What is Google up to?

June 24, 2014

dropcamMergers and acquisitions indicate rapidly growing markets ahead. Google made a 3.2B$ acquisition of Nest in January. Now they just followed on with an acquisition of the Wi-Fi surveillance camera maker Dropcam for 555M$. Thermostats, smoke alarms and cameras – what is Googles plan? I think it is the homes and maybe offices they are after. There are many thermostats, smoke alarms and smart cameras available but Nest and Dropcam definitely comes with a cool design which should at least bring home healthier margins. People love nice products! Google has always been interested in Wi-Fi and it’s not a wild bet that there will be Wi-Fi in homes and offices. But this can’t be enough, they must be going after a service model with recurring revenues and collecting data from these devices to store, manage, analyze and sell. I have always claimed that “data is the gold of M2M” and I am confident that Google shares that view.

Provided I’m right, I still questions that idea. Even if Google spend another couple of B$ to buy companies with cool things (Sonos could be a good target) they will never get market share over maybe 5-10% and scattered around. I understand that they could sell the information back to the users of these devices but that seems to be a difficult path to get the money back. And if they try to sell the data elsewhere I would believe the owners of the devices and policymakers would have a view on that. But Google knows all that. The recurring revenues are obviously attractive but it feels questionable to pay this much to get there.

On top of all I believe their will have to be at least three separate wireless networks in homes: an unmanaged Wi-Fi with good performance but only best effort services, a really secure fully managed network for security related applications like door locks, surveillance and medical monitoring, and maybe even a third managed low bandwidth network for connecting things like fridges, coffee machines, etc. And even worse, we will see a mix of WAN and LAN technologies being used as well. I simply don’t see how one can deliver sensible services like surveillance or smoke detection over an unmanaged best effort Wi-Fi network. Successful companies with such services like Verisure today typically manage their own network.

So I am probably wrong. Goggle sees something I don’t. And they also understand the down-side of connected hardware since Nest just had to recall 440.000 smoke alarms due to a potential risk that they didn’t alarm immediately. But I am happy for their acquisitions since it stimulates entrepreneurs, customers and other companies who consider playing a sincere role in building the Internet of Everything.


Let’s face the M2M security challenges

April 13, 2013

hackersInitially technical innovators focus all they have on making it do whatever they want their innovation to do. Shortly after the breaking news about their brand new product, solution or service we use to receive the follow-on news about problems with things like security, health impact, integrity or fair trade. The scope of the problems obviously relates to what the new thing actually is.

Lets face it, it has always been like this. Telephone systems, microwave ovens, TV set-top boxes, ATM:s, door locks, PCs and Wi-Fi networks are all examples of things that quite easily were possible to manipulate, at least initially. But when we connected people and businesses to the Internet the magnitude of the problem increased many times. Having almost everything using the same communication protocols and even the same network gained us a lot of efficiency but also raised the security bets drastically. Most attacks are not reported publicly but the ones we hear about are serious enough. Fire Eye claims one security attack to enterprises every third second, based on analysis of information on more than 89 million security related attacks reported. Some specific examples since last summer, picked up from Network World: 450.000 stolen passwords from Yahoo, 5,8 million passwords from LinkedIn, 1,5 million from eHarmony, 8 million online credentials from Gamigo and about 3.6 million Social Security numbers and 387,000 credit and debit card numbers from South Carolina. And we all remember the series of password thefts at Sony some two years ago. We’re already at the point where this belongs to the daily news feed and is business as usual.

Now we are connecting also things to the Internet and we will inevitably enter a new era of security and integrity issues, yet on another scale. Imagine hackers manipulating traffic lights, road signs, railroad control systems, power grids, nuclear plants, TV broadcasts, elections, pacemakers, airplanes, stock exchanges or hospitals. Media is quite frequently presenting examples along those lines and even if it is hard to differ between urban legends and real life cases it is safe to say that security will be a very important part of the M2M industry.

Recent examples from media include the Techspot.com story about a security consultant and pilot who claims he can hijack a commercial airplane remotely with his Android app, a story about a hacked pacemaker in the US where almost five million pacemakers and implantable defibrillators have been sold the last five years and several stories about hacked cars including the most recent research from Rutger University and University of South Carolina where they manipulated cars in motion via the TPMS system. At the Hack in the Box conference in Amsterdam the other day electrical vehicle charging stations were identified as potential targets for hackers to cripple parts of the electricity grid.

If the issues of security, safety and integrity aren’t taken seriously by the industry they will slow down or even prevent deployment of M2M solutions. Since perception is reality we need to go beyond just fixing the issue – we also have to make people believe it is taken care of seriously.

Inspiring example: The thermostat Jobs would have loved

February 13, 2013

nest tstatThe power of M2M is the ability to enable drastic changes in an industry. To do things differently. To change the game. Like in the early days of Internet we still focus on connecting things. That is good and makes us faster, cheaper, greener, etc. But it doesn’t change the game. It is when the technology is used to completely re-think and re-design something the power is released.

A wonderful example is thermostats. The “father of the iPod”, Tony Fadell, created the “learning thermostat” after having stumbled over expensive, dumb and ugly thermostats for the green house he was building. He created the gorgeously designed Nest which has been shipping for more than a year now. It is said to be compatible with 95% of the American and Canadian low voltage residential heating and cooling market by now. This little sexy device can remove some 20% of the heating and cooling energy bill and cost $250 US. Nest is now shipping 40-50K units per months and investors continue betting on Nest which now is said to be valued to $800 million US.

People normally don’t bother about thermostats but this easy to install and use, wonderfully designed and intelligent darling that saves people money has become a best-seller at Amazon, at Lowe’s and on Apple’s online store. It uses a number of sensors to understand the life-style of the household and adjusts heating and cooling in an optimal way. Beyond the information on the device itself it communicates with people’s smartphones and pads.

Innovative new approaches in established industries are always challenged by established players and Nest is already involved in legal battles. But I think we only have seen the beginning of Nest. Now they address consumers right away, seducing them with design and a good cause. But the device is Wi-Fi and ZigBee enabled thus ready for the Utilities and the Smart Grids. Is there a reason for a Utility to install another device in a home where a Nest already is in place?

We need a rock solid M2M service layer

February 18, 2012

The 10 Million dollar M2M question is how to support thousands of business processes in tens of thousands of businesses in an efficient and scalable way. Beecham Research’s M2M Sector Map (see Interesting reading) makes the point of the fragmented and complex market very well. Mobile operators typically have few services with very many users while most potential users of M2M will have industry specific or even company specific needs in relatively small numbers. This is why most connected devices in cellular networks today are terminals in large volumes (typically electricity meters or eReaders) with small ARPU but also little work required by the operator per terminal deployed. The issue with this is that the electricity meters are rolled out primarily due to political decisions and one can argue that eReaders, iPads, etc are just big mobile phones and not really M2M solutions.

The other type of deployments today are primarily those where the value gained is big enough to pay for integration, software development, customization, etc. And these are “real” M2M solutions leveraging the value of connecting things and putting computing on top.

I come to think of the “bankruptcy gap” in between the only two viable business models over time: low price/low cost/high volumes and high price/great perceived value/customization. In the bankruptcy gap you will find average products with average prices. There is an obvious risk today to address the bulk of the very fragmented M2M market: quite an effort to provide what the customer want and price sensitiveness due to not big or clear enough benefits is a scary combination.

This looks similar to the bankruptcy gap but with one big difference: the driver putting businesses across industries into the bankruptcy gap is commoditization of products and services. But in the case of M2M we are in the early days! How can this be?

I think the situation is dangerous since it threatens to once again leave us with a great idea, a lot of energy and efforts, poor results and many investments and opportunities wasted. To me the key reasons why we face an artificial bankruptcy gap in M2M now are:

– Parts of the solutions, like plain vanilla 2G data subscriptions, are more or less commodities today. Other connectivity for M2M like PLC, Satellite, Wi-Fi, Rfid, NFC and PSTN are not commoditized and combinations of them are complex to deal with.

– Today it is too much effort to develop, integrate and support the M2M applications. Robust, efficient, large scale service delivery platforms are needed supporting standardized complete development stacks, different networks and numerous APIs.

Good news is that there is progress in these areas. Most mobile operators have or will deploy Service Enablement Services (SES) taking care of horizontal requirements on top of the connectivity. Module and equipment vendors, independent start-ups and others are working on similar often cloud based offerings and some of them support combinations of different connectivity technologies. Many standards development organizations have recognized the need for a common cost-efficient M2M service layer that can be embedded in different hardware and software to provide robust connectivity between terminals and the application servers. The ITU Focus Group on Machine-to-Machine Service Layer, initially focused on e-health, announced January 16 is a good example.

The best way to avoid another M2M flop is to ensure strong collaboration in establishing a rock solid common M2M service layer with standardized protocols and APIs and to always start working on real customer problems to avoid brilliant answers to questions we don’t know.

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