Creating New Markets in the Lifecycle of Connected Things

Editor’s Note: This blog was originally published in February 2019. It has been updated to include the latest information. 

When the first consumer electronics arrived on the scene in the form of radios, televisions and home appliances, they were a novelty. By the time PCs and mobile phones came along, consumer electronics were fully mainstream. Today, connected devices are so much a part of our daily life we rarely pause to consider how they got here, how they work, or what happens to them after we’re done with them. How many of us have an odd old thing laying around or abandoned in the kitchen junk drawer?

The Ecosystem of Things

Before the internet, there were floppy disks and cassette tapes. Today, we commonly think of ecosystems as digitally connected markets, data streams or devices, but an ecosystem is also all the things surrounding a product that it depends on to be created and function effectively. So, like a navigation device today depends on a mobility chip (5G/WiFi) and GPS receiver that enables it to use mapping data from the internet, a PC in the early 1980s needed a 5.25″ floppy disk drive to run its programs. However, PCs that shipped in the late 1980s either switched to 3.5″ disk drives or ran the risk of losing sales.

That just underscores the challenge that engineers face when trying to predict the obsolescence cycle of not only the device they want to build but also its parts and surrounding ecosystems. Planning for obsolescence is a key part of the product lifecycle, and it typically starts before the idea is even put to the drawing board.

Starting at the end: obsolescence planning

The average lifespan of consumer devices, and the parts that go into them, has been steadily decreasing for years now. These devices were initially expected to last 40+ years; the average lifespan of a new smartphone purchased this year will be only about 2.5 years.[1]

This shift has made obsolescence planning a complicated exercise and spawned new markets in areas like end-of-life (EOL) forecasting, aftermarket parts, refurbishing, remarketing, recycling, and EOL extension models through repair and maintenance. A recent report predicts that the global market for e-waste management and recycling will be valued at more than $189.8 billion by 2030.[2] This issue is especially acute in the autonomous vehicle market.

Back to the beginning: design and introduction

EOL is only one phase of the lifecycle for connected devices. Consumer electronics have two interdependent lifecycles at play: the product lifecycle and the market lifecycle. Obsolescence plays a key factor in the beginning phases of concept design and market introduction, as engineers have to consider the obsolescence risk associated with component lifecycles when designing a new device. And, as resources become increasingly scarce, designing for sustainability and a circular economy will become more important.

Here’s a quick snapshot of the two lifecycles at play:

Source: Smartsheet[3]

These two lifecycles are made up of separate but overlapping phases:

• Product lifecycle: Beginning of life (BOL), Middle of life (MOL), End of life (EOL)
• Market lifecycle: Introduction, Growth, Maturity, Decline

Throughout each of these lifecycle phases, digital transformation at the edge is creating new opportunities for connected device makers and their partners to increase product and service innovation, streamline processes and expand into new markets. Here are a few examples:

• (BOL/Introduction) Accelerate development: Leveraging advanced technologies like virtual reality and artificial intelligence (AI) can accelerate research and prototyping for new product development. Using data from multiple sources and machine learning algorithms, design processes that used to take up to a year can be shortened to only a few weeks.
• (MOL/Growth) Create new markets: Nest may not have been the first smart thermostat, but it may have jumpstarted the smart home market by connecting the device to the internet through a WiFi chip. That opened the door for a diverse set of manufacturers and ecosystem players to begin developing the IoT connected device space. As these IoT ecosystems expand, the rich insights they yield are also leading to new market opportunities through IoT data exchanges.
• (MOL/Maturity) Moving from products to platforms: As hardware sales decline, manufacturers may focus on expanding digital services to generate new revenue opportunities. A platform-first approach can also lead to bigger growth opportunities with less risk. The 2023 Global Interconnection Index (GXI), a market study published by Equinix, predicts that 90% of Fortune 500 companies will become digital providers by 2025, both selling and consuming digital services.
• (EOL/Decline) Unlock value from secondary markets: EOL offers a smorgasbord of market opportunities in aftermarket and lifecycle care services, refurbishing and recycling. For example, AI can help determine if devices should be resold as is, refurbished or recycled. Several companies are also using AI to overcome the complexities of general e-waste sorting through visual recognition.

The emergence of these new opportunities signals a key trend: Agility and collaboration will be crucial for consumer electronics manufacturers to stay viable and discover new growth areas. Businesses that can leverage and create opportunistic arrangements across rich digital ecosystems will thrive and benefit from dynamic new business models.

Tapping into the value of digital ecosystems requires IT infrastructure built for distributed scale and security that can support these kinds of new collaboration and interaction models and handle increasing data growth. An Interconnection Oriented Architecture® (IOA®) strategy provides a proven and repeatable framework for shifting to this kind of interconnected and distributed IT infrastructure from a traditional siloed and centralized model.

Interconnecting the lifecycle of connected things

There are major changes happening within the consumer electronics industry. Today, a dizzying array of multilingual robots, connected cars and smart home devices are proliferating at breakneck speed, while the obsolescence cycles are becoming shorter with every passing year.

Thriving in this fast-paced world will require connected device makers to get innovative products and services to the market first with a platform-first mindset, while managing the product and market lifecycles to reduce costs and minimize obsolescence. That will depend on having real-time data insights and agile collaboration between designers, engineers and supply chain partners throughout the product lifecycle. New data sources need to be captured and local analytics mined for greater insights, action and automation. Moreover, ensuring the best possible user experience will depend on delivering customized services and content to connected devices quickly and securely.

Now that we have 5G infrastructure and services rolling out into production globally, we’re seeing these manufacturers look at ways to enhance connectivity using the advanced features and functions of 5G. For a deeper dive into this topic, read the blog Unlock the True Potential of 5G With Edge Infrastructure to understand the importance of the user plane function (UPF) and traffic breakout.  Many of these manufacturers are also looking for ways to enhance and secure the data sessions from these devices leveraging overlay networks. For more on this, read the blog What Are Overlay Networks and How Are They Shaping Our 5G Future? Considering all these elements and the wider trends in the technology provider market, where these elements come together and interact to create rich and repeatable solutions becomes even more important.

Leveraging IOA best practices on Platform Equinix® can help enable the kind of real-time, secure interaction between people, locations, clouds, data and things needed to achieve this. An IOA approach with distributed exchange points allows connected device makers to meet, collaborate and innovate with partner ecosystems via direct and secure interconnection. That makes it easier than ever before to scale operations, optimize supply chains, invent the next winning products and deliver the best services to connected devices at the digital edge.

The 2023 GXI report tracks, measures and forecasts the growth in interconnection bandwidth—a measure of the capacity provisioned to privately and directly exchange traffic between two parties inside carrier-neutral colocation data centers. The GXI  forecasts that interconnection bandwidth in the manufacturing sector will grow at a five-year CAGR of 45%, a clear sign that more manufacturers are collaborating with digital supply chain partners to drive innovation and increase resilience.

Re-architecting manufacturing IT for the digital edge

For a closer look at how agile, distributed digital infrastructure can help manufacturers improve supply chain visibility, support new as-a-service business models and scale smart manufacturing technology, read our practical how-to guide for manufacturers.

[1] “Average lifespan (replacement cycle length) of smartphones in the United States from 2013 to 2027,” Statista.

[2]  “E-Waste Management Market,” Straits Research, October 2022.

[3] Kate Eby, “Data, Data Everywhere! Product Lifecycle Management in the World of IoT,” Smartsheet, June 26, 2017 (updated March 1, 2023).