries, companies, cities and governments in the same way and magnitude that the arrival of Internet made last time. But this time it will happen much faster since most of the bits and pieces already are in place. We call this IoT right now but soon it will just be Internet again.
I always think that everything is a science. Regardless of what you look into in more details, it proves to be very complicated. I love the massive opportunities Internet brought and believe these will be even bigger now when we add things to it. But Internet has created a trend which I dislike: by leaving out the physical part of the equation (like running a taxi business without taxis or hotel business without hotels) we are dependent on others doing the hard “physical” part which is connected to places, people, boarders, re-cycling, communities, manufacturing etc. Not that there is anything wrong with entrepreneurs executing on these opportunities, not at all, but we all have to think a little further before celebrating or investing in these initiatives. I see a whole range of challenges, including the vulnerability of these businesses when it comes to policymakers and not the least when the incentives to provide the underlying activities or assets disappear. The Internet part alone also tends to become global leaving only one or few companies in the market (Facebook, Twitter, Google…). Put differently, we simply have to think about the type of society we want to live in.
With Internet of Things this becomes quite obvious. Data is the gold of IoT and a lot of companies are focusing on building business on that data. But without anyone connecting the things, the T in IoT, there will be no data. And when companies make the effort, I don’t think it is obvious that they will share all their gold with anyone anyway. At least not for free. On top of that I’m convinced human beings as well as organisations will become much more cautious with their data and how it is shared and used. Security and privacy are the two big challenges to IoT!
Another dimension of this is that the opportunity to disrupt using Internet has made a lot of people completely lose the respect for the underlying assets or activities. A good example of that is all IT/Internet companies announcing plans to build a car. There is nothing wrong with that, if you have funds to buy all skills and other assets it takes. But I have still to see a car manufacturer announcing that they will start make fridges, shoes, smartphones or Internet search engines. Maybe traditional companies have more respect for the complexity of other industries.
I believe we all would benefit from a little bit more respect for how difficult it actually is to do different things. A hackathon with youngsters to innovate healthcare over a weekend is great education and fun but makes no sense from a healthcare point of view. An app to keep track on parking spaces is easy to do compared to building the infrastructure to provide all the information needed. The how of IoT is about collaboration and eco-systems, where all relevant players have an important role bringing their experience and know-how to the solution.
Leave a Comment » | Business Models, Eco Systems, IoT, M2M, Privacy, Safety and Security | Tagged: car, disruption, Hackathon, iPhone, Respect | Permalink
Posted by magnusmelander
Ecosystems is the new HOW in IoT
November 13, 2016
All IoT solutions span at least three industries – collection of data (sensors, gateways, datacom, telecom, etc), managing data (cleaning, matching, analysing, combining, etc), distributing information (IoT value is created when a piece of wanted data is delivered to the right place at the right time, i.e. apps, signs, ERP systems, warning lamps, etc). In the early days of IoT clever people were able to put together all these things to solve a specific problem for a customer or even a number of customers in similar situation. The problem is that any single piece in an IoT solution is quite complicated, so in order to make a really good solution all bits and pieces need to be top-notch. If you need a CO2 sensor you will have to turn to someone who offers the right functionality, quality and price for you solution, at any given time. If you need to have the wanted information from your solution delivered in an app, you need to provide your customer with a top notch app with great UX at any given time. If not your entire solution will look bad in the eyes of the users, even if it’s actually the best one in the market.
1 Comment | Business Models, Eco Systems, IoE, IoT, M2M | Tagged: alliances, Eco-system, industry groups, standard bodies | Permalink
Posted by magnusmelander
Small and big companies must learn how to work together
July 22, 2016
The pace of technological development remains vivid and it takes great people and sharp focus to understand what to use it for and how. Like if this wasn’t challenging enough, a new generation of internet is rapidly emerging where things are added to the people and organisations already connected. The three key deliverables from IoT are efficiency, security and sustainability and this alone will make huge impact on business and society. Almost everything will be affected why it’s vital to start work on risks and opportunities in all fields now. The only big difference from when Internet arrived is that ignorance will not be an acceptable excuse this time.
Imagine combining 3D scanning, Internet, data analytics, design software and 3D printing. What would that do to fashion, retail, healthcare and distribution? Or heat cameras, drones, Internet, cloud computing and data analytics. What could that do to fire fighting, border control, building management and search for lost people.
We are facing huge change in the magnitude of when we went from farming to industry and it’s really time to start working on all the opportunities and issues.
Most new solutions involve connected hardware which makes life somewhat more difficult. Hardware adds complexity and time, requires financing, impact the environment directly and increase financial risks. Large scale manufacturing has moved to developing countries and with that also experience and skills. It’s quite easy to see the value added by data from the connected things but unless someone connect them there will be no data. We simply will have to cope with the fact that things will stay in the physical world even if the virtual world is much easier and faster to work with. One important implication of that is that innovative and successful startups with hardware as part of their solution hardly can scale up to become global since it will take too long time. This is why we have to learn how to transform innovation in sharp startups to value creation in large international companies.
We started the hardware hub THINGS downtown Stockholm in March 2015 to learn how to make this transformation. We have some 30 carefully selected startups and Sweden’s biggest maker organisation in our 2000 m2 building at the campus of KTH Royal Institute of Technology. And we have a handful of export companies including ABB, Assa Abloy, NCC and Husqvarna as main partners. Since hardware is too broad we focus on themes agreed with our partners and these are IoT, sensors, wearables, 3D scanning/printing, automation and robotics. We have been practicing for over a year now with all types of meetings, events and workshops with our industry partners and other enterprises including Deutsche Telekom, Daimler, l’Oreal, Airbus and Nike. By now we have learnt enough to scale up our efforts and involve more startups and enterprises. The current startup community involved includes some 150 startups now and in June we launched THINGS Enterprise Circle to build a community of Swedish and international enterprises who want us to help start or accelerate their technology innovation and digitalisation efforts.
At this point it’s clear to me that efforts to learn how to transform innovation from small to large companies have to be based on processes not one-off events, absolutely common interest (i.e. IoT and hardware are far too generic but battery technology and energy harvesting or wearables are ok) and really careful selection of companies and people for workshops. The purpose of a workshop is to inspire and bring new ideas and approaches to the enterprise and the aim is to have the enterprise to buy projects and prototypes from the startups to get the collaboration going.
Small and large companies who learn how to work together in an efficient and mutually beneficial manner will be the winners in the networked society. We are determined to figure out how to make this happen at THINGS and welcome enterprises and startups who want to be part of our journey.
Leave a Comment » | Business Models, IoT, M2M, Safety and Security, Things | Tagged: 3D print, 3D scan, Cloud computing, data analytics, digitalisation, drones, innovation, IoT, networked society | Permalink
Posted by magnusmelander
A great way for IoT companies to cross the chasm
July 19, 2016
Crossing the chasm is hard for start-ups which Geoffrey A. Moore explained so well already 1991. It is also a well-known fact that going from a consulting business model to a product model is really difficult. There are practical challenges like cash flow sales and marketing but the mind-set related ones are the most difficult ones. In essence a consulting sales person always tries to sell at least what a customer is asking for while a product sales person have to manage customer expectations to release dates, price and features. Still companies are trying since the ability to scale faster and more profitable is seducing and the ones who succeed can end up in a much more interesting situation. No risk no glory! There are also examples of bets where companies separate the platform they use as consultants from the consulting and SAP is a great example of that.
In the IoT space I believe we have an additional strong argument for going from consulting to product. All IoT solutions include hardware, connectivity, data collection, data analysis and distribution of information. Customers want to leverage these systems to improve their business why most IoT solutions are customer, application or industry specific. The traditional way to develop an IoT company is to “get hold of” a platform to develop customer applications on. So most IoT companies come with a technical asset which they try to turn into a solution for a specific customer need. The challenge is to learn enough about an industry or application to make customers impressed and eager to buy. Wherever I go today I meet IoT startups with solid but quite generic platforms and some customers, often in different industries to make it even more complicated. They might have invested a couple of million dollars to develop and maintain the platform most often using external money. The combination of IoT rapidly becoming an international business and quite local and not really specialised IoT platform companies will unfortunately create problems in many IoT startups.
I have now seen a couple of IoT startups successfully going from consulting to product and believe it is a great way to go. By taking the de-tour as consultants they can finance their company themselves as long as they need. In the consulting stage they might test different potential markets for their product, they build relationships with customers, partners and potential recruits in the target market and they can develop their product back home in stealth mode if they like.
It is still challenging to go from consulting to product like this but if this is the plan already from start one can mitigate risks by hiring product people and structure the company as a product company. And again, no risk no glory!
Leave a Comment » | Business Models, IoT, M2M | Tagged: chasm, consulting, crossing chasm, iof platform, platform, product, SAP | Permalink
Posted by magnusmelander
The perfect role for operators in IoT?
July 17, 2016
The telecom industry got a head start in the early days of IoT aka M2M. Ericsson took the lead with the 50B connected devices mantra which translated well into an obvious role for huge operators with millions of connected users and massive investments in wireless networks. And it went without saying that the obvious providers of technology and solutions would be the telecom vendors already in the family. This was a clever and well executed plan by primarily Ericsson since the operators were looking for the next massive growth opportunity after having connected most people and given them data buckets. Operators went for it with one primary caveat – we will not only provide connectivity.
Now, only few years later IoT has gone from a connectivity focused baby to a data centric young adult. IoT is only a new phase of Internet – we’re adding things to people and businesses already connected – which explains the speed of development. From a usage point of view, Internet including IoT and the enabled services and solutions will remain customer focused and very fragmented and the operators will continue working hard to figure out their role beyond connectivity.
Here’s what I would do. The two major challenges for IoT are security and privacy. The smaller one is security since we are used to repair and plug holes as we go, and since we tend to have a very short memory. But privacy is really challenging since nobody knows how the requirements will develop over time. When your data is out you can never get it back why any service will need a solid privacy architecture to cope with future requirements without having to rebuild from scratch. The user must own his or her data and decide who should get hold of it.
But privacy is not only a technical issue why we need trusted partners to help us manage our data. Today most of us trust serious banks to manage our financial data as an example. Our trusted partner needs big muscles to force and enforce proper agreements and obviously have to walk the talk themselves. Operators already manage a lot of our private data and provided they do that well, this is a great position to build the trusted partner role on. The trusted partner role can also be required to build and orchestrate a fair and robust sub-eco system in a specific market like smart homes or connected cars.
So why is privacy of importance anyway? Today most users of internet applications sign up without even reading the agreements. One often hear “I’ve nothing to hide” as the key argument to avoid the hassles of reading and thinking. But with today’s capabilities in data analytics, all digital traces and information we leave behind can quite easily be used to picture an individual, understand how a product is designed, see patterns, understand security procedures and arrangements and so on. In the wrong hands this can be really bad and this type of information is already very useful for burglars to know when people are away and industrial espionage for example. A small example of what could, technically, be in use today is recruiters knowing without asking that a female candidate is pregnant, don’t exercise or have a heart problem.
I am absolutely convinced neither consumers nor policymakers will let this development continue as today. And this is where I believe operators with a relevant brand can find their role in IoT beyond connectivity. A role which will be increasingly important and valuable as far out as I can see. Two good examples of operators I see moving in this direction today are Telefonica and Telia Company (see FAQ 6 and 7).
Leave a Comment » | Business Models, IoT, M2M, Operators, Privacy, Safety and Security, User Interaction | Tagged: agreements, consumers, Ericsson, imse, policymakers, security, trust, trusted partner | Permalink
Posted by magnusmelander
Trusted partners are key to IoT
February 7, 2016
IoT will make major impact on how we do things and what can be done, across industries and borders. Adding things to the Internet creates a massive opportunity in pair with what Internet have done to us to date. The major challenges are as always to be found in organisations and processes, rarely in the technology as such. However, if we cut the cake differently, and look at it from people making bets on creating and implementing IoT products and services, I would argue that the two biggest challenges are security and privacy. And security is the smaller of these two big ones! We have always had security challenges, but they can be mitigated and fixed on the go. Fixing bugs and problems are part of the development so to speak. If someone finds a back-door and steal our jewels, we will install a lock on the door and hope people will forget it, if you see what I mean. The vendor of the door takes a hit but people have a tendency to forget quite rapidly.
But with privacy it’s a matter of architecture and trusted partners. If data that at some point in the future is considered sensitive is “out there”, it’s too late to take it back. In the digital world nobody knows how many copies there are, who has them, what they use it for, and so on. Most countries have laws and policies for this already, sure, but the first issue is that policymakers probably will shape up rules and policies down the road. Nobody will be badly punished for data that is made available before the changes, obviously, but it might take fundamental changes of systems and services to meet the new policies if the architecture isn’t there already. The second, and much more difficult challenge is that people themselves might change their views over time on what is acceptable and not. Such changed requirements are neither planned nor managed within countries or companies. They might come and go, spread across by social media and gather less or many people behind. And policy makers are always influenced by public trends, media etc. so these “unmanaged public policies” can force rapid legal changes as well.
Leave a Comment » | Business Models, IoT, M2M, Privacy, Safety and Security | Tagged: IoT, mobile operator, Privacy, security, trusted partner | Permalink
Posted by magnusmelander
Inspiring examples: managing buildings with drones
November 5, 2015
Swedish real estate giant Riksbyggen develops and maintains buildings across the country since 75 years. Some 350.000 people live in buildings managed by Riksbyggen. Maintenance of buildings is expensive, dangerous and surrounded by a lot of regulations and policies. Just imagine climbing snow-covered rooftops in the cold and dark Swedish winter. Riksbyggen have an innovative and business focused CIO who started study the development of drones for building maintenance 2008 to try save money, time, lives and the planet. Early this year they tried the DJI Phantom med 4K-camera and the concept worked. An inspection takes some 10 minutes instead of two hours and the result is digitally documented in 4K, ready to show the customer and to be saved for planning of future maintenance etc. Just to check the snow indicators on the roofs takes a couple of minutes for a whole block instead of having to climb up on each roof to take a look. With an IR camera mounted on the drone additional checks can be done. Today Riksbyggen has 9 trained operators and are currently running a pilot with a couple of customers. Imagine how many similar applications there are for drones to revolutionise!
Leave a Comment » | Business Models, Inspiring example, IoE, Safety and Security | Tagged: 4K, dji phantom, drone, Riksbyggen | Permalink
Posted by magnusmelander
What does it take?
October 23, 2015IoT, IoE, M2M or whatever we call it has three primary deliverables: sustainability, security and efficiency. Each of these are massively important in all organisations. And like if that wasn’t enough, they are almost always interlinked – a more secure solution is often more efficient and saves a little of our planet for example. So what’s stopping all of us from running after these benefits? It actually takes quite a lot to get there but done correctly it’s almost always worth the effort. A simplistic description of what it takes could look like this:
Prototyping with user testing is probably the single most important part since without a clear view of exactly what to do, what users want and so on, the projects most often become very expensive failures. And up until recently it was very complicated and expensive to make working hardware prototypes. But today we have a range of affordable fantastic devices for prototyping like iBeacons and TI sensortags. And together with developer tools like Evothings Studio a working prototype is only hours or maybe a day or two away from real life tests on mobiles and pads. Further more, it is too abstract for normal human beings to visualise what adding IoT to something will allow us to do. We need to try it out to understand.It is my experience that most organisations are stumbling on other things than technology when trying to figure out how to utilise IoT in their business. At the same time adding IoT for the right things and at the right time will be game changers across industries. The countries who can enable citizens to do a fair share of what the healthcare system is doing for them today (like the banks did) will make massive gains in efficiency. The manufacturer of fridges who figure out how to provide them as a service to their customers will change the game, increase predictability and help save the planet. Avanti!
None of these things are even close to rocket science, most of them have been done many times before and very few have anything to do with technology in general or IoT in specific. The thing that we are less used to is to actually connect the things physically. It’s about hardware and hardware is challenging by definition – ask the next VC you come across. Design for manufacturing, mechanics, design, labour cost, DOA, electronics, material, tools, power, freight, etc are typical things we need to be on top of. And that require quite many people to be involved.
PS. Don’t forget that the key difference between when we connected people and organisations to the Internet and now when we connect things, is that ignorance will not be an acceptable excuse.
Leave a Comment » | Business Models, User Interaction | Tagged: iBeacon, prototyping, TI sensortag | Permalink
Posted by magnusmelander
connectcompute 