Entitlement and Compliance Management

Car-as-a-Service – Part 1: Transformation of Business Models in the Automotive Industry

By Bashyam Anant

Google's driverless car, which was awarded a driving license in Nevada in May 2012, is a bellwether for the technology-driven transformation of the automobile industry.  Observers are dreaming up possibilities as exemplified by "if you give a car the abilities of race car drivers (instead of the average driver) and combine them with "conservative software" used for standard driving then you can develop a safer driving experience."  What if you were able to try out driverless features in your car for one month at no charge? If you liked it a lot, you could buy an annual subscription. When your subscription runs out, you could renew it through your smartphone. On a weekend, you might want to upgrade the driverless feature from "commuter style" to "race track style", and be driven at breakneck speeds on a racetrack.

Such possibilities are endless. At their core, they speak to the imminent transformation of business models in the automotive industry – from a business that is characterized by occasional vehicle sales today to the "car-as-a-service" future which creates an on-going relationship between auto manufacturers and consumers with recurring revenues from sales of apps and services. Note that Google's driverless features were retrofitted onto a Toyota Prius, and were enabled by a combination of hardware platform (e.g. laser radars), breakthrough software and Internet-enabled services, the essential ingredients of a "platform + apps + services" recipe driving the transformation of automotive manufacturers discussed below.

Until recently, comparing Apple to Ford would have been dismissed as a meaningless exercise. In this article's context, however, it serves as an indicator of the payoff that automotive manufacturers can expect should they succeed in replicating Apple's formula of "platform  + apps  + services"  exemplified by the iPhone platform + iPhone Apps  + iTunes content. The table below shows that Ford and Apple are roughly similar by revenue. But, Apple's market capitalization per dollar of revenue (3.1 in the table below) is 10 times that of Ford's.

 

The good news, though, is that these types of returns are very much within reach, and Ford, in particular, is already making progress in that direction.  Ford Sync is an early example of a next generation vehicle information and communications system – a connected, software-driven dashboard in simple terms. Ford offers Sync in four editions based on levels of features, bundled services and optional subscription plans as summarized below:

 

	Sync	Sync with Voice-Activated Navigation	Sync with MyFord	Sync with MyFord Touch
Handsfree calling	X	X	X	X
Entertainment
Voice-activated music search, Bluetooth audio streaming	X	X	X	X
Voice-activated radio tuning		X		X
HD Radio (pay per song)				X
Satellite radio (subscription)		X		X
Navigation	X	X	X	X
Subscription Services				X
411 business search, Personalized news, weather, sports, traffic alerts	X	X	X	X
Vehicle Health Report	X	X	X	X
Wi-Fi hotspot				X

 

Ford Sync illustrates several strategies to grow revenues from a "platform + apps + services" approach, covered in Part 2.

Next time: Car-as-a-Service – Part 2: Platform + Apps + Services = Strategies for Growing Revenue

Related articles

Consumerization of Industrial Technology

Google's Driverless Car | Shocking Effects & Information

Device Manufacturers: Adopt the Holy Trinity, Go Intelligent

By John Lipsey

The challenges facing device manufacturers are enormous: Increased competition from new players on the world stage have a commoditizing effect across the spectrum - from medical devices and telecommunications equipment to oil and gas machinery and building automation. Complex supply chains, devices becoming a commodity, and rising fuel and transportation prices are driving manufacturing costs up and margins down. And rapidly evolving markets and changing customer needs require a heightened flexibility and nimbleness that most old-line manufacturers simply don't have.

Flexera Software’s Vincent Smyth believes that “Going Intelligent” provides manufacturers with a solution – enabling them to regain their competitive footing, lower costs and more flexibly tailor their products to meet customer demands.  What’s the formula for going intelligent?  Intelligent Device = App-enabled Hardware + Flexible Licensing.

Read the full article Device Manufacturers: Adopt the Holy Trinity, Go Intelligent.

Consumerization of Industrial Technology

By Bashyam Anant

Consumerization of IT is a recent phenomenon where enterprise IT departments are beginning to allow employees to access corporate applications from personal devices such as iPhones and iPads. In similar spirit, we are beginning to see consumer devices, in particular, smartphones like the iPhone, transform the way industrial technology is deployed and used. In this post, we will disscuss examples from medical devices and point-of-sale systems that illustrate the trend and the issues they pose for incumbents and new entrants in these markets.

In the medical equipment business, startups like Alivecor and CellScope are transforming smartphones into mobile diagnostic tools. Alivecor's heart monitor, for example, consists of a sensor, an iPhone app and a cloud-based application. The sensor snaps on to an iPhone (watch demo) and is placed on the patient. It then transmits heart signals to the iPhone app, which then transmits the data to the cloud application for associating the reading with the patient's medical record, for analysis or for printing an ECG. At this time, the device is commercially available as a veterinary heart monitor, pending FDA approval for humans.

Figure 1: Alivecor iPhone App for Heart Monitoring

CellScope uses optical attachments to turn smartphones into "diagnostic-quality imaging systems for healthcare, consumer skincare and education". One of their apps is a clip-on otoscope which helps pediatricians or parents take pictures of a child's middle ear and store or share the pictures, enabling ear infections to be diagnosed and treated remotely, all by using just a smartphone with an optical attachment and an associated app.

Square has transformed point-of-sale systems by following a similar pattern. Square allows a business to accept credit card payments using a card reader that plugs into a smartphone's headphone jack. Square's android or iPhone app then transmits the payment to the business' cash register in the cloud for reconciliation and analysis.

Alivecor, CellScope and Square are disrupting incumbents in their markets by disaggregating the value of industrial equipment (e.g. ECG monitors or point of sale systems) into sensors (e.g. card reader or heart sensor), smartphones and software. Incumbents that sell proprietary hardware devices in these markets are at a cost disadvantage (since they have to produce hardware while new entrants require only a smartphone) and will also be perceived as locking customers into proprietary hardware.

Because the new entrants make money on software and/or transactions, they now have to worry about protecting their IP against software piracy, managing the software lifecycle associated with their apps (e.g. software delivery and software updates), managing customer software entitlements (since each customer might have different rights to the software) and tracking and charging for usage, if they make money on transactions. Read these related posts for information on these topics:

Intelligent Hardware Manufacturers That Successfully Release Their Inner Software

Software Defined Data Center – Step Towards Utility-Based Business Models

The Internet of Things and Machine-to-Machine are on the Horizon—Are you Ready?

Share your stories of industrial use cases being transformed by smartphones.

Age of Intelligent Machines – Enabling New Software Licensing and Usage Models

By Ripin Checker

On Tuesday, David Perlmutter, executive vice president, general manager of the Intel Architecture Group (IAG) and chief product officer of Intel Corporation shared this message at the Intel Developer Forum (IDF) 2012 with his keynote address, "Reinventing Computing – Collaborating to Shape the Future From Datacenter to Devices".  As I reflect back on his address, I think David was showcasing how Intel is transforming itself from a semiconductor/chip company to a platform company that works with its partners to provide the market with integrated hardware and software solutions.

The majority of the address was spent on identifying the different solution trends and how “Intel Inside” truly stands the test on this new industry journey.  For example, I was amazed to hear that the first smartphone based on Intel Atom architecture was launched by MegaFon. This signals a big transition for Intel from desktop/servers to intelligent connected devices.  And it also signals more collaboration between Intel and its partners. 

The support for partnerships was touched on in David’s keynote.  He recognized that Intel can’t move forward alone and that collaboration with partners is necessary.  Today, as devices become intelligent, there is a growing need to connect these devices to the cloud and provide a connectivity fabric for different applications to talk to each other…hence the growth of the machine-to-machine (M2M) or as some call it, the Internet of Things (IoT) market. This message was well-received by Flexera Software, since we are a member of Intel’s Intelligent Systems Alliance and work with many intelligent device manufacturers to license, protect and monetize their applications with Flexera Software licensing solutions--helping intelligent device manufacturers to drive revenue growth in the M2M and IoT space.

Want to learn more about licensing, protecting and monetizing software applications and usage models on devices – stop by Flexera Software booth #232 in the Intelligent Systems Community at IDF 2012.

Check out these related Intelligent Device and Machine-to-Machine blogs:

• The Year of the Ecosystem – Leveraging Software for Competitive Advantage and Revenue Growth

• Intelligent Hardware Manufacturers That Successfully Release Their Inner Software

• The Rise of the Machines – The Machine-to-Machine Evolution

• The Internet of Things and Machine-to-Machine are on the Horizon—Are you Ready?

• Smart Device, Smarter Services

• Embedded Systems Best Practice: Standardizing on a Common Software Licensing Platform

If NASA can update the Mars Rover software, publishers should update their software too!

By Bashyam Anant

In a recent Wired article, NASA Pulls Off 160-Million-Mile Software Patch we learned that NASA had carried out a 4-day software update process for the software powering the Mars Curiosity Rover. According to the article, "the software required to help Curiosity land on the surface of Mars and the software it needs to drive around and avoid obstacles is completely different. Curiosity's hardware is pretty modest…it didn't have enough memory to hold the software for both the landing mission and the surface mission, so the software had to be swapped out remotely after landing." The article also explains how the NASA team carefully orchestrated the update process over 4 days and 160 million miles to ensure that the software update did not render the Rover useless.

NASA clearly has a sophisticated software update strategy. What are other software producers and device manufacturers doing to deliver software updates to end users? About 100 such publishers responded to our survey on this topic.

As the graph below shows, 12% of respondents do not produce software updates at all. Rather, they ship a full software release to address bugs and deliver enhancements for their products. We suspect that these respondents produce software which is updated infrequently or software for which the downtime associated with re-installing software is not an issue.

How do end users update your software today?

(N = 100)

 

 

47% of respondents deliver updates using rudimentary software download sites. These publishers are expecting end users to diligently check for software updates on their download site, make sure they find the correct software update for their product and version and be sure to install them. In short, these publishers are signing up for avoidable support calls and costs - a large fraction of support calls that publishers handle are eventually addressed by a software update. Clearly, an automated software update approach that delivers the right update to the right end user in a proactive fashion would avoid these costs. 17% of respondents and NASA got that idea – however, by building a homegrown solution for automated updates, publishers are veering into capabilities that are not their core competence.

Learn more about the software update process: Software Updates and the Customer Relationship – Eight Issues That Impact Retention, Profit and Your Ability to Compete

The Rise of the Machines – The Machine-to-Machine Evolution

By Tu Le

Some call it the "Internet of Things" others call it "Machine-to-Machine" and some simply call it the convergence of smart enabled devices with the Internet—whatever you call it—we are at a new inflection point of connected devices. Based on Analysys Mason forecasts (http://www.analysysmason.com/about-us/news/insight/M2M_forecast_Jan2011), within the next few years, literally billions of Internet-enabled microprocessors will provide digital intelligence and connectivity for almost every commercial and industrial product or appliance, even baby clothes (Baby clothes go high-tech: Pyjamas to monitor heart beat, temperature, movement), extending the Internet into most aspects of our lives. This reminds me of how Skynet was created. For some wondering what Skynet is – it is a fictional computer systems, part of the Terminator movie series, with highly advanced artificial intelligence built by Cyberdyne Systems to automate the first national defense network that is capable of processing information at billion or perhaps trillion of operations per seconds. In these fictional movies, everything from embedded devices to computer systems to everyday machinery that humans are dependent on are interconnected and are controlled by Skynet making itself an entity with massive power by the data that it has in its possession to control and destroy anything how it see fit.

Traditionally, old world engineered systems like appliances, vehicles, energy meters, and vending machine were not connected to anything internet or internet-like. But, these same redesigned systems are now entering into the Internet. Expanding rapidly and globally due  to the growing advancements in hardware and software components, these smart appliances and devices are becoming the "Internet of Things" and the "Machine-to-Machine Evolution". Initially and implicitly, it is not the consumers that will have the most to gain from smart enabled device networking — it's the businesses that support them. The intelligent device manufacturer of your washing machine should be interested in its operating and usage patterns. Perhaps when it breaks down it will let them know, so that they can call pro-actively to let you know that they can provide immediate service. This may sound only slightly interesting for consumers, but for business and industrial automation applications it yields several major advantages. Intelligent device manufacturers can use their connected products to develop customer service relationships that can ultimately recreate the basis of customer management and generate new software + service offerings that enable recurring software licensing revenue streams. They can use device-networking technology to reduce the hassles of product ownership, while at the same time helping their own business to reduce costs and pursue new revenue growth opportunities.

As operators and service providers upgrade their infrastructure to support the ongoing demand for bandwidth, smart enabled devices will become ubiquitous and will play a bigger role in our life – from navigation systems in our cars and phone, to remote diagnostic machines to monitor our vital signs. Smart enabled devices or machines of tomorrow will have the capabilities to communicate with each other and process real time information that will lead to more efficient business transactions and conversely making our lives easier and subsequently ever so more dependent on these devices. As more and more machines are connected to each other and are part of the central fabric of our life, one day a spark of phenomenon might eventually happen and will give life to Skynet.

The Internet of Things and Machine-to-Machine are on the Horizon—Are you Ready?

By John Lipsey

Gartner has claimed that the 'Internet of Things' is on the horizon. The 'Internet of Things' is a phrase used to describe how the internet will link traditional smart devices, and a wide range of additional physical assets to allow these endpoints to generate and share data. Nearly every product will have an IP address and communication capability – not just networking and telecommunications devices, but also industrial equipment such as buildings, medical devices, test and measurement systems, construction equipment, and oil and gas machinery, to name a few – that will link to other devices and services via the web.

This isn't blue sky thinking. In its September 2011 report entitled The Internet of Things is Coming, Gartner recommends that CIOs and IT leaders set aside two days as early as 'before mid-2012' to develop a strategy for this scenario. The trend of pervasive Internet is already gaining hold and today is described in a number of ways in different industries – Machine-to-Machine (M2M) communications, intelligent device management, telematics, telehealth and "smart" infrastructure, to give some examples. Gartner forecasts that there will be more than 30 billion permanently connected devices by 2020 and more than 200 billion intermittently connected devices by that time.

Opportunity beckons intelligent device manufacturers. They must evolve their products from fixed function and disconnected systems to flexible and seamlessly connected devices.

In this video, Steve Schmidt, Flexera Software's vice president of corporate development, talks about machine-to-machine, the Internet of Things, connected devices, and the tremendous value to consumers, and the monetization opportunities for producers.

 

Steve Schmidt, Vice President of Corporate Development, Flexera Software 

Smart Device, Smarter Services

By Bashyam Anant

My recent treadmill purchase literally drove home the point that Intelligent Device Manufacturers are fundamentally transforming themselves into software-centric, service-driven businesses.

The treadmill features a built-in Android Tablet computer.  It is connected to my home wireless network and displays the news, accesses email, lets me watch videos and more. The treadmill also connects to the manufacturer's cloud-based application. This application lets me program a workout using Google Maps. For example, I could plot a route around my neighborhood and save it in the cloud. Periodically, the treadmill connects to the cloud application, downloads the workout and programs it in with accurate details such as elevation and distance. I can also track my progress towards fitness goals by viewing my workout history with time, distance, incline, calories burned and pulse in the cloud application and also on the treadmill. I can download workouts planned by other consumers in exotic parts of the globe—the plan is rendered in the treadmill on a Google Map. The cloud application also has running events that I can compete in, in real time. I can also find a fitness coach online who can tailor a program and monitor my progress. And finally, I can also share my workout programs via Facebook or Google+.  

This example illustrates several trends we are observing in the broader Intelligent Device Manufacturer space:

• Adoption of Android well beyond mobile use cases into industrial equipment.
• Internet-enabled devices are growing as the treadmill example shows. Internet connectivity is a key enabler for several use cases including firmware updates, software updates and data upload/downloads (e.g. workout programs for the treadmill).
• Connectivity and software on devices are transforming business models. My treadmill's manufacturer has created a "hardware plus services" model since the cloud application that the treadmill connects to requires an annual subscription to give me access to my workout history and all the sharing features.
• Many devices are capable of creating an app store and partner ecosystem for manufacturers. For my treadmill, fitness professionals from anywhere in the world can work with me and get paid for their services. Likewise, many fitness apps could be developed for the treadmill ecosystem.
• Social media features are being built into devices.

What are your experiences with smart devices?

Read related blogs:

• Machine-to-Machine (M2M) Has Evolved

• Anyone for 1 quadrillion intelligent, connected devices on the Internet?

• New IDC Report Highlights How Licensing Helps Intelligent Device Manufacturers Generate Revenue from Embedded Software
  

• Intelligent Devices Proliferate Due to Abundant Processors and Embedded Software

Machine-to-Machine (M2M) Has Evolved

By: Steve Schmidt

Everywhere I turn, I seem to run into another interesting opportunity to drive more value out of Machine-to-Machine (M2M) initiatives, so I thought I would share some of my thoughts on M2M. First, a common definition of Machine-to-Machine (M2M)…

Machine-to-Machine (M2M) refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability.^[1][2] M2M uses a device (such as a sensor or meter) to capture an event (such as temperature, inventory level, etc.), which is relayed through a network (wireless, wired or hybrid) to an application (software program), that translates the captured event into meaningful information. (Source:  http://en.wikipedia.org/wiki/Machine-to-Machine)

The initial focus of M2M, and the one that continues to get a great deal of attention because it is foundational, is the creation of a connection from a machine/device to another machine/device.  Connecting devices in a one-to-one fashion was the starting point, and then connecting them in a networked manner.  This assumes the device is "intelligent" -- meaning that the device can process information in some way.  Making the device intelligent and finding a way to connect it are still key steps, but that is just the beginning.  The real value is in what type of data is sent over the connection and what is done with that data. 

The primary benefits of M2M have historically been the ability to better support remote devices, e.g., knowing when a pump is close to failure and needs to be replaced, when restocking is required in a vending machine or when a system is running old software.  Additionally, M2M helps reduce the support costs associated with the maintenance of the device.  M2M can circumvent the need for manual inspections, and can also speed up time to diagnosis and ultimately resolution.  Customer satisfaction improves in this scenario as well, as they continue to receive uninterrupted benefit from the device.

The breadth of use cases and benefits of M2M is expanding, to include new ways to monetize the offerings from the device vendor.  A wide range of opportunities open up when the M2M connection is used to share usage data from the device.  For example, it enables new business models to be implemented – these can be business models that are more lucrative in general and/or more appropriate for specific sub-markets.  For example, users of a device can be charged based on number of discrete uses, or usage levels during specific times of the day, or a concurrent number of users within an enterprise, or based on geographic location, or use of specific features… or any number of parameters.

This data can also be aggregated and analyzed for improved business intelligence.  Seeing patterns of usage consumption can lead to focusing new sales activity on the products or features that are most highly valued, and in the most receptive markets.  It can lead to targeted marketing campaigns that up-sell users to new levels of functionality or renew them at the most opportune time.  It could focus development on the most valuable features, on the most widely deployed platforms.  It could be fully anonymized and provided to others to be leveraged in their databases, marketing activities, or support services.

M2M has evolved to encompass and enable high-order value propositions, driving increased revenue.  Maturity models presented by Gartner, Sprint, and others at recent M2M conferences reflect this evolution.  They generally depict the major steps of connectivity, support enhancement, and then additional monetization.

Next time we'll take a look at a few tactical ways to more fully leverage M2M.

Anyone for 1 quadrillion intelligent, connected devices on the Internet?

By: Randy Littleson

I came across an interesting article in the last week (Cisco: 50 billion things on the Internet by 2020) that highlighted a debate between Cisco and IBM in terms of how many intelligent, connected devices were going to be connected to the Internet in the next few years.  At the low-end, Cisco was projecting 50 billion devices (this is the low-end!).  At the high-end, IBM is projecting 1 trillion connected devices by 2015 (the article also states that Cisco's CTO predicted 1 trillion devices by 2013 – contradicting other Cisco estimates).  That's 2015 – as in 4 years!

The article goes on to say that the number of connected devices already exceeds the number of people on earth.  So, it's clearly more than just a fad.

While the business and personal applications and uses of these intelligent devices vary greatly, there are some commonalities in terms of the enablers for this to happen.  Probably the biggest is software.  Increasingly, intelligent devices are driven by multifaceted software.  Embedded software and machine to machine (M2M) software are used to power, monitor, manage and administer these devices and applications within these intelligent devices to help deliver the myriad of uses and capabilities for businesses and consumers alike.

There's an entire infrastructure supporting this rapid growth in connected devices.  All of this software must be delivered to and updated on these devices.  The producers of this software want to protect and monetize the software they put inside these intelligent devices and there's an entire back-office to manage software entitlements and subscriptions, activate software licenses and much more.

If you manufacture any type of physical device today, you need to be thinking about the competitive value you can deliver your customers by making your device an intelligent, connected device with machine to machine management capabilities or risk that the other 1 quadrillion connected devices might just deliver your customers something you don't.