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Internet of Things February 2018 Viewpoints

Technology Analyst: Guy Garrud

Ford Makes Smart Infrastructure Partnerships

Why is this topic significant?

Ford is making moves to establish itself as an important player in smart-city infrastructure. Urban mobility and smooth integration of various types of vehicle are both key issues the company hopes to tackle.

Description

January 2018 saw the annual Consumer Electronics Show in Las Vegas, Nevada. During a keynote session at the show, Ford's CEO, Jim Hackett, announced that Ford would be working alongside software specialist Autonomic (Palo Alto, California) to create an open-source platform or "Transportation Mobility Cloud" for so-called vehicle-to-everything (or V2X) connectivity. The platform can serve to incorporate systems such as connected traffic lights, bike-sharing networks, and public transport. Ford gave an example application for the platform, enabling a ride-hailing company to interface with Ford's fleet of autonomous vehicles, dispatching vehicles for passengers or deliveries.

Ford has advanced its connected-car strategy for several years now. For example, Ford made a $182 million investment in cloud-software specialist Pivotal in 2016. More recently, in November 2017, Ford announced a cellular V2X trial in the United States with AT&T, Nokia, and Qualcomm Technologies.

Implications

Ford appears to be in the midst of a digital transformation, shifting its focus from just automotive manufacturing to a wider set of mobility products and services and even an infrastructure platform. Offering the company's V2X system as an open-source platform is also an aggressive move. Subtle aspects of the software underlying strongly software-dependent industries can have a strong shaping effect on the industry as a whole. Ford is seeking involvement from other parties such as local governments and companies offering smart-city infrastructure services in an attempt to establish its version of smart-city software as a common standard.

Ford is far from the only company offering smart-city infrastructure, and its new program risks coming into competition with platforms including Cisco's Kinect or Siemens's City Intelligence Platform.

Impacts/Disruptions

Ford is aggressively pursuing a digital transformation rather than risk disruption by other companies offering innovative takes on the concept of mobility that differ from traditional automotive manufacturing. Indeed, focusing on the wider smart-city and smart-transportation opportunities could be an attempt to dislodge companies that have come to dominate the nascent autonomous car space.

Ford's approach appears to fit well with the overall societal trends away from vehicle ownership. However, establishing a full smart-city-infrastructure solution is a massive undertaking, especially for a company that has a stronger background in automotive manufacturing than it does in software and electronics. Careful partnerships with other companies that specialize in hardware and software will be crucial, and much of Ford's success or failure may depend on whether its strategic partners are able to deliver a compelling platform.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: High

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: 5 Years

Opportunities in the following industry areas:

Automotive manufacturing, smart city design, cloud software, cloud hardware, public transit

Relevant to the following Explorer Technology Areas:

Volatile Times for Smart-Home Companies

Why is this topic significant?

Developing products for nascent markets can be extremely hazardous, even for companies with seemingly robust hardware and software platforms.

Description

In late December 2017, the CEO of Otto, a smart-lock start-up, announced that the company has ceased operating. The news came a few weeks ahead of an anticipated first shipment of the company's smart locks to customers who had preordered the locks.

In a blog post announcing the move, Otto's CEO, Sam Jadallah, explained that during its most recent round of funding, Otto was approached by a large company with an offer of acquiring Otto. The acquisition reportedly fell through on 11 December, the date on which both companies had anticipated finalizing the acquisition.

Otto had developed a smart lock that had a retail price of $699, which is substantially higher than the price of competing smart-lock products. For example, August's smart lock has a list price of $229.99—less than half the price of Otto's debut product.

Smart locks are an area of active development. At the Consumer Electronics Show in January 2018, Amazon launched its Amazon Key service, which enables users to grant Amazon's delivery drivers one-time access to their property in order to deliver packages that drivers would otherwise leave on porches or return to the courier's depot.

Implications

The smart-home market is largely nascent, but this situation doesn't mean that companies moving into the domestic IoT space will necessarily realize commercial success easily. Two main barriers to commercialization for players in the smart home market are interoperability and demonstration of a compelling use case.

Even when companies offer a compelling product, difficulties in implementation can still result in poor customer experiences. For example, in August 2017, a different smart-lock manufacturer—LockState—inadvertently disabled hundreds of its locks because of a faulty firmware update.

But even strong implementation is no guarantee of success; Jadallah's lengthy blog post describing the cessation of operations emphasizes the amount of effort that went into ensuring every aspect of the product—including the physical mechanism and the layers of software and digital communication necessary to ensure the smooth functioning of the device—would work well. Instead, Otto's plight highlights the financial vulnerability of many tech start-ups.

Impacts/Disruptions

Otto hasn't released details about precisely why the acquisition fell through, which makes an accurate assessment of its impact difficult. Myriad factors could have led to the deal's failure. Perhaps the buyer believed that Otto's planned retail price for the company's smart locks was too high to be attractive to most users. Perhaps the due-diligence process revealed external or internal problems that led to the deal's falling apart. Perhaps the buyer simply had a change of mind or saw the offer of acquisition as a means to squeeze out a competing product.

Alternative models of smart locks are already available in the marketplace, and the smart-lock market will continue. However, the pivotal role such locks will play in securing properties will likely make them an extremely tempting target for hackers, and cybersecurity will be even more crucial than for most IoT applications.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: Now

Opportunities in the following industry areas:

Smart home, domestic security, logistics, finance and business insurance

Relevant to the following Explorer Technology Areas: