Creating New Markets in the Lifecycle of Connected Things

AI, IoT and interconnection are transforming consumer electronics

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 are done with them. How many of us have an old odd 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 being 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 having a WiFi chip 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 better have switched to 3.5” disk drives or run 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, have been rapidly decreasing since PCs and mobile phones first made an appearance. Initially expected to last 40+ years, the average lifespan of electronics today ranges from 1.5 to 13 years, with the majority averaging 4-5 years.i That has made obsolescence planning a complicated exercise that has spawned new markets in areas like end-of-life (EOL) forecasting, aftermarket parts, refurbishing, remarketing, recycling, and EOL extension models through repair and maintenance.ii A recent report predicts that the global market for electronic waste management and recycling will reach $55.3 billion by 2022.iii  This is especially acute in the smart 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 lifecycles at play that are interdependent – 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:

Product Lifecycle: Beginning of Life (BOL) Middle of Life (MOL) End of Life (EOL)
Market Lifecycle: Introduction Growth Maturity Decline
Source: Smartsheetiv

Throughout each of these lifecycle phases, digital transformation at the edge is leading to 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: v

  • (BOL/Introduction) Accelerate development: Leveraging advanced technologies like virtual reality and artificial intelligence (AI) can accelerate research and prototyping for new product development. Motivo Inc. is a startup that provides insights-as-a-service to optimize the design of integrated circuits. Using data from multiple sources and machine learning algorithms, design processes that used to take up to a year were shortened to about four 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. And, as these IoT ecosystems expand, the rich insights they are yielding are also leading to new market opportunities through IoT data exchanges like the one launched by Samsung Electronics.
  • (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. For example, Tim Cook predicted that Apple’s services revenue would grow to the size of a Fortune 100 company before the end of 2017. Rich digital service offerings including Digital Content and Services, AppleCare, Apple Pay, licensing and other digital services enabled the company to hit their goal by August 2017.
  • (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, Teleplan uses AI to grade used devices and determine if they should be resold as is, refurbished or recycled. Several other companies, like Refind Technologies, AMP Robotics and ZenRobotics, are 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. That requires an IT infrastructure built for distributed scale and security that can support these kinds of new collaboration and interaction models, as well as 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 centralized or siloed model.

Source: Equinix

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.

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 second annual Global Interconnection Index (the GXI), a market study published by Equinix, tracks, measures and forecasts the growth in Interconnection Bandwidth – the total capacity provisioned to privately and directly exchanged traffic with a diverse set of counterparties and providers at distributed IT exchange points inside carrier-neutral colocation centers. The GXI Volume 2 predicts the manufacturing sector will experience a 56% CAGR in installed Interconnection Bandwidth capacity between 2017 and 2021 due to the traffic created by manufacturing supply chain partners’ collaboration and innovation.

Re-architecting manufacturing IT for the digital edge

Source: Equinix

To learn more about how interconnection can help connected device makers for consumer electronics stay ahead of the game throughout the product lifecycle, check out our Manufacturing Digital Edge Playbook.

 

 

[i] Bright Hub Engineering, End of Life Electronic Parts: How Soon Do Electronic Parts Become Obsolete; Statista, Average lifespan of consumer electronics and tech devices in 2015 (in years).

[ii] SiliconExpert blog, Years to End of Life: How Reliable is EOL Forecasting?, Feb 2016; EE Times, Rochester Electronics carves niche with end-of-life parts, June 2003; The Balance Small Business, Electronics Waste Recycling Business Opportunities, May 2018; GreenBiz, 9 companies to watch as e-cycling movement takes off, Feb 2014; GreenBiz, Why Motorola is making it easier for you to fix your own mobile phone, Oct 2018.

[iii] MarketWatch, Electronic Waste Management Market 2018 Global Analysis, Opportunities and Forecast To 2023, June 2018.

[iv] Smartsheet, Data, Data, Everywhere! Product Lifecycle Management in the World of IoT.

[v] Ellen McArthur Foundation, Artificial Intelligence and the Circular Economy, Jan 2019; Forbes, The Future Of The Smart Home: Smart Homes & IoT: A Century In The Making, Dec 2017; XTRABYTES, Product vs. Platform: Why Platforms Win, Mar 2018; Inc, Don’t Build Products. Build Platforms; AppleInsider, Apple’s services will grow to over $100 billion per year in 2023, says Morgan Stanley, Nov 2018.

 

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