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🛰 Fire-Spewing Drones, Surveillance Dolls, Re-Bundling, and Dirty Air - IOP Observatory #14

Hi, glad you could make it. In this issue: Re-Bundling, Surveillance Dolls, Fire-Spewing Drones ❤️ Lo
February 21 · Issue #14 · View online
The VUCA Observatory
glad you could make it.
In this issue: Re-Bundling, Surveillance Dolls, Fire-Spewing Drones
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There’s a famous truism in the tech industry. Coined by Jim Barksdale, CEO of Netscape, it’s “There’s only two ways I know of to make money: bundling and unbundling.”
Now that the industry discourse around the unbundling powers of the internet has run its course, folks are suddenly discovering the Bundling aspect, again. Case in point: the NYTimes treatment of the music industry. There is of course an argument to be made that this fits neatly into the Inputs- and Outputs-Innovation framework and network effects that we discussed last week.
But it’s interesting to map this to other industries as well. Given the arguments around the End of Moore’s Law, we can expect to see bundling in this arena as well. Arguably, we already are, with Apple designing their own mobile chipsets for use with their iOS operating systems, Google coming up with custom chips for anything from Machine Learning to securing their compute infrastructure. Make sure to read Rodney’s great essay on this topic.
In related news (we might call this unbundling humans), the outlook for what is often dubbed the fourth industrial revolution becomes over so bleaker.
Tyler Cowen, whose tremendous book “Average is over” gives a good overview over the mechanics of a world governed by Zipf-ian power laws as opposed to our cherished Gaussian normal distributions, argues: if previous industrial revolutions are any indication, wage levels will remain suppressed for quite a while, and we need to prepare for more political turmoil.
Meanwhile, Bill Gates jumps into the fold, arguing for taxation of “robots”. How that would work on a practical level (for starters: what’s a robot?) remains unclear, however.
Home IoT
While we’ve been talking about the normalisation of the surveillance apparatus by introducing kid’s toys like Elf on the shelve into our homes and having children grow up with the intuition and knowledge that their every word is being recorded, you can trust the Germans to have a rule or regulation on the book for nearly everything.
There’s a toy on the market called the Cayla doll which apparently possesses some rudimentary, Alexa-like voice interaction features, and, crucially, and insecure Bluetooth connectivity module. Now a ruling came down by Germany’s federal network agency (BNetzA) that the doll is in fact a hidden surveillance device, which in turn makes the import, sale und operation illegal under federal statute. Owners are ordered to destroy the toy, and the importer is barred from bringing it into the country. Once again the unfortunate reality of lacking class-action provisions in civil litigation in Germany become obvious, as owners now have to litigate against the distributor on their own.
At the same time, with consumer IoT in a bit of a post-CES slumber, there’s grand announcements on how home security is *the* niche for IoT startups. Given the security fears and regulatory uncertainty that might be a bit premature.
What exactly is it that made Cayla an illegal surveillance device, but does not make Echo one, for instance? For all intents and purposes, the Echo is a speaker that functions as a recording device, and given that you have to trust Amazon, a third party, not to unwittingly record what you say, it could easily be construed for it to fall under this regulation. And you could certainly make the case that the Samsung TV proceedings from last year could be elevated from a civil litigation privacy case into a criminal offence.
By now, this section might seem like a broken record. We got additional data coming in, and US solar grew by a whopping 95% last year. Which means that the pace of installation is increasing, with new installations growing by an astounding 636% y-o-y, making solar capacity a fully 39% of new installations in 2016.
Couple that with the recent decision by Toshiba-Westinghouse to leave the US market amidst a total of USD 6bn in losses, and you get a pretty good picture where the industry is going. It’s interesting what to note what the NYT is diagnosing as one of the causes for nuclear’s decline: the long dormancy and slow pace of the industry led to a deterioration of skills and knowledge, which now make it incredibly expensive.
Compare that to renewables, where learning seems to accelerate, and hence the costs come down. Is it any wonder then, that renewables are considered the safer bet in the circles that matter, namely finance?
Lot’s happening in mobility this week. For starts, I was quite surprised by how coherent Daimler’s vision going forwards in cars is. They were speaking at the IBM event I was at last week, and their case for - ehem - CASE, that is Connected, Autonomous, Shared, and Electric, cars is quite compelling. More on that in a future blog post.
The Economist assembled an overview over where forecasters see electric mobility heading, and it’s set to grow much faster than anticipated. We’ve long talked about how forecasts in traditional areas are often in for a surprise once exponential functions enter the theatre. Here, the drop in battery costs seems to do its spiel.
Relatedly, a recent study finds that consumers are much more willing to purchase EVs, but are hampered by a lack of offerings. This is going to change, obviously. And given our current air quality crisis, we should hope it happens sooner rather later.
We’ve looked at Stockholm a few issues back, now we’re having a look at London, where, as the NYTimes reports, air quality occasionally gets worse than in much-derided Beijing. The main culprit? Diesel engines. 
But it’s not only EVs that we’re looking at. VISA, the payments processing network, announced it’s going to integrate directly into cars to facilitate payments for fuel, amongst others. The acquisitions of major car companies in the payments space certainly start to make sense now.
For a broader picture of all the disparate cost components, and a potential strategy for car makers, it’s always good to revisit Reilly Brennan’s (who does a tremendous job with his Mobility newsletter) piece on Unification, which makes the case for tighter integration of all these components for a compelling mobility offering. You have to wonder though, whether keeping all those costs in separate mental buckets was a pretty good strategy for consumers not to worry too much about the true cost of ownership of vehicles.
The Strange, Weird, and Interesting
Drones with flame throwers – for maintenance. You can’t make this up.
End note
That’s it for this week.
As always, let me know what you think about the Observatory at Oh, and we’re currently planning a series of shows on the future of mobility in our podcast, Thingonomics. If you don’t subscribe yet, I think you should. Be warned, though, it’s in German.
Until next week. Cheers,
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