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Business Aspects of the Internet of Things Seminar of advanced topics, FS 2009, Florian Michahelles (ed.) This report summarizes technical and business opportunities of the internet of things. All articles have been written by students participating in the Seminar of advanced topics in spring 2009.

http://www.im.ethz.ch/education/FS09/iot_sem

The Internet of Things has emerged both as vision of research and business practice. As the ownership of the term is not clearly defined, also a clear definition is missing. Clearly, ITU’s report “Internet of Things” has provided great popularity to the Internet of Things. It explains it as the capability of items to share information about themselves. The main driver is RFID, but as technologies progresses various others, such as sensors, might become feasible soon. This is pretty much in line with EPCglobal and the Auto-ID Labs claiming to architect the internet of things. The focus here is on a world-wide infrastructure allowing to share item-level supply-chain data across companies for increased process efficiencies. Then, there is the IPSO alliance, backed by the major internet backbone technology providers, fostering the application of IPv6 to objects, and a number of other initiatives, also branded under the term ‘web-of-things’, running items and objects as web-servers and, as such, using web technologies to manage the expansion of the internet to the real-world.

Eventhough a clear and commonly agreed definition of the Internet of Things does not exist, there is a huge variety of topics bound to this vision. It was the goal of this seminar which took place in Spring 2009 with 17 students with backgrounds ranging from business to computer science and environmental engineering, to shed some light on these topics. The seminar was organized in a ‘conference style’ which meant, first, for each student to present one topic in a 15min talk in class and to manage a subsequent discussion both on business as well as technical terms. Second, each student was asked to compose one paper which then was peer-reviewed by three other students plus the instructor of the course.

These proceedings present a selection of the most compelling papers of the course. The following articles cannot be regarded as scientific contributions, but they provide concise summaries of related work in the field and hopefully serve as helpful introductions to the Internet of Things for novices, practitioners and other student interested in this field.

Thank you very much to all students visiting “Business Aspexts of the Internet of Things” in spring 2009 at ETH Zurich, details to be found here: http://www.im.ethz.ch/edu/FS2009/iotsem

Florian Michahelles Zurich, Switzerland, June 23, 2009

Table of Contents Business Aspects of the Internet of Things

Seminar of advanced topics, FS 2009, Florian Michahelles

Mobile as a Personal Computer 3

Anar Gasimov

RFID for Track & Trace of Baggage in Airports 8 Stéphanie Nguyen

Smart Home 13 Jingzhi Xu

Input Techniques for Mobile Phones: keyboard, sensors, barcodes, RFID, HCI 19 Afet Musliji

End User Programming in Internet of Things 23 Özge Kökçü

User-Generated Content 28 Niroshan Balasubramaniam

Monetization of Mobile platforms 34 Avinash Vankadaru

Business Aspects of the Internet of Things: Mobile Marketing 39 Gilad Geron

Why Mobile Payment still has some way to go in Switzerland 45 Stefan Wengi

Persuasive Technology in Motivating Household Energy Conservation 52 Yi Bing Tan

Roomba to Roomie: Robots are entering our homes and our lives 59 Zacharias Annu

Promising Business Applications of Vehicular Communication Systems 66 Michael Steiner

Things and Services 73 Sanjin Goglia

Mobile as a Personal Computer

Anar Gasimov Swiss Institute of Technology Zurich

[email protected] Abstract Mobile phone has become indispensable in modern life. Its increasing popularity rises the question about what will be the place of mobile phone in the future. The trade-off between mobile phone’s reduced capabilities (e.g. small screen, low processor power) and its unique advantages (e.g. geo-localization, user awareness) make this question more challenging to answer. In this paper we will see the different capabilities of mobile phones and analyze at which extent those capabilities can evolve and contribute to mobile phones future status as a personal computer. 1. Introduction Mobile has evolved from being merely used for voice calls and short messages to a ubiquitous platform used for social and commercial purposes [6]. The expansion of mobile web (3G, 3.5G), advances on mobile hardware (e.g. bigger screens, better processing power) and new services/tools facilitating mobile application development are the three main factors contributing to this trend. The definition of mobile can vary from one source to other. Some define it as mobile device to communicate and exchange data through mobile or wireless networks [1], others define it as battery operated digital device with computer-like capabilities [2]. In this article we will refer by mobile to pocket size PC which can be seen as a device combining mobile phone functions such as sending and receiving calls and messages with those of Personal Digital Assistant (PDA). There is a wide range of devices between a desktop PC and a mobile. Laptops, Notebooks, Netbooks, Deskbooks are all PCs of different sizes each adapted to special situations. Mobile can also be considered as a part of it, however, its unique capabilities such as user-closeness or location awareness, and its special business configuration (e.g. Mobile Network Operators, device manufactures) make it a full-fledged domain. Mobile can act as a PC at some extend, it can also become the primary computer device in coming years [1], but it is important to note that mobile and PC

are not concurrent of each other. Turning mobile phones into PC's is not an achievable goal. Mobile phones are used in context, in mobile settings, and thus service specific needs (e.g. schedule, communication, navigation, location-based services etc.). In this regard, the main questions are: what are the main differences between a mobile and a PC and how mobile can be improved to be used instead of PC in many situations. Those main questions are analyzed from three aspects: hardware, software, and business logic. 2. Mobile versus PC a) Hardware Mobile device is composed of about 20 different components e.g. CPU, screen, Bluetooth, GPS receiver, SimCard slot, etc. The basic technology of those components are the same in all mobile models, but their interfaces and connection models change from one model to another. Each mobile model has its nonstandard shape, thus manufacturers have to adapt the components to fit in that shape. This embedded configuration of mobile offers some advantages and disadvantages compared to PC (Table 1). Let us consider each of the missing points of mobile hardware separately and see how they can be improved.

Mobile PC • Portability • Special input

capabilities: • Near Field

Communication, Audio, Photo/Video, Barcode, Tagging

• Built-in GPS

• Large screen • Ergonomic

keyboard • Long battery life • Processor power • Standard protocols • Bigger storage

Table1: Advantages of Mobile and PC Battery Life Even physically smaller, mobile has relatively higher battery life than current notebook computers when it comes to basic mobile functionalities such as conversation and messaging. However, there is still room to improvements to allow mobile perform like a PC.

Business Aspects of the Internet of Things, Seminar of Advanced Topics, ETH Zurich, FS2009, Florian Michahelles (ed.)

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There are three ways of solving battery problem: making hardware which consumes less energy, improving the battery itself, and developing new facilities which make the battery charging easier. The first and the second suggestions have been exploited for many years. In other words, small improvements on that direction are constant but big changes are not frequent. The last suggestion is more interesting as there is a big improvement potential. Currently each mobile model has its own charger. This trend seems to change as a consortium of mobile manufacturers are agreed to make an ecological universal charger by 2012 [7]. Once the most of the mobiles use the same charger, those chargers can be installed in different places such as home, office, train station, bus, etc. Universal charger is also a first step for a universal docking station for mobile. Small screen The size of the screen is a subjective argument as it also determines the device’s total size. Many mobile models are forcing this trade-off by using the total front panel of the device for the screen (iPhone, HTC Diamond). In this regard, there is not an ideal screen size adapted for all usages. Watching a movie requires a very big screen, sending an email can be done on a small screen, and all day office work needs a middle sized screen. In this context, an ideal screen should have a flexible size: small while carrying and big while using. It can be partially solved by beamers and docking stations (Figure 1, 3) as it is already the case for notebooks. Another solution is using foldable screens (Figure 2) even if it is still in early research stage. This solution can accommodate both bigger screen and small device issues. Input Mobile’s small size makes it less comfortable for data

input. Extended keyboard solutions such as projected keyboards, Bluetooth keyboards are already available but not very popular among users. The main reason is while using a bigger keyboard the mobile device’s screen is far from user and therefore unreadable. In this regard, external ergonomic keyboards have to be used with conjunction with a bigger screen. Docking stations is also the most suitable solution to provide external screen, keyboard and also mouse for mobile devices. Processor power There is a trade-off between processor power and the battery life. This problem is the same as for notebooks. Thus, there is not real solution as we would always want instantaneous/fast processing and unlimited battery life. Processor chip manufacturers besides increasing the processing power, optimize them to consume less battery power. The processing speed of some new mobile models have already reached the level of few year old notebooks (e.g. Toshiba TG01 with 1GHZ processing power). Standard protocols / extension The hardware of a PC has passed a long standardization period. Currently desktop PCs can be assembled with a minimal knowledge in computer science. Even small notebooks are composed of standard CPU, peripherals, input/output ports, etc. This standardization is more complicated for mobiles due to their small size and custom shapes. Each company and in most cases each mobile model has its own hardware specifications. The lack of standardization of mobile hardware is the green line which separates it from PC family. The improvements on this direction can start by putting on mobiles standard input/output ports such as USB. With a mobile having a USB port, any hardware can be plugged to mobile with the corresponding driver. Storage The storage difference between mobile and PC is fading as the cost of high capacity memory cards drop. Memory cards with 16, 32 GB capacity are now available for a low budget. Those capacities are more than enough to store and run a large set of applications. The demand for more space is generally for achieving purposes which can be done using other devices than the mobile (e.g. PC, external/network disk).

Figure 1 Mobile Beamer

Figure 3 Docking Station for mobile

devices

Figure 5 Mobile with USB port

Figure 2 Foldable screen

Figure 4 Projected Infrared keyboard


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b) Software Solving the hardware problems demands big effort from mobile device manufacturers and it is hard for small companies to contribute. In contrast, mobile software market is open and there is still much to do a in that area regarding the available technologies. Internet factor The latest revolution in mobile came with new mobile telephony communication protocols such as 3G. Larger bandwidth and a flat rate connection made mobile internet accessible to a larger population (Figure 7). It opened a new horizon for internet based applications (e.g. Limbo, Bedo, etc.). This step to forward has been determinant for mobile in its new role as a PC. There is a big probability that mobile will become the primary device to access the internet in the future [3]. Many utilities which were in the past required a notebook (e.g. email, instant messaging, small amount payments) are now more suited for the mobile. User interface and input As the size of the mobile device cannot go bigger, the potential of improvement resides in the user interface design and the possibility of using other input methods than a keyboard. User interface is the key point to make people shift a part of their activities from PC to mobile. According to statistics (Figure 6) the IPhone market share has increased more than 500% in one year. It is a good example of how the user interface design can be crucial when choosing a mobile device.

Figure 6 Smart phone market share

Internet surfing is one of the most used PC-like activity of mobile. Mobile web users as PC web users prefers shorter surfing sessions over long ones [5]. Surfing time can be significantly shortened by innovative input methods. Nearly every mobile have a build-in audio and video input capabilities. They can be used as new generation input devices. With applications such as Shazam mobile user can record couple of seconds of a sound and the application will search for corresponding music title using the tone matching. Kooaba is another

type of application which uses image input to find the corresponding information in the database. Those techniques are enhanced to other areas of image processing such as face recognition, optical character recognition, augmented reality, etc. Being able to recognize a Chinese text and automatically get information about what is written using the mobile phone is the dream of most tourists. The information on the screen can be also arranged in a way to let user access the desired functionality with minimal number of clicks [8]. Mobile OS Mobile Operating System market is globally shared by five systems which are Nokia Symbian, Apple iPhone, Microsoft Windows Mobile, RIM, and Linux. In contrast with PC OS, mobile OS have many incompatibility issues between different versions and devices. This is due in part to custom hardware specifications of each mobile device. For example as the keyboard structure for each mobile device varies from one model to other, the underlying software which uses the keyboard becomes incompatible when changing the OS. New open mobile OSs such Android contributes to standardization by pushing the existing mobile OS companies (Symbian, iPhone) to either be more open or to propose better standardized API. c) Business Aspects

Figure 7 Mobile internet (pages downloaded), source Opera


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The business configuration of mobile market is slightly different from PC. In the PC market the roles are shared between actors such as OS developers (Microsoft), microprocessor (Intel, AMD) and peripheral manufacturers (Logitech, Samsung, etc.) and internet service providers (Google, Yahoo). In contrast, in mobile market Mobile Network Operator’s are have far more power than other actors. They decide which model with which capacities should or should not go to the market. In this configuration sometimes good solutions can be stopped if they are not interesting for MNOs. From statistics (Figure 8) we see that even if the mobile communication cost decreases, the average monthly bill is stable over years. In other words, MNOs have to make users pay for the infrastructure (satellite, antennas, etc.) one way or another. Emerging Mobile Virtual Network Operators are the first step to make the mobile market more liberal. MVNOs act in the same way as the MNOs exept that they do not own the underlying infrastructure. Another obstacle in this liberalization process is the SimCard. Currently SimCard is the black box controlled by MNOs. If a SimCard can be replaced by a software solution such as a username and password, the mobile will definitively be the most popular PC.

Figure 6 Average local monthly bill for mobile, source: CTIA

Internet of Things Aspects

Making mobile act like a PC means more internet connected computer in the future. Mobile can replace any other electronic device if the required hardware is present. For example, mobile has a camera, it is small, and it has an internet connection. Moreover, a mobile phone is cheaper than a good quality CCD barcode scanner. This will tremendously increase the number of internet connected “readers”. Coupled with new

tagging methods such as Microsoft Tag, internet and location based systems, mobile’s evolution as a PC will contribute to the expansion of the internet of things. Imagine 2 billion people able to read any barcode/tag and instantly retrieve/proceed the contained/linked information. 3 Conclusions There will be certainly more mobile users than PC users in the future. This is mainly due to poor countries where people cannot afford to buy a mobile and a PC. Mobile devices will act more and more like PC. As the flat rate mobile internet becoming a standard, mobile will be the first device to access to internet. Mobile’s future place as a PC will pass by hardware and software standardization starting by liberalization of mobile market. The first battle will be between the mobile and small size notebooks. We can already see that a part of activities which in the past were done in the notebooks are shifted to mobile (e.g. email). New generation of notebooks with as very small screen (e.g. 7 inch screen) including a SimCard slot are already on the market. From hardware point of view the biggest evolution should be the mobile docking station. It can either follow the same scenario of notebooks (each company with different solutions) or start directly with standardized solutions. And finally, each device has its area of predilection. For example, it was predicted that the new home cinema facilities will make people go less to cinemas but it has not affected much the cinema frequentations [4]. In this regard, mobile’s future status as a PC will not change the configuration of current PC market. All the intermediate devices in between will continue their existence. References [1] Mobile Phones Will Become The Primary Personal Computing Devices. John J. Barton, Shumin Zhai, Steve B. Cousins. s.l. : IEEE Workshop on Mobile Computing Systems & Applications, 2006. [2] Exploring the Implications of M-Commerce for Markets and Marketing. Sridhar Balasubramanian, Robert A. Peterson, Sirkka L. Jarvenpaa. 4, s.l. : Journal of the Academy of Marketing Science, 2002, Vol. 20.


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[3] The Future of the Internet III. Janna Quitney Anderson, Lee Rainie. s.l. Pew Internet & American Life Project, 2008.

[4] Mediametrie, Media in Life. Study on Cinema frequentations in France. 75 000 Cinéma de Médiamétrie. s.l. : mediametrie.fr, 2007

[5] Mobile web surfing is the same as web surfing. Martin Halvey, Mark T. Keane, Barry Smyth. 3, New York : ACM, 2006, Vol. 49.

[6] In-Stat. US Mobile Social Networking and the Millennial Generation. s.l. : In-Stat Mobile Consumer Service, Reed Elsevier, 2008.

[7] BBC News. Universal charger for phones plan. http://news.bbc.co.uk/1/hi/technology/7894763.stm [8] Robbins, D. C., Lee, B., and Fernandez, R. 2008. TapGlance: designing a unified Smartphone interface. In Proceedings of the 7th ACM Conference on Designing interactive Systems (Cape Town, South Africa, February 25 - 27, 2008). DIS '08. ACM, New York, NY, 386-394.


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RFID for Track & Trace of Baggage in Airports

Stéphanie Nguyen ETH Zürich – Department of Management, Technology and Economics

[email protected]

Abstract Contributing to the growing trend of the internet of

things, RFID has been replacing barcodes as the technology for track and trace of baggage in airports. With the growing complexity of airports and the disadvantages of barcodes, such as low read-rate, airport baggage mishandling rates has been increasing significantly. Despite the benefits of RFID, many airports have been facing roadblocks concerning a global standard of UHF frequency, the investment required for the implementation and setting up the infrastructure. To overcome the roadblocks, the International Air Transport Association (IATA) has provided support for a smoother transition to RFID with their Baggage Improvement Programme which provided some focus on global RFID implementation. With most of the roadblocks out of the way, a global adoption of RFID for track and trace in airports is on its way.

1. Introduction

By 2010, one third of the world's population is

expected to be on the internet and there is a staggering amount of data intelligence being driven by the rapid proliferation of smart sensors and RFID tags [1]. Radio frequency identification (RFID) is a technology that uses wireless readers to access data encoded in chips. It has evolved into a reliable, cost-effective technology used for personal identification, asset management, security, logistics, inventory control, and many other operations, without needing human intervention [17]. It enables computer systems to identify objects, as well as understand their status. After overcoming much controversy, RFID’s value proposition makes it clear that it is a growing part of the web of identify that is growing [20]. The value proposition is especially high when it comes to baggage handling in airports. The increasing complexity of the system and increasing baggage mishandling is putting pressure on the

industry to improve the technology, leading the way to using RFID for track & trace in airports.

This paper aims to identify the need of better baggage handling and how RFID can be used as a solution. The Hong Kong International airport will provide an example of an RFID implementation in airports. This will lead to a comparison between the current barcode system and RFID and what benefits can be achieved. Finally, the paper will look at some of the current roadblocks for a wider adoption and how the industry is overcoming them. 2. Background

2.1 Airport baggage handling

Since 1992, barcodes have been used in airports for

the identification of baggage. During baggage check-in at the airport, a baggage tag with a barcode is printed which includes all relevant data, such as flight and destination. This tag is then attached to the baggage and serves as identification until the final destination.

There are several problems associated with using barcodes on luggage. The problems include:

‐ The barcode requires optical sight to be read by the barcode scanner.

‐ Barcode scanners can read only one barcode at a time.

‐ The average read-rate is very low at around 85%.

‐ The paper on which the barcode is printed is easily crumpled or torn.

‐ Information cannot be overwritten – changing or adding information requires a new barcode which needs to be printed.

According to industry statistics, 42 million items of luggage were delayed or lost in 2007, at a cost of $3.8 million1 to airlines [6]. In 2006, the industry paid $1.21 billion in direct compensation, although passengers have not yet taken advantage of the increasing liability 1 Monetary units are expressed in U.S. dollars


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of airlines [14]. The baggage handling system is becoming more complex due to the safety regulations, increasing number of passengers and tighter turn-around times between flights [16]. The growing complexity and problems at airports is driving the transition to a new technology. 2.2 RFID technology

An RFID tag includes a microchip connected to an

antenna. The data is read using a reader which transmits digital data to a computer. The figure below depicts this process.

Figure 1 - RFID technology [7]

Table 1 - RFID trials and implementation [14]

The RFID Journal defines RFID as “a generic term that is used to describe a system that transmits the identity (in the form of a unique serial number) of an object or person wirelessly, using radio waves” [2]. Along with barcodes and other technologies, they are considered automatic identification technologies which have been developed to increase efficiency of manual data input and improve data accuracy [2]. Contrary to what many people think, the technology is not new and it dates back to World War II where it was used to identify and authenticate allied planes [7]. 3. Implementation

Especially in such a complex setting as an airport,

it is important to take the environment into consideration when implementing RFID. For example, metal, electrical noise, extreme temperatures, liquids and physical stress can create a challenge and may affect performance [7]. For this reason, the environment can only be assessed using field trials, so by 2007 several trials were already performed. IATA summarized the trials and implementations in table 1. Upon completion of a trial, many airports have moved on to a full implementation, such as the Hong Kong International Airport, while some have just abandoned the project.

Antenna Transponder Reader

Computer System


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3.1 Hong Kong International Airport

A good example of a RFID implementation project which started as a pilot and is currently fully operational is the Hong Kong International Airport. With a passenger throughput of 48.6 million in 2008, HKIA is one of the world’s busiest airports. By 2008, they announced that all of its check-in counters would print integrated RFID baggage tags [18].

The main driver for RFID implementation at HKIA was to boost security and improve baggage handling efficiency. They wanted to reduce required manpower, as well as reduce short ship rate and baggage transfer. In 2004, a pilot implementation was started. A year later the project went live, and by 2008 it was completely operational [19].

The RFID technology is used in parallel to their existing barcode system. When checked-in and transfer luggage arrives at the luggage-handling conveyor, they are fitted with a smart label bearing a 10 digit IATA number which becomes the bag’s “license”. The “license” includes information such as airline and flight number and is read using a barcode scanner. The information, which is stored in the barcode, is transferred to the RFID tag. RFID readers throughout the baggage handling process are then used to ensure the correct flow of the bags to the airplane [19].

Reengineering was required to accommodate the 214 new readers, 500 antennas and the change in software. The total cost amounted to $50 million, but costs never represented an issue. The support of the local civil authorities and the airlines ensured that the project was self financing [19].

The result of the implementation was higher customer satisfaction through a lower rate of

Table 2 – Barcodes vs. RFID capabilities

mishandled luggage. The productivity of the airport increased by 17% due to higher luggage sorting capacity, reduced manual labor and increased passenger security. The only concern that arose was due to the possible health risks of RFID from exposure to radio waves, but experts insured that it was not anything to worry about [19].

Since the implementation of RFID at the Hong Kong International airport, there has been many more. By early 2008, more than 30 airports had a trial or full implementation of RFID. In December 2008, Lisbon international airport became the world’s first airport to completely replace the barcode with RFID. All baggage are now tagged and tracked with RFID and barcodes have been completely eliminated. Then Italy’s busiest airport, Milan’s Malpensa Airport, became the first airport in Europe to implement a comprehensive RFID baggage tracking across the entire baggage handling system [5]. 4. Results

RFID provides many benefits over the current

barcode system. Table 2 below summarizes the capabilities of the two methods. The implementation of RFID involves benefits to three stakeholders: the airlines, the airports, and the passengers. [14] For the airline, a $733 million saving is expected every year, of which $343 million would be attributed to a read rate improvement. This saving estimate is a direct result from the reduction of baggage mishandling costs incurred by airlines. For the airports, expected benefits are the optimization of operating costs, the ability to better manage the infrastructure, enhancement of safety and quality control. Finally, the passengers’ benefits will be seen through the reduction of 5.7 million claims, the faster resolution of baggage problems, and accurate/timely information [14].


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5. Overcoming roadblocks

5.1 Standards Leading the airline industry, the International Air

Transport Association (IATA) was created about 60 years ago by a group of airlines. They currently represent 230 airlines, which consists of 93% of international traffic [11]. In 2008, with nine airlines and nine airports, IATA has launched a Baggage Improvement Programme (BIP) to reduce the rate of mishandled baggage by improving handling processes. Part of their focus is on the identification of baggage using RFID to ensure passenger and baggage are reunited at their final destination [13]. They are able to do that using their ability to create industry wide standards, attracting the helping efforts of airlines, and focusing on a mutually beneficial approach for everyone involved [10].

The International Organization for Standardization (ISO) and EPC Global have developed standards for RFID technology to define an efficient platform on which industry can operate and advance [7]. Although there are many different RFID frequencies, the UHF Frequency Band was chosen by IATA for the aviation industry because of its proven interoperability, large reading distance, low cost, high information transfer rate, and compatibility with a broad spectrum of materials [9].

In November 2005, IATA approved the recommended practice RP1740C for the UHF electronic bag identification, based on three standards: ISO/IEC 18000-6C (EPC Gen2 protocol), ISO/IEC 15961 and ISO/IEC 15962 [15]. IATA also recommended a business case for the industry and a transition plan for the technology that promotes global interoperability. The recommendation was provided in the Passenger Services Conference Resolution Manual [21].

5.2 Cost and infrastructure

Today, a major roadblock for the implementation

of RFID in airports is still the investment required. There are two areas of costs associated with RFID in airports. The first one is the cost of the equipment (tags and readers) and the other one is the cost of the integration into the system.

Considering the cost of the equipment, there are currently many different manufacturers, which provide it at various costs; some have previous experience in RFID implementation in airports [16]. With the price of tags still around 10 cents each, it would cost the

airlines about $300 million annually for 3 billion bag tags. On the positive side, the cost of tags is decreasing as the number manufactured is increasing [16]. For example, increasing manufactured quantities from 100,000 to 1,000,000 can reduce the cost by 40%. Another 25% saving can be achieved with 10,000,000 tags [16]. In addition, tags of the range 7-8 cents have already been introduced several years ago. Then earlier this year, a Chinese RFID tag-and-reader company has announced an EPC-compliant inlay (aka tag) for 5.8 cents each for volumes of 5 million or more [4]. This price reduction could have a significant effect on the future speed of RFID adoption.

The cost of tag printers and readers also needs to be taken into consideration. In 2007, the cost of RFID printers was between $1,600 and $1,800, while the readers range from $1,500 and $2,500 [16].

The airlines would also have to invest in the installation of the infrastructure. This includes the structure for readers, commission tests for readers, and Programmable Logic Controllers (PLC) integration. The total cost of implementation is in the range of $350,000 and $1,000,000 depending on the size and complexity of the airport [16]. Although the cost seems high, studies have shown that the system would provide a payback within two years [3].

Even if the investment is possible, building the infrastructure is another roadblock. With a larger amount of data available by using RFID, the complexity, burden, and cost of managing the information is increasing [14]. There is currently also a lack of skilled integrators to implement RFID, which has limited the number of full implementations possible. But contrary to popular belief, global benefits can be achieved with only 80 of the top airports equipped with RFID. This will cover 80% of all mishandled luggage [14] and save the industry over $200 million [21].

6. Conclusion

Due to the increasing complexity of airports and

number of mishandled luggage, the change from the traditional barcode system to using RFID technology for track and trace at airports has become a global trend. With the help of the International Air Transport Association, airports have overcome the roadblocks of RFID implementation, such as building the infrastructure and the investment required, in order to benefit from its main advantages. Although there is already a large amount of airports already equipped with RFID, the reduced cost of RFID chips is opening up the way for small airports to adopt the new


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technology and leading the way to a more global benefit for everyone. Baggages at airports are quickly becoming part of the internet of things.

10. References [1] Smart infrastructure of the Century. (2009, March 7). The Jakarta Post. Retrieved March 16, 2009, from International Newspapers database. [2] “What is RFID?”. RFID Journal. 2005. [Online] http://www.rfidjournal.com/article/articleview/1339 /1/129/ [3] Roberti, Mark. “Baggage Tagging Is a No-Brainer.”RFID Journal. 9 October 2006. [Online] http://www.rfidjournal.com/article/articleview/2706/1/2/ [4] SCDigest Editorial Staff. "The Five Center RFID Tag is Here, the Five Center Tag RFID is Here! Well, Almost." SupplyChainDigest. 29 January 2009. [5] “European airports deploy RFID‐enabled baggage tracking”. RFID News. 5 March 2009. [Online] http://www.rfidnews.org/2009/03/05/european-airports-deploy-rfid-enabled-baggage-tracking [6]“ Software upgraded for baggage handling solution“RFID News. 21 October 2008. [Online] http://www.rfidnews.org/2008/10/21/software-upgraded-for-baggage-handling-solution [7] “Understanding Radio Frequency Identification (RFID)”. R Moroz Ltd. 4 November 2004. [Online] http://www.rmoroz.com/rfid.html [8] Zhang , Ting; Ouyang , Yuanxin; He, Yang. “Traceable Air Baggage Handling System Based on RFID Tags in the Airport”. Journal of Theoretical and Applied Electronic Commerce Research. Vol 3. Issue1 April 2008. University de Talca - Chile [9] Dr. Scherrer, Darien. “RFID Regulation and Technical Issues”. RFID –visions and reality ETH Zurich. 6 March 2009. [10] “Baggage Improvement Programme (BIP)” IATA. 1997-2009. Accessed: 20 March 2009. Available: http://www.iata.org/ [11] “About Us” IATA. 1997-2009. Accessed: 20 March 2009. Available : http://www.iata.org/about/ [12]” IATA Introduces RFID Standard for Baggage Tags Annual industry savings projected at US$760 Million”. IATA. 18 November 2008. [Online] http://www.iata.org/pressroom/briefings/2005-11-18-01.htm [13] “Simplifying the business”. IATA. January 2009.

[14]” RFID for Baggage business case” IATA. 2007. [15] “INNOVATIONS and technologies” IER. 2007. Accessed: 20 March 2009. Available : http://www.ier.fr /uk/ market/air-transportation/~/uk/innovation/keeping-track-of-baggage-with-rfid/index.html [16] “RFID in Aviation: airport luggage control”. AeroAssist. June 2008. [17] “Zebra’s RFID Readiness Guide: Ensuring a Successful RFID Implementation”. Zebra. 2008. [18] Hong Kong International Airport. Accessed 20 March 2009. Available: http://www.hongkongairport.com [19] “Case Study: Hong Kong Airport - Baggage tracking implementation”. The Sectoral e-business watch. 2008. [20] Bite, Katalin Emese. “Minimizing the baggage loss at airports”. Periodica Polytechnica. 2008. [21] “RFID IN AVIATION”. IATA. 2008.


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Smart Home

Jingzhi Xu MSc Management, Technology and Economics

ETH, CH-8092 Zurich, Switzerland [email protected]

Abstract

Have you ever dreamed of owning a house, which you can control all the things with one single click? The Smart Home provides this concept that, a house installed with of remote control and automation technology which make your life easier and more convenient. This technology has appeared for several decades; however, there is no large scale of adoption of this technology until now. This paper analyzes the Smart Home market from the demand side and supply side, and there are some opportunities of this technology to be promoted. However, there are still some roadblocks to adopt this technology as well.

1 Introduction A Smart Home is a home or building (usually a new one), which is equipped with special structured wiring to enable occupants to remotely control or program an array of automated home electronic devices by entering a single command [1]. For example, you can remotely control your heating and lighting system in your house by a touchtone phone when you are in vacation. You can also alarm the security system when you find some bad guys break into your house. First, this paper is going to give an overview of the concept of Smart Home and its main characteristics. Then the technology aspect of Smart Home is

introduced and its some key elements are discussed in details. Finally, the market aspect of Smart Home is also discussed from the demand and supply side, and the viewpoints of different roles are compared with each other. 2 Background Smart Home uses electronic networking technology to integrate the various devices and appliances in the house, so that the households can control an entire home centrally and remotely, as a single machine. This technology actually offers significant improvements in the living standards of the elderly and disabled who may otherwise totally rely on home care without these technologies. There are four main features of Smart Home, which are remote access, safety and security, centralized control, and sustainability: With remote access, households can control their home via PC or telephone remotely. For example, if you forget to switch on/off some devices when you are away, or even simply want to switch on the HVAC system before you go back home, you can use your office PC or even a mobile phone to have a full access to your home automation system wherever you are. You can trigger on/off devices, lights, or activate programmed sequences such as vacation mode to give your house a lived in look, or simply


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switch off the security alarm and open the door lock to enable relatives or Delivery Staff to enter your house. Safety and security is a main consideration regarding to the concept of Smart Home. The sensor network within the house and around is capable of detecting the unpredictable break-in, therefore alarming automatically and turning on the strong lighting system to let the households clearly see the situation at night. The centralized control system, usually in form of touch panel, makes the life of households much easier. With one single touch panel, you can control the home theater, music system, light controls, life safety and security system, etc [2]. The last but not the least is the sustainability, which should be realized by a typical Smart Home. Since the amount of energy consumed in the house accounts for a large proportion, the future home need to take considerations into save the energy consuming by 50% or even more, compared to conventional houses. The energy collected at solar panels or building material itself (such as multi-layer facade) can supply the heating or cooling during the winter or summer times. When households are not at home, the whole heating or cooling system will be stopped which will save much unnecessary energy waste. Another example would be rainwater collecting system can make use of rain to flush toilets. There are some examples of design of the concept of the Smart Home: the atmosphere transmission system, which has the capacity to record its own memories of living patterns and the residents’ preferred lighting, sounds, images and smells; Smart dressing table can create a perfect and convenient atmosphere for putting up make-up on quickly and effectively; Smart bed can be programmed to remember your preferred sound, smell, light and temperature settings to gently wake up all your senses and give you a good start to every morning; Smart

Universal Remote Control is capable of recognizing an object via an internal camera promptly displaying an appropriate GUI for any system in the Smart Home [3]. 3 Smart Home Technology Smart Home technology is a collective term for information and communication technology (ICT) which are used in houses, where the various components or devices are communicating via a local network. The technology can be used to monitor, warn and carry out functions according to various different selected criteria. Smart Home technology also makes the automatic communication with the surroundings possible, via the Internet, ordinary fixed telephones or mobile phones [4]. There are some elements, which is applied in the market now: Sensors Sensor is a very important element used in smart house, measures a physical quantity and converts it into a signal which can be read by an observer or by an instrument. Sensors monitor and measure activities in the surroundings. Examples are movement and heat sensors, humidity sensors, bed mats, thermometers and smoke detectors. Actuators Actuator is a mechanical device for moving or controlling a mechanism or system. Examples are door or window and garage door openers, curtain and awning engines, automatic light switches and relays. Several of the components of environmental control systems are actuators. Controllers Controllers make choices on basis of programmed rules and occurrences. Controllers are microprocessors often built-in with sensors and actuators. They receive and process signals


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from the sensor or other controllers. For example the controller of a thermometer can be programmed to send a message to switch off the electric heating system when the temperature exceeds 22 . This message is received by the �

heating controller, which will switch on the actuator. If on a hot day the temperature exceeds 27 , a messa� ge can be sent to the window opener to open the window. Network and Data Bus The network is the transmitter of the signals in the system. The most popular transmitters are power line, radio signals (RF) and to some extent optical fibers. All modern Smart Home systems have bus-based networks. In a bus-based net all the units in the system can read all the messages. The system unit recognizing their own address reacts to the content of the message. A unit can receive a message individually or as member of a group. Hence, in one case a message can be submitted for one lamp to light, and in another case a message for all lamps to light. 4 Smart Home Market 4.1 Technology Adoption

Figure 1 S-Curve of Different Technology

The adoption of new consumer products follows a standard pattern which called ‘S-curve’, as the graph shows above. At the early stage of the adoption of a new technology, there is a slow take-up in the early years, and then followed by a more rapid increase in adoption which moves the product into the mass market arena. Finally, as the market matures and take-up slows down, the gradient of the S-curve become shallower as it approaches a maximum level of market penetration. While most technologies follow the S-curve pattern of adoption, but they do so at different rates or speeds. For example, it takes 80 years for the telephone to reach 70 per cent of households while the television took only 15 years. Similarly, the electricity has reached 50 per cent market penetration after being in the marketplace for over 50 years, whereas the car has reached only 20 per cent penetration over a similar period [5]. The shape of the adoption cure depends on several different factors, such economical, social, technological factors, which is quite complex. Therefore, it may need a long time for the adoption of Smart Home technology; we may even need our next generation to improve this technology as well. 4.2 Demand and Supply Side of Smart

Home 4.2.1 Demand Side The customers' interest in the concept of Smart Home has been mainly from the DIY and hobbyist segment of the market. Actually, many Smart Home websites and technical literatures are the preserve of these somewhat technically minded accumulative home improvers. The mature projects of Smart Home have only been limited to the academic researcher and wealthy home owners until now. Customers who buy Smart Home only relatively satisfied with their partial systems, typically integrating intruder


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alarms, security lighting, and fire and security sensors. While some customers may be willing to pay additional money on a new or converted property to obtain limited functionality of Smart Home, however, there may be greater unwillingness to retrofit such systems into their existing residences because of the expected disorder. In recent years, there has been an increase in the building and conversion of properties that have embedded Smart Home technology. Moreover, there has been increasing access to the technology for ‘expert home improvers’ and ‘DIYers’. There remains, however, a general lack of passion on the part of construction and property industries, manufacturers and suppliers to push or even properly promote this technology. The lack of common protocols and high initial high investment make the adoption of this technology hardly. 4.2.2 Supply Side Technology of X-10 is introduced in 1979, which is less sophisticated level than today’s Smart Home technology. Twenty years on from X-10, there are two new technological drivers which could give new motivations to the concept of Smart Home: the appearance of powerful microprocessors and the increasing pervasiveness of new digital communications protocols. Microprocessors allow the electronic control of almost all mechanical appliances. Whereas washing machines, fridges and televisions were once controlled using mechanical devices, nowadays the microchip facilitates their control and operation by electronic means including remote control. The digital communications protocols such as the Internet and Bluetooth provide opportunities for standardizing communications between appliances and equipment, and for making the

interface between users and equipment more straightforward and easy to use [6]. There are some more opportunities from the supply side: many new technologies appear; wireless and power line are getting cheap and cheaper nowadays; more and more big companies start to take part in, which can improve the adoption of Smart Home technology; especially for Japanese and Korean residents, the living space is very limited, so they have more motivation to develop Smart Home technology, to improve their living standard. 4.3 Consumer Attitude This survey is conducted by Joseph Rowntree Foundation in 2000 [6]. Four key features of Smart Home were tested out with participants using the following options: 1. remote access; 2. safety and security; 3. centralized control; 4. convenience.

Views about the Smart Home

19%

23%

18%

14%

40%

47%

28%

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Strongly Agree Agree Neither

Disagree Strongly Disagree

Figure 2 Views about the Smart Home Of the four features, security and safety aspects were the most popular with over two thirds agreeing with. The benefits of remote access also had wide appeal. Opinion was more divided on the benefits of convenience and centralized control. In both cases around half of those


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surveyed indicated these features would be useful to them. Groups most likely to value the benefits of Smart Home were: those in work, men, and people aged 15–34, households with children and those who already have access to new technology in their house. The technical aspects of running a Smart Home caused concern among many of those surveyed. Three specific areas of concern were tested out with participants, which are: 1. system failure; 2. lack of control; 3. complexity.

Concerns about the Smart Home

22%

15%

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Strongly Agree Agree

Neither Disagree

Strongly Disagree

Figure 3 Concerns about the Smart Home People were most concerned about the system failing which around two-thirds agreed with. Around half were worried that the system would be too complex and a similar number said they would worry about the system being difficult to override. Older people were most concerned about potential technical problems which two-thirds of those aged over 55 agreed with compared to 38 per cent of the young group aged 15–24. Therefore, people are more concerned with security and safety aspects regarding to the benefit of Smart Home. While system failing is most concerned by users with regard to potential problems of it. The suppliers need to consider

both viewpoints most from the consumer side, while they provide Smart Home to the market. 4.4 Viewpoints of Industry Experts Architect is one of the most important roles during many parts of the design–build process. They have deep influence on the type of services and systems integrated into buildings. Architects believe that rising income and wealth will drive the market for advanced Smart Home technology. The view of building contractors is that advanced Smart Home will remain a rarity at the lower and middle end of the housing market. Some of them see the Smart Home as a ‘fad’, and in some cases regard it as a distraction where they are building for the top end of the housing and apartment market. The specialist contractors and service providers are at the sharp end of the Smart Home industry, and they are generally very optimistic about the growth of similar smart solutions in the domestic home. Property agents and developers maintain that show-homes set up so that the technology can be demonstrated effectively provide the best hope of stimulating an interest in the Smart Home concept. The equipment manufacturers offer strong support for Smart Home technology. For example, Siemens and Sony are, along with the domestic appliance manufactures and ICT conglomerates, at the forefront in developing the common protocols and standards needed to speed up market development in this home technology (e.g., iLINK (IEEE1394) and HAVi) [7]. The experts from academic institutions and research organizations took the most positive stance towards the concept of the Smart Home. 5 Conclusions The Smart Home has remained a dream for years just over the horizon. And the horizon keeps receding. Along the way, there have been


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intriguing pilot projects and lab experiments, but nothing that justified the extra cost to consumers. Today, despite the spread use of broadband Internet and home networks, most consumers still remain skeptical about Smart Home technology. Mass market consumers have almost no interest in using technology for home automation or control [7]. Still, the percentage of households having broadband Internet are growing worldwide, if the government can guide the development of open standards in hardware and software, then the smart meters can communicate with a television set-top box, cell phone or PC [8]. Those devices will serve as remote controls that allow a person to see how much energy a house is consuming and suggest heating, lighting and air conditioning settings to save money. Once a technology platform is in place, the Smart Home market for intelligent appliances and other devices will take off [9]. Therefore, the whole industry will boom. However, there are many different industries get involved in, which makes it more complex than that only single industry can jump to start it, such as building construction/installation, automation industry, consumer electronics vendors, household appliance vendors, and computer and peripherals vendors. All in all it’s still a long way for Smart Home technology to adopt worldwide. References [1]Digital Image Communications, http://dicommunications.com/smarthome.htm [2] Bob Siegel, “The ‘Smart House’— Area homeowners opt for ‘home theaters’ and more”, welcomehome.

[3] Sang Hyun Park, So Hee Won, Jong Bong Lee, “Smart Home – digitally engineered domestic life”, Pers Ubiquit Comput (2003) 7: 189–196. [4] Toril Laberg, Haakon Aspelund and Hilde Thygesen, "SMART HOME TECHNOLOGY: Planning and management in municipal services" [5] IPBusiness, http://www.fatpipeonline.com/departments.php?department_id=12&article_id=344 [6] Mark Pragnell, Lorna Spence and Roger Moore, “The market potential for Smart Home”. [7] Vividlogic, http://www.vividlogic.com/product.php?cat_id=1&p_id=4 [8] Steve Lohr, "The Smart Home Is Still Looking for a Market", The New York Times, January 6, 2009. [9] Victoria Haines, Val Mitchell, Catherine Cooper, Martin Maguire, "Probing user values in the home environment within a technology driven Smart Home project".


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Input Techniques for Mobile Phones: keyboard, sensors, barcodes, RFID, HCI

Afet Musliji Management, Technology and Economics ETH Zurich, CH-8092 Zurich, Switzerland

[email protected]

Abstract

Input techniques linking mobile phones to humans

and to things determine the way these devices communicate with the physical world. Requirements and constraints such as small screens, limited buttons and the mobile setting of the user on-the-go pose new challenges for developing appropriate input techniques that satisfy the user. Different input techniques including state-of-the-art are described in this paper and analyzed based on intuition of the users and functionality of the devices. Effects that different techniques might have on the development of new applications are also provided. 1. Introduction

The mobile phone is the most pervasive electronic device used by people all around the world. In 2008 there were 2.5 billion mobile phones and about 80% of the world’s population had network coverage [2]. It is estimated that by 2015 the number of active mobile phones will be 5 billion [2].

Given the high demand for mobile phones and with the rapid advance of the technologies involved in the same mobile devices the mobile phone has evolved from a simple mobile communication device into a multifunctional device used by people for different purposes. A mobile telephone that provides additional information accessing features combining voice services with e-mail, fax, pager or Internet access is called a smart phone [4]. These additional capabilities of the mobile devices enable people to interact with things, places and other people in the real world. This brings us to the idea of Ubiquitous Computing or the Internet of Things for whose implementation the smart phone is the most promising device. This statement is supported by the fact that the mobile device is always

with the user. However, this does not necessarily imply that the user is always able to use the device raising the question of design challenges particularly the interaction techniques used for the same device. Mobile Human Computer Interaction (HCI) studies these challenges. 2. Mobile HCI - Design Challenges and Requirements

Mobile HCI is a multidisciplinary approach that addresses the design of mobile user interfaces from different viewpoints. Aspects such as user psychology, application design, social usability and communication technology are all taken as inputs in mobile HCI research.

The mobile phone is meant to always be on the disposition of the user. As such, many design challenges and constraints are brought in the design of mobile devices. The issue of input techniques as part of the design and the possibilities emerging from break-through techniques are studied for the purpose of this paper. The major constraints of this nature that are identified are: small screens and limited buttons of mobile devices resulting from their small size, the limited attention of the user in a mobile situation and the limited time that the user has to learn a new interaction technique.

Contrary to these requirements, most of the conventional mobile devices are used under conditions of high cognitive and attention demand; the software of devices is ignorant of the surrounding environment and events and natural gestures of use are missed.

2.1 Small Screens and Limited Buttons

The pervasiveness of mobile phones implies

handsets of relatively small size limiting the space


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available for both screens and buttons, which make up the interface for interaction.

2.2 Limited Attention of the User

The mobile phone is used on-the-go and therefore gets only a limited attention of the user. However, today many mobile applications on smart phones require the full attention of the user. These applications simply ignore the surrounding environment of the user. The user should be able to use a mobile device while doing other activities such as walking or speaking to another person. The mobile device is therefore under the continuous but not full attention of the user. 2.3 Limited Time to Learn

The lifetime of current mobile or smart phones is

relatively short. In addition, the turnover of mobile devices is relatively high compared to other electronic devices. These two facts together imply that users frequently change their handsets and buy new ones. Users often change their handsets with every new subscription whose durations vary between 12-24 months. Many times, users are forced to learn a new input technique when they face a new device [2]. Therefore, there should be standards for the type of interaction for handsets from different manufacturers and different models of handsets from the same manufacturer and the input techniques should be easy to learn. The same techniques would be easy to learn if natural gestures of people are included in the interaction with mobile phones. 3. Scenarios and Techniques

In order to describe some of the techniques that address the requirements of mobile HCI, we will propose different scenarios of mobile phones users in their everyday life and show how these specific techniques are used to effectively perform the required task.

3.1 Location Finding – User Friendly Interface

The first scenario described involves a mobile user who would like to see her next tasks and appointments on the calendar of her smart phone and would want to spot the locations of her meetings on the map [2]. The scenario and its implementation are described in the paper about TapGlance, which is a design proposal for mobile phone user interface.

The user has a brief look at the calendar by pressing and holding a number keypad with the

possibility of having memorized the key for the calendar application benefiting from spatial memory.

Figure 1. A Preview of the TapGlance Interface [2]

She is then interested in the location of her

meetings on her list and decides to fully open the calendar application by tapping the same number key on the keypad. She notices that the locations of her two next meetings are in different places and wants to locate them on the map. The user changes the view style of the application and selects the map view style with double tapping a single number key on the mobile keypad. Again, she can memorize the key for the transition of the view. 3.2 Mobile Phone Users Facing Different Environments – Light and Temperature Sensors Combined with a Touch Screen

The contexts of mobile device use are far more varied and potentially compromised, than the contexts in which we interact with desktop computers [6]. For example, a person using a mobile device on the beach may struggle to read the device’s screen due to glare caused by bright sunlight, while a user on an a cold place with gloves on is unable to accurately press keys or extract a stylus.

The first problem can be solved with the help of light sensors that would detect the intensity of light striking the screen of the mobile device based on which the brightness of the screen would be modified. Whereas for the person who needs to use her mobile phone with her gloves on and possibly with reduced motion ability of her fingers, the device should detect the outside temperature and adjust the display on the touch screen of the device to make the interaction possible. 3.3 Using a Mobile Phone for Physical Browsing – Internet of Things


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The idea of the Internet of Things is that every object becomes a smart object having a tag, which provides a hyperlink to the virtual world. A tag may be for example a barcode, RFID (radio frequency identifier) tag or an IR (infrared) beacon. Based on the tag information, the user can then for example load the page corresponding to the URL to his device and get electronic information from a physical object. This is a powerful paradigm, which adds the power of World Wide Web to the interaction with physical objects [7].

The mobile phone or the smart phone is the most suitable device for interacting with these objects. The main interaction methods that can be used are scanning, pointing and touching.

A person can use the scanning interaction technique in order to find out which objects in her vicinity are possible to be controlled with a mobile phone. The object might or might not be in the sight of the user. The services provided by the tags will then be presented on the user's UI device. Thus the presence of the tags is communicated to the user and the user can then choose the object of interest by using her mobile phone. Effectively, this means choosing a physical object in the digital world [7].

Figure 2. ScanMe [7]

When an object that the user wants to interact with

is visible, then pointing would be a natural way to do it. The user points to the tag on the object with a mobile phone, which can use IR (infrared), laser beam or Radio Frequencies.

Figure 3. PointMe [7]

Finally, the interaction technique involving

touching would use RFID tags on the object whose information would be accessed by bringing together the mobile device with the smart object. This technique is suitable for a person who is shopping and needs additional information about the product that she is interested in buying. The hyperlink on the RFID tag of the product provides access to the page where the consumer can learn more about the same product.

These entire interaction techniques enable the mobile phone become a universal remote controller. 4. Research Area

With the latest trends [6] in society and technology of increasing amount of personal computing done away from the desktop; the increasing capabilities of ever-smaller devices; the congruence of computing capabilities onto mobile phones and the overall ageing of the population, mobile HCI research becomes ever more important.

Mobile personal computing brings the physical location of the user to be considered for a comfortable and normal usage of the device. The amount of light and the ambient temperature have a dramatic effect on the overall performance of the mobile phone and thereby customer satisfaction. Situational impairment [6] stemming from such physical conditions should be better understood so that solutions to such impairments can be incorporated into new devices. This also applies for ageing users of mobile phones, whose ageing related impairments affect their user experience.

The small size of mobile devices and the variety of those handsets offered on the market bring the requirement for common standards on input techniques. Users of mobile phones would prefer to learn once and use the same input technique everywhere [2].


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The greater computing capabilities and the increasing pervasiveness of the mobile phone or the smart phone imply that mobile human computer interaction is an interesting and a very important research area. Mobile HCI research will try to find new technologies and techniques to increase the effectiveness of the pervasive computing device – the mobile phone of the future.

5. Conclusion

In summary, we can conclude that input techniques for mobile phones should be developed in accordance with the specific requirements of the mobile environment. The issues faced are addressed with technological solutions such as different keyboards, sensors for different purposes, barcodes and RFID tags.

In this paper, the challenges faced in designing and selecting appropriate input techniques for mobile phones were discussed. The design issue of mobile HCI gains even a greater importance considering the abundance of the mobile phone all over the world and its potential as a future ubiquitous computing device. The design requirements stem from the nature of the mobile device and the usage of the device not neglecting the environment that surrounds the users.

Based on these challenges different scenarios of mobile users were identified and solutions using state-of-the-art technologies were proposed based on research and already developed applications on this field. The paper ends with an overview of the mobile HCI research area and the problems that it strives to solve. 6. References [1] Enrico Rukzio, Gregor Broll, Karin Leichtenstern and Albrecht Schmidt. Mobile Interaction with the Real World: An Evaluation and Comparison of Physical Mobile Interaction Techniques. Ambient Intelligence, LNCS 4794, 2007. [2] Robbins, D. C., Lee, B., and Fernandez, R. 2008. TapGlance: designing a unified smartphone interface. In Proceedings of the 7th ACM Conference on Designing interactive Systems (Cape Town, South Africa, February 25 - 27, 2008). DIS '08. ACM, New York, NY, 386-394 [3] Smart phones: how to stay clever in a downturn. http://www.deloitte.co.uk/TMTPredictions/telecommunications/Smartphones-clever-in-downturn.cfm [4] CEVA Glossary of Terms. http://ceva-dsp.mediaroom.com/index.php?s=glossary

[5] Ken Hinckley, Jeff Pierce, Mike Sinclair, Eric Horvitz. Sensing Techniques for Mobile Interaction. Microsoft Research, One Microsoft Way, Redmond, WA 98052 [6] Jacob O. Wobbrock. The Future of Mobile Device Research in HCI. Human-Computer Interaction Institute, School of Computer Science, Carnegie Mellon University, Pittsburgh, PA 15213 USA. CHI 2006 Workshop [7] Pasi Välkkynen, Ilkka Korhonen, Johan Plomp, Timo Tuomisto, Luc Cluitmans, Heikki Ailisto*, and Heikki Seppä. A user interaction paradigm for physical browsing and near-object control based on tags. Mobile HCI Conference 2003


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End User Programming in Internet of Things

Özge Kökçü Department of Technology, Management and Economics, ETH Zurich

[email protected]

Abstract

Web-enabled cell phones, sensors, different design tools, public APIS, PDAs, toolkits are becoming pervasive and cheaper day by day. Moreover, it is simpler to learn how to use them. On the other hand they are designed for a general user with specific needs (lack of customization). This fosters end-users who are mostly non-professionals for developing their own applications for their devices. The aim of this paper is to focus on end user programming in internet of things. First of all, the definitions of end user and end user programming will be stated to understand the concept better. Then, it will concentrate on end user programming in internet of things with specific examples such as Exemplar, Lashups and Chief Cook Robot. Finally, after discussing the advantages and disadvantages of adding end user programmability feature to products, the future work in internet of things will be mentioned in brief.

1. Introduction With the help of internet, information sharing

accelerated rapidly. Users can reach any information they want very easily and quickly. Furthermore, involving the users in the product development phase is the new trend. Therefore, end user programming is becoming pervasive and it brings the flexibility for users to make additions to their products according to their own specific needs. Since users know their problems best, it will be very beneficial for both users and product developers to add end user programmability feature to the products. End user programmability in the framework of internet of things is a progressing research field which aims to involve users in product development to reduce the

related costs. Before getting in the subject one has to know who the end users are and thus in the next section the definition will be given.

2. End Users

End users are the users of a program. They can be artists, receptionists, teachers, designers, students, animators, accountants, in brief; everybody who uses computer can be an end user. End user programmers write applications but this is not their primary job. They may have different backgrounds in programming. They perhaps take a course in college or learn it from their friends or they may not have any knowledge at all.

Scientists and physicists were the first end user programmers. It was very difficult for them to learn programming with assembly language. Therefore, Fortran was launched in 1950s which made their life easier. They were able to develop their own applications easily and quickly. Then, the next group consisted of people who wrote spreadsheet macros. Lotus was the main program that they used. Database builders followed spreadsheet macro writers quickly. They wrote programs for data storage and for retrieval of customer information to keep track of their customers. Finally, with the internet boom in mid 1990s, almost everyone became an end user programmer [6]. Information sharing accelerated with internet boom and easy access to data helped people to develop their own applications.

As stated in EUSES (End Users Shaping Effective Software) web page, there were 2.75 million “professional” programmers in the US, it was expected that the number of end user programmers would exceed 55 million by 2005 [8].


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3. End User Programming

Before defining the end user programming, it will be more appropriate to define programming first. Programming is the creative art of instructing a computer what you want it to do. Simply, it is defining a sequence of commands to a computer to perform a specified task. With the advance of technology the nature of programming is changing rapidly. Everyday, lots of new tools emerge to allow users to design new applications and to do programming. As a result of this, more and more nonprofessional people are being included in the world of programming. The emerging trend in programming is to increase the number of people who can do programming for their own usage. More and more products are trying to integrate scripting or some sort of macro languages. This concept is being described as “end user programming”. The definition of end user is clear but the use of “programming” in this context creates confusion. End-user development, end-user customization and end-user software engineering are other concepts that are used to prevent this confusion.

In the context of this paper, end user programming is the programming done by the end users who are not professional programmers and do not have any educational background in programming [7]. With the help of end user programming, the power of software is increased significantly since the users are not restrained by the capabilities of the software. The internet boom made it possible to access lots of technologies easily and quickly. This leads users to new ways to develop applications and programs.

There are different approaches for end user programming such as programming by demonstration, visual programming, natural-language syntax and forms-based programming. Programming by demonstration means allowing users to demonstrate their actions and inferring programs that correspond to those actions. Visual programming refers to providing a visual interface to programmers such as dataflow diagrams, flowcharts and screen-layout systems. Natural-language syntax is making the programming language similar to a spoken human language. Cobol and HyperTalk tried this approach. Finally, forms-based programming means programming by filling out a set of forms that query a user about the types of inputs and results she/he wants [7].

Typical software with end user programmability feature should have an editor, an interpreter or

complier, error checking and debugging tools, documentation and version management tools at least, as the bare minimum requirements [7].

There are lots of software programs available for users that have end user programmability feature. LabVIEW (a functional measurement application with analysis and a custom user interface), Mathematica (to monitor the movements of the stars, create interactive graphs of stock prices, or manipulate digital photos, etc), Citrus (Graphical structured editors for code and data), Barista (to create of a new class of highly visual, highly interactive code editors), Exemplar, etc. This paper will give detailed examples from tools that are used in internet of things.

4. End User Programming in Internet of Things End user programming in internet of things is a

relatively new concept and there are limited applications available to users. However, there are serious ongoing researches. Progressively more diverse set of sensing technologies is appearing in smart products and research projects. In this context, different research groups such as HCI (Human Computer Interaction) in Stanford University are trying to develop prototyping tools that allow designers to gain insight into the design space of sensor-based interactions more rapidly[3]. In the following subsections, applications with end user programmability feature will be discussed to illustrate the concept more concretely.

4.1. Chief Cook Robot

This robot is developed in EPFL (Ecole Polytechnique Federale de Lausanne) in Learning Algorithms and Systems Laboratory (LASA). It is a good example of programming by demonstration to clarify the concept of end user programming. It imitates the basic actions demonstrated by people. Manipulation of objects and reproduction of gestures are the main imitation tasks that are performed by this humanoid robot. To illustrate, it can cook an omelet by whipping eggs, cutting ham and granting cheese.


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Figure 1. Body gestures are recorded by motion sensors. Sensors gather data about body position independent from environment [9].

Information flow in the system starts with the human performing the action (see Figure1). After that, robot gets the signals and decides what to imitate by first reducing the dimensionality and then making probabilistic data encoding. Next step is determining the task constraints and how to imitate the action. Finally, the task is reconstructed in data space and robot imitates the action.

There are three ongoing researches for this project: learning task constraints, dynamical control, and general inverse kinematics. Besides that, the researchers are concerned with biological principles to improve the robustness and flexibility of the robot [9].

4.2. Exemplar

Exemplar is a prototyping tool that takes sensor data as input and gives constructive events as output for interaction design. It also uses the programming by demonstration technique. First of all, end users perform the action with the sensor. Then, the program generates corresponding signals which can be reviewed by the user from the computer screen. Finally, user can review the result by demonstrating the action again. Moreover, it is a very powerful tool that can author individual events that depend on multiple sensors and multiple events for a single sensor. To illustrate, Exemplar can be used to prototype an accelerometer based control for existing game in less than 30 minutes [3].

Exemplar made a study with 12 participants. The participants belonged to different ages, sexes, and educational backgrounds. Although they had some human computer interaction design experience, none

of them was an expert in sensor programming. The aim of the study was to assess the ease of use of Exemplar. Participants were given 3 tasks to complete. The first two tasks were relatively easy compared to the last one. The results were quite satisfying. The first two tasks were completed by everyone and they at least completed a part of the third task. After the study, participants indicated that Exemplar was successful in decreasing the time required to build prototypes, facilitating rapid modifications, enabling more experimentation and helping them to understand user experience. From the study as a whole, it was concluded that majority of the participants spent most of their time on designing rather than implementing. Furthermore, they defined two main shortcomings in Exemplar. First one was that users were not able to see the events (available build-in functions) that they do not use but still active. Second one was the training examples were hard to find after they started their implementation since they were pushed too far off-screen [3]. However, developers of Exemplar have overcome these shortcomings recently.

4.3.Lash-Ups

Lash-up is a toolkit that end users can use to develop location aware web services for their cellular phones. Both cellular phones with internet connections and public APIs for web services are becoming pervasive. This will increase the usage of the lash-ups. Lash-up toolkit solves the main problem of previous mash-ups which is identifying the user’s location without asking for any inputs from the user [2].

This toolkit has two main components: server and client. Server has the data for available lash-ups for users. Client resides on the user’s cellular phone. Client gathers location information and sends it to lash-up server and server searches for relevant lash-ups and sends back the list of relevant lash-ups in which the user can choose whatever he needs.

There can be several applications of lash-ups. They could be used as reminder service. After doing the necessary settings, whenever the user enters a predefined region, lash-up server could remind him to do something such as buying gasoline for his car. Moreover, they can be used for searching web content with entering location data. For example, users can find out the nearest markets around without entering input.

Developers of lash-ups are trying to improve it further. Now, they are trying to develop new tools to


25

make it easier to develop Lash-Ups for users. Besides that, they are working on the content they send to the end users. They are trying to make it as relevant as possible and to increase the quality. Moreover, they are exploring new ways for identifying group behaviors and personal preferences of individual users. Lastly, in Lash-up distribution, they are trying to use supplementary attributes of users such as time of day and place, etc [2].

5. Pros & Cons

The costs and benefits of adding end user programmability feature to your product depends on how much control and programmability you plan to maintain for users. Benefits are worth to consider. First of all, users know their needs and problems best. It is impossible to address the needs of every single user’s specific needs. Therefore, adding end user programmability feature will make the product simpler and more reliable. Product will just have the general features needed. Allowing users to add their programs would give them freedom and responsibility at the same time. Instead of blaming the developers of the product, they would try to solve their problems on their own. Furthermore, serious users will realize the missing parts of your product and they will be able to participate in the improvement of your product [7].

On the other hand, the managers and developers of the product will fear the loss of control on the performance of the product. Users can decrease the performance with their applications and then blame the product for operating slowly. Moreover, the users may be slow adaptors and may not be used to programming. Therefore, detailed documentation and training will be needed for the beginner users which mean extra time and resources. Also, users will not be aware of their limitations and some of the programs that they will develop may do unintended and damaging things. Another disadvantage is the different versions of the product may confuse the users. Even if radical changes are done in the product, users will still want their programs to work in new versions [7].

Warren Harrison, a professor in Portland State University, approaches end user programming from the security perspective. He points out that many e-businesses have bankrupted because of Web sites written by end users who learn Perl or HTML on their own [6]. End users are not aware of the importance of securing their applications. In response to this, the concept of end user software engineering emerged. End user software engineering cares for

reusability, security, and variability besides the programming.

6. Future Work

End user programming in internet of things is a relatively new concept and it is difficult to find a lot of information in this concept. Exemplar and Lash-up are good tools for this topic. Developers of both Exemplar and Lash-up are still trying to improve their products. Besides these, many other new applications can be developed. Developing a product where people could use RFID tags to keep track of their stuff may be another possible application. Users will place RFID tags into their stuff and through a computer program they will be able to define where their products are and keep track of goods that they borrowed to other people. As chief cook robot developed in EPFL [9], applications that can be configured by programming by demonstration will be other useful and easy to use tools for end users. These robots can be used for doing small daily works of end users.

7. Conclusion

This paper introduced the concept of end user programming in internet of things which is one of today’s important research fields. Applications like Exemplar, Lashups and Chief Cook Robot are different examples from this field. They are developed in universities and there is still room for improvement. Involving users in product development by giving them the chance to make additions to the product will both add value to the product and lower the costs for producers. On the other hand, adding end user programmability will impose additional costs and has some cons such as detailed documentation and training will be needed and applications developed by end users may cause unexpected and unintended damages. End user programming in internet of things is open to discussion and improvement.

References

1) Hartmann B., Klemmer S. R., Bernstein M., Abdulla L., Burr B., Robinson-Mosher A., Gee J., “Reflective Physical Prototyping through Integrated Design, Test, and Analysis”, Standard University HCI Group, Standford, USA

2) Brandt J., Klemmer S. R. “Lash-Ups: A Toolkit for Location-Aware Mash-Ups”, Stanford University HCI Group, Stanford, USA, 2006.

3) Hartmann B., Abdulla L., Mittal M., Klemmer S. R., “Authoring Sensor-based Interactions by Demonstration with Direct Manipulation and Pattern


26

Recognition”, Standard University HCI Group and The MIT Media Laboratory, 2007.

4) Riehle D., “End-User Programming with Application Wikis: A Panel with Ludovic Dubost, Stewart Nickolas, and Peter Thoeny”, SAP Research, SAP Labs LLC, CA, USA.

5) Wong J., Hong J. I., “Making Mashups with Marmite: Towards End-User Programming for the Web”, Human-Computer Interaction Institute, Carnegie Mellon University, Pittsburgh, USA.

6) Harrison W., “From the Editor: The Dangers of End-User Programming”, Software, IEEE, Volume 21, Issue 4, July-Aug. 2004 Page(s): 5 – 7.

7) End-User Programming Homepage. http://www.cs.uml.edu/~hgoodell/EndUser/

8) EUSES (End Users Shaping Effective Software). http://eusesconsortium.org/

9) EPFL Learning Algorithms and Systems Laboratory http://lasa.epfl.ch/


27

User-Generated Content

Niroshan Balasubramaniam

ETH Zurich, [email protected]

Abstract

Internet has enabled major revolutions. One of this,

was to give back the power to the people. We discuss in

this paper how the development of new platforms like

Wikipedia or Facebook, entirely created by users, is a

landmark in the world of Web 2.0, setting user-content

at its core. We review the different types of user-

generated content as well as their recent evolution. We

then understand how product recommendations made by

consumers through user-generated platforms can enable

us to make better buying decisions, notably in the frame

of shops, by using the mobile interface Apriori.

1. Introduction

Web 2.0 is currently one of the most widely used

buzz word in the Internet industry. This term describes a

new generation of web interfaces enabling users to read,

share and write content over the web. User-generated

content (UGC) like Facebook or YouTube are

challenging the traditional media. Encarta, a private

endeavor from Microsoft to build a digital encyclopedia

has now been ruled out by users preferring free and open

contents like Wikipedia [1]. During the Asian Tsunami

in 2004, personal blogs from tourists who survived the

earthquake have been able to inform citizens around the

world about the happenings, faster and with more details

than the websites of CNN or BBC [2]. Traditional media

have found themselves losing a bit of their supremacy,

losing their roles as gatekeepers of published content –

Internet has finally given back the power to the people

[3].

In this paper, we address this new paradigm changing

the consumers into creators. We will first define what a

user-generated content is and give an outlook of the

different types of UGC. We will then understand the

different sociological, economic, legal and technological

drivers that have permitted the fast development of

UGC. After that, we will understand how product

recommendations are being used by UGC based

websites to improve their business model. We will from

then on discover how Apriori, a mobile platform, and the

Internet of Things, could facilitate product

recommendations. We will then conclude this paper by

summarizing the key points that we learnt and address

the next challenges of user-generated content.

2. Defining user-generated content

There is currently no standardized definition of user-

generated content (UGC). The studies on the social,

economic and cultural impact of these platforms are just

at their premises. The OECD defines UGC as fitting the

following requirements: i) a content which is made

publicly available, through internet, ii) boasting a certain

level of creativity and maybe the most important point

iii) contents created outside of professional practices [4].

Contrary to what we could think, most user-generated

content outputs are created without expectation of any

kind of profit. Nevertheless, the amount of people

contributing to these platforms is growing at such a level

that these latter are almost turned into databases

containing an incredible rich value for companies who

could use them as market-research-like data to

understand the trends, needs, wills and interests of

consumers [5]. People contributing to user-generated

contents on the web are usually on the look for three

main returns: connecting with people, a form of self-

expression and as well as to receive recognition or

prestige for their work [4].

3. Forms of user-generated content

Now that we have understood the basic requirements

for a web content to be characterized as user-generated

content, we would like to understand the different forms

that these UGC can take. This is a rather difficult and


28

controversial exercise as different people could group the

many UGC websites into different groups depending on

their own interests. It is somehow also challenging to

classify the various types of UGC as these involve more

and more not only one type of media or activity but

several. Facebook is for example a case where people

can at the same time stay in touch with people, share

videos as well as create groups with information on a

topic. Nevertheless, for Steve Rosenbaum from

AlwayOn [6], a source of information for technology

savvy consumers, we can split the world of user-

generated content in seven groups according to their

main use (fig. 2).

Fig. 1: The different forms of UGC (source: [6])

We first have the media websites like Youtube, where

users can freely upload and share their own videos. We

then have the chat interfaces to better connect with

people like Facebook or Linkedin where we can even

develop contact with totally new people. Then we have

platforms to share personal information which targets

mainly the family or friends like with Flickr where you

can easily upload all your private pictures. Next, we have

an industry growingly using UGC to make money, the

Ecommerce platforms like Ebay. People can also meet

with people sharing common and specific interests,

through websites like Meetup. To end this classification,

we have two groups using blogs as layout, the news and

the voices, mainly used to inform people. Blog news are

now competing with websites like CNN or BBC and

usually deliver more specific, personal and quicker

uploaded news than the latter. Voices are usually famous

bloggers who have become famous personalities through

the web in the recent years by providing their views on

political, social or economic trends.

To understand the user-generated content

phenomenon, it is interesting to analyze the amount of

users for different websites. In Table 1, we see that the

trend of UGC is generally moving towards blogs and

social networks, the two most personal types of user-

generated content. It is also interesting to note that an

impressive 70% of internet users are actual consumers of

UGC, and this amount will be steadily growing in the

next few years.

Table 1: User-Generated Content Consumers

2008-2013 (% of Internet users, source [7])

Based on numbers from 2008, we can note the

impressive amounts of people visiting famous UGC

website such as MySpace, Wikipedia or Facebook. More

than just purely numbers, these websites are extremely

dynamic and competitive: if we compute the site

analytics for the unique monthly visitors for Facebook,

Google.com and Microsoft.com, we see that for the

month of March 2009 only, Facebook records more than

90 mio visitors, while Google and Microsoft have

respectively 140 mio and 60 mio visitors [8]. This

figures are even more impressive if we consider how

often one searches for information on Google.com or

how established are websites like Microsoft.com. In the


29

last one year, Facebook boasts a 200% increase versus

5% for Google. But success does not necessarily mean

continuity: Myspace, the former big star of UGC is now

losing its trendy image and has lost more than 10%

visitors in the last year and this decrease continues. A

few numbers characterizing this glorious past are given

in figure 3 from which we can understand the big change

of dynamics recorded after just one year: MySpace was

at that time described as the most popular and ever

growing UGC website – fact that is no more the case.

This should be a signal for creators of new social

networks. Even if the attention from massive amounts of

people is rather easy to catch, it is difficult to last in this

world of UGC where new ideas are popping up every

day. Unfortunately, very often, these websites do not last

long enough to be able to monetize and capture the value

of their large pool of consumers [9].

Fig. 2: Monthly visitors of UGC websites in 2008

(source: [6])

4. Drivers of user-generated content

We have seen now the different forms that UGC

could take and understood the high dynamics

characterizing this field. It is of central interest to

identify the different drivers which have brought us to

this status enabling so many user-generated contents to

blossom in the World Wide Web. According to the

OECD [4], we can spot four major drivers which have

shaped this change: i) Technological, ii) Social iii)

Economical, iv) Legal.

Technological drivers. This driver is maybe the most

important of the four drivers. Broadband has rapidly

been taken up by many households starting from late

90s. This has enabled users to upload and download

massive amount of data. High speed internet has enabled

people to integrate large videos or pictures to their

websites and make the use of internet much more

enjoyable and interactive. As a second step, we can note

the incredible advances that happened in the hardware

industries as well as the multiplication of a number of

consumer electronics goods enabling people to share

content ever more (digital cameras , digital video

recorder, new generation mobile phones,…). Third point,

maybe one of the least noticeable but the most important,

the development of interfaces and online applications

enabling users to create, post and upload content in a

very easy and rapid way.

Social drivers. A significant amount of people using

internet nowadays are users that are often called the

“digital natives”: people born with the new IT era, for

whom watching TV over the internet or using MSN or

ICQ to chat is simply the norm [10]. These people have

substantial IT skills and are predisposed to contribute

content to the World Wide Web. This younger group is

also very often the most exposed category of people

using social networks and following easily new trends.

Economic drivers. These drivers partly follow the

technological drivers. Indeed, as technology improves,

internet connection or consumer electronics are

affordable by a growing percentage of the population.

More than that, new ideas to monetize social networks

and user-generated content are pushing more and more

companies to start a UGC-like platforms, enabling them

a novel way to market their brands, leveraging notably

on viral marketing campaigns. Examples abound but one

exemplifying case is maybe the ketchup company Heinz

which has recently launched a campaign to let

consumers create their own advertisement, with a

comfortable money prize for the best. These home-made

advertisements are now being uploaded on their website

as well as one Youtube where they record a significant

audience.

Legal and institutional drivers. This driver is key in

the development of UGC as one need to make sure that


30

his creation will remain his, be it a luxurious painting or

simply an upload of an amateur picture on Facebook. It

is also a challenge as we should give property rights to

creator without making it to restrictive as this would lead

to a lower rate of sharing among users. A good example

of intermediate solution is the Common Creative (cc)

standard which requires the users to strictly mention the

name of the actual creator of the picture, text or video

but also let them freely share and distribute this content

to any third party.

We summarize the impact of these four drivers in the

following scheme.

Fig.4: Four drivers leading to the current world of UGC

5. Product recommendation

User-generated content are not only useful to connect

with people or to share knowledge, but they have also

been proven successful in driving sales, notably in the

frame of e-commerce platforms such as Ebay or Amazon

[11]. Indeed, one of the major challenges that these

websites have faced at the beginning of their venture was

to gain the trust of their consumers [12]: how could a

consumer be sure that a person living 3000km away

from him will indeed send the MP3 player or T-shirt he

ordered? E-commerce companies have developed

platforms for consumers to create content notably on

recommendations of products and sellers of these

products. In many such platforms, the fact that people

could even rate the recommendations has made them

ever more reliable.

There are mainly two types of product

recommendations: the product ratings and the product

reviews. The first one is usually used to give a brief

approval on the quality of a good, by giving a rating on a

one to five stars scale. The second, reviews, are a tool

used to give more precise and comprehensive

information on the experience with this product and

consist of a text of usually 100-200 words.

It is interesting to notice that some companies like

Epinions.com, have even based their business model on

these recommendations [13]. This website has indeed

created a full database containing thousands of reviews

and ratings of different kind of goods and services. The

main interest for a potential buyer of a product would be

to gather more information on the product to actual real

experiences of people who are not linked to the company

selling the product and thus who are unbiased.

Other similar websites include hunch.com,

ratings.net, reviewcentre.com, kelkoo.com and

edigitalresearch.com.

6. UGC + Internet of Things = Apriori

In the frame of the internet of things, where electronic

components and objects are linked by wireless

connections, User-Generated Content can help as an

interface between consumers and the goods that they are

interested to buy.

If we now consider the tens of different products for

one category like olive oil or MP3 player, both boasting

an incredible various range in terms of quality and price,

we understand the possibilities of product

recommendations as enabling the consumer to make

better buying decisions. Usually, a typical consumer will

not try to look for much information when it comes to

but in a shop. Nevertheless, it is believed that 3 out of 4

buying decisions are made in the shop themselves [14].

Thus, to enrich a consumer’s information on a product,

in an easy way, researchers at ETH have came up with

Apriori, an interface connecting mobile phones, the

products and a database of recommendations. Mobile

phones are indeed always accessible for a consumer even


31

in a shop and have a high penetration rate among people

- usually more than 90% in big cities [1

The program enables mobile phone

specific headset, to recognize the pro

bar code or in the future thanks to RFID tags. By

connecting to Apriori, consumers can access existing

recommendations on the same pro

usually ratings rather than reviews as this tool is much

more convenient for a quick buying d

consumers can also submit product ratings from

anywhere, enriching the database ever more

Fig.5: Apriori enables recognition anrecommendation on products (source

There would be standard criteria, usually vali

most products, like the price/quality ratio

specific criteria that could be added

himself like the quality of headsets for an Ipo

would also require the presence of a mo

is done currently in Wikipedia, delete or amen

relevant rating criteria. One potential future application

would be to connect Apriori with exisiting

such as Epionions.com, to enrich even more user

experiences [14].

One can doubt in general on the quality of these

recommendations and might address the issue of

reliability of ratings, in the frame of a worl

lead by companies monitoring and orchestring the image

that they project. This could be prevente

other forms of User-Generated Content, the social

networks. Indeed, in the future, we might be able

the recommendations coming only from our close

of friends, by for example taking the ratings coming only

from people who are connected with you on Facebook.

Someone who is interested in having the view of

professional computer scientists on the buying of a new

have a high penetration rate among people

14].

The program enables mobile phones, through a

to recognize the product thanks to its

e or in the future thanks to RFID tags. By

cting to Apriori, consumers can access existing

ations on the same product, which are

usually ratings rather than reviews as this tool is much

decision. The same

uct ratings from

atabase ever more (figure 5).

Apriori enables recognition and submission of

ucts (source: [14])

criteria, usually valid for

s, like the price/quality ratio, but also more

by the consumer

sets for an Ipod. This

also require the presence of a moderator who, as it

elete or amend non-

ne potential future application

be to connect Apriori with exisiting databases

such as Epionions.com, to enrich even more user

oubt in general on the quality of these

ress the issue of

ratings, in the frame of a world growingly

orchestring the image

be prevented by leveraging

Content, the social

, in the future, we might be able to filter

ations coming only from our close circle

s, by for example taking the ratings coming only

with you on Facebook.

in having the view of

n the buying of a new

laptop could for example filter the ratings coming from a

social network used by specialists of the fiel

example.

7. Conclusion

Web 2.0 sets user-content at the heart of its

development. From a state where creators and

were split into two worlds, internet has been able to give

the power to consumers to become creators. Platforms

like Wikipedia are nowadays almost as trusted as

professional traditional encyclopedia

free did not mean poor-quality.

becoming almost a second

your first one, be it Windows or Apple, enabling you to

access data, send information, to uploa

your desktop and a growing amount of functions. Blogs

created by simple persons are nowa

CNN.com or BBC.com, the tra

information. We have seen in this article the

types of UGC as well as the four

the development of user contents

economic as well as legal drivers

on e-commerce platforms using UGC as a tool to make

their services more reliable an

research by presenting Apriori, a platform connecting

user-contents, mobile phones an

help consumers to make better buying

interesting to see that all the

it a simple blog or writing a complicate

quantum physics on Wikipe

the power to the people. We create the worl

tomorrow.

Nevertheless, major challenges persist in this new

paradigm, such as the level

these information being written by non

notably on topics like science or

address some privacy issues

not always meant to be share

like facebook or Flickr reveals very private information

that is indeed difficult to control.

emphasis should be put on giving

to the creators of UGC, through for example the

common creative standard. To conclu

for example filter the ratings coming from a

by specialists of the field for

content at the heart of its

development. From a state where creators and consumers

, internet has been able to give

the power to consumers to become creators. Platforms

like Wikipedia are nowadays almost as trusted as

professional traditional encyclopedia and proven that

quality. Facebook is today

d operating system, next to

ows or Apple, enabling you to

information, to upload videos from

a growing amount of functions. Blogs

by simple persons are nowadays competing with

CNN.com or BBC.com, the traditional gatekeeper of

information. We have seen in this article the different

types of UGC as well as the four drivers having secured

evelopment of user contents, technological, social,

rivers. We have then focused

commerce platforms using UGC as a tool to make

their services more reliable and we concluded our

research by presenting Apriori, a platform connecting

contents, mobile phones and recommendations to

help consumers to make better buying decisions. It is

interesting to see that all the different types of UGC, be

it a simple blog or writing a complicated article on

quantum physics on Wikipedia, has finally given back

eople. We create the world of

Nevertheless, major challenges persist in this new

as the level of trust that one can put on

ing written by non-professional,

science or medicine. One can also

s as user-generated content is

not always meant to be shared with anybody: websites

like facebook or Flickr reveals very private information

ifficult to control. More than that, more

be put on giving some forms of rights

to the creators of UGC, through for example the

. To conclude, this whole new


32

sets of social networks might have a difficult time in the

future to survive and be more than a periodic trend. As

we have seen in this paper, monetization of social

networks and UGC is a major issue for many of these

platforms.

References

[1] Microsoft closing Encarta online encyclopedia, March 2009

http://www.physorg.com/news157661569.html

[2] Tsunami Blogs Help Redefine News and Relief Effort,

January 2005

http://news.nationalgeographic.com/news/2005/01/0126_05012

6_tv_tsunami_blogs.html

[3] Online Collaboration Boosts Power of the People, January

2009

http://discoveryfuel.com/collaborative-design/online-

collaboration-boosts-power-of-the-people/

[4] Web 2.0, Wikis and Social Networking: OECD study on

user generated content, October 27, 2007

[5] Marketing with user-generated content, The McKinsey

Quarterly, A. G. Shenkan and B. Siche, November 2007.

[6] 2008, the Year of Nano-Networks

http://alwayson.goingon.com/permalink/post/22841

[7] User-Generated Content Draws Fans. February, 2009.

http://www.emarketer.com/Article.aspx?R=1006895

[8] Compete.com, April 2009.

http://siteanalytics.compete.com/facebook.com+myspace.com/

?metric=uv#

[9] Who’s Worried About Facebook? Not Twitter, February

2009.

http://gigaom.com/2009/02/08/whos-worried-about-facebook-

not-twitter/

[10] User-generated content drives half of U.S. top 10 fastest

growing web brands. Nielsen / Netratings, August 2006.

http://www.nielsen-online.com/pr/PR_060810.PDF

[11] Digital Natives, Digital Immigrants, On the Horizon, Marc

Prensky, MCB University Press, Vol. 9 No. 5, October 2001

[12] Flaws with the eBay Trust model, November 2005

http://benmetcalfe.com/blog/2005/08/flaws-with-ebay-trust-

model/

[13] http://www.epinions.com/about/

[14] APriori: A Ubiquitous Product Rating System, F. von

Reischach, F. Michahelles, Workshop on Pervasive Mobile

Interaction Devices (PERMID) at Pervasive 2008, Australia,

May 2008.


33

Monetization of Mobile platforms

Avinash Vankadaru Management, Technology and Economics ETH Zurich, CH-8092, Switzerland [email protected]

Abstract Social community platforms had great success on the Internet and even created the term Web 2.0. Currently, some of the platforms are expanding their applications to mobile phones and other new platforms specifically designed for mobile devices allowing them to find friends, share data and do many other things by connecting to the world of internet of things. This paper will provide a characterization of Mobile 2.0 and broad classification of its present day services. Later we look into the different conceptual ways of monetizing these services with appropriate examples. This paper explains the reader about fundamental concepts present behind the business models adopted by many successful and unsuccessful companies. At the end we look at some of the challenges faced during this monetization process and finally come up with some do’s and don’ts before you make up your own business model. 1. Introduction Mobile social community platform in its most common usage means a range of mobile software programs often web based, which allow users to interact and share data with other users or services. The social networking phenomenon is leaving the confines of the personal computer. [1] New powerful and well connected mobile devices are allowing people to send round-the-clock updates about their vacations, their moods or their latest haircut. Mobile is going to be the next big internet phenomenon. It holds the key to greater access for everyone – with all the benefits that it entails. The phenomenon of leveraging mobility and the handset to enhance user’s relationships and lifestyle via web-enabled communities and other two-way interactions, is fast gaining traction with mobile network operators, headset manufacturers and application developers as a

way to drive differentiation and enhance user experience. Advances in operating systems, browser technology, search capabilities and user interface, have enabled high profile Mobile-Web deals. With high interest from operators in all countries and increased data usage, Mobile Web 2.0 is poised to alter the way people interact with their phone and their world. However, fragmentation in the devices and systems, combined with questions about user experience and the business models that will effectively monetize Mobile Web 2.0, has led to some serious doubts about the maturity and success of this phenomena.

Looking back at the internet and social network boom, we can observe that year on year many services have vanished from the frontier because they could neither make any money out of them nor could get the critical mass required to invest further .Even as of today most of the popular networking sites like Face book, MySpace, Skype [9] etc are in the red zone. As compared to the internet base application, mobile social networks and applications should be more careful regarding their products, services and their business models because Web 2.0 applications are blessed with the internet boom of 2000’s where in a vast amount of money has been invested in building up those undersea cables and connectivity, thereby making it really cheaper to use that bandwidth, so gathering a critical mass for survival has never been a problem. But in Mobile 2.0 services, it is expensive for the consumers even to send a short message [5]. So the startups should not think of building up the critical mass as done by Web 2.0 applications, but should provide useful and innovative services which can attract customers and also be able to retain them. They should go for monetization of those services from the initial stage otherwise they might not be destined to survive a longer gestation period and will soon be busted. Also choosing the business model is very crucial for the success of company and this aspect must be taken into consideration right from the beginning.


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The current Mobile Web 2.0 is characterized by • More and more mobile operators migrating to

flat-rate pricing schemes • Potential for using location based tagging • To enhance user generated content

identification, and community networking, development of mobile browsers and widgets to manage the web experience on the device

• Moves towards standardization and efforts to create a seamless web-mobile experience for long tail sites

• High interest in mobile advertising as a new revenue stream for users and as an effective marketing tool.

• Early adopters already demonstrating the potential for leveraging device features to enable on-the spot blogging.

Additional characteristics of Mobile 2.0 in the future,

• Making use of new sensor technologies (accelerometer etc) that will be adopted by mobile phones in the future and connecting to the Internet of things.

• Mobile phone will be the first computer accessed by rural population in most of the countries and these services will help the internet penetration there by increasing the productivity.

2. Monetization This paper will give a brief insight into the different possible conceptual ways of monetizing these platforms. They are defined as below a) Consumers pay b) Companies sponsor c) Advertising d) M-Commerce Almost all the new innovative ideas used by any of these Internet and mobile startup firms fall under either one of these categories. Many new services are using a combination of these ways, in order to make it more effective and it also seems working on the ground level. 2.1. Consumers pay In the real world consumers paying for the resources they utilize is quiet normal, but in virtual world this is more or less a taboo till now for most of the stakeholders. The companies should be really

convinced of their services in order to make the consumers pay, because most of the consumers take it for granted that anything related to Internet is for free. But when used smartly using solid products and services this method can reap great benefits and provide the companies with a steady flow of revenues in regular periods, which improve the sustainability of such services over a long term. The most common tool used under this method is Subscriptions. Several companies like LinkedIn, Last.fm etc use it by offering premium services to people who are willing to pay for them. This goes along with Chris Anderson’s “Freemium” concept [2], wherein he proposes that a minority of people pay for the majority of the people, thus the company can get a steady source of revenues and can also create a huge customer base surpassing the critical mass, so that they can reap enormous profits from the traditional advertising. For services like mobile TV, live video broadcasting on mobile phones, tools like Pay per view or Pay per minute can be used which allows the user to acquire these services only when they need it, thereby giving them more freedom, and also help these companies to use their resources in a much more optimal way. A service like live video streaming using mobile phones offered by companies like Qik etc, can be offered to broadcasting companies (both print and TV) and other professional services. The growth rate of smart phones in US during 2008 has been around 75.7% [6] and it has been the same trend all over the world. We can make use of this increased processing power and innovative hardware features to provide them with new applications and widgets at a premium price. Device and OS specific manufacturers had already jumped into this bandwagon by creating services like App store for Iphone, Ovi store for Nokia, Android market, Windows market place for mobiles, App catalog for Palm pre and Blackberry App world for Rim phones. Considering the growth rate of such devices and take into account the idea that mobile web will become the dominant access method in many countries of the world these services has enormous potential and the market research data shows that consumers are also willing to pay for them. Information services that can be directed to an external service company or the mobile operators can induce people who are handicapped of using such applications because of reasons like lack of broadband penetration, illiterate, mobile devices with stripped of features etc, thereby providing them with another source of revenues. Location based services will revolutionize the way we use our mobile devices and new social algorithms will have to be created to garner its


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complete potential. The geographical information is considered as productive by consumers and are willing to pay for it [3].Data and Bandwidth transfer will also provide revenues for the mobile service operators and they can collaborate with third party application developers by profit sharing in order to optimize their revenues and bring in more people into their mobile service, which can create a network effect and indirectly impact its sales revenues in a positive way. 2.2. Companies Sponsor The recent trend has been that companies are sponsoring some these applications and services for their own conceived interests. Application content integration is the biggest way in which companies are sponsoring. An ice cream popping game for mobile phones made by EA sports, featuring ice creams from Moven-pick is a perfect example for this. Tracking and building social media metrics will provide most of the fast moving consumer goods (FMCG) companies a strong edge over their competitors. Since these days mobile phones are considered as an extension of our self, there can be no better device that can collect contextual data and create a broad social metrics providing some useful consumer information for the real world companies. Similar to this is On-site web analytics which measures the performance of your website in a commercial context combined with other LBS helps the companies in organizing their resources in an optimal way. Also companies would like to have two-way communication with its customers i.e. Feedback, complaints etc, and those services which allow the consumers to have a two way contact will be promoted by the companies, for the better utility of both the parties involved. Custom build social applications [7] and its distribution is an other way through which companies market themselves and introduce new products for its potential target base. With the advent of sensor technologies being inducted by manufacturers into mobile phones, more specific information like time slept, the surrounding atmospheric conditions, physical body movements, etc about the customer can be transmitted to the companies in order to create customized products which increases the ROI for them. The most potential source of revenues I consider for these mobile platforms is targeting real world companies and providing them services using the internet of things and helping them to differentiate themselves from their competitors who could reap heavy benefits for all the parties involved i.e. customers, application developers, hardware manufacturers, companies etc. For examples some of these services can be like your car talking with

your mobile phone regarding the air pressure in the tires, gasoline level and the nearby gas stations talking with your petrol tanks and mobile phones, a network of automobiles connected to a virtual social network via their mobile phones and transponding information regarding climate and traffic conditions and so forth. . The possibilities are enormous and can only be bounded by imagination. So being able to provide such unique and productive services along with their products will allow the companies to differentiate from their competitors. 2.3. Advertising It has been the traditional way of making money out of many of these Web 2.0 applications and has been successful to some extent with new approaches like ad sense, ad words etc, but blindly following those approaches on the mobile platforms, will not help your cause. The reason why we think Advertising can provide substantial revenues because of the ergonomic factors associated with mobile devices. The screen is limited [8], and any advertising in all its probability is bound to attract the attention of the consumer. In addition to this rather than dumping clinical ads on to the consumers irrespective of the situations which finally turn out to be futile, it would be very productive if this advertising can be made contextual thereby making it more useful for the customers [4]. It’s a translation of Google’s online virtual world strategy into the real world, using mobile phone connected to the world of internet of things. Again advertising by itself will not get revenues, but in conjunction with any of the methods stated above can be very effective way. Also as in the Web 2.0 services, you don’t need a critical mass on the mobile platform to secure ad revenues. Interactive advertising is a type in which the consumer is involved in the campaign either physically or virtually. With the help of mobile platforms, now it will be possible to make the consumer involve physically and mentally with this mode of advertising, thereby increasing his curiosity. Display advertising is the most common mode but if done in combination with other methods, will be more successful .Direct marketing and discount coupons can be more arable because of the contextual nature of the mobile phones. A beacon placed at the entrance of a retail showroom, sends you a message regarding new brand lines or individual discounts when you go pass through that shop in the same lane. Its impact is two way i.e. both on customer and showroom. Google tremendous success is integration of search engines and advertising. Similarly if contextual advertising is integrated into the physical world, the benefits are big.


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2.4. M-commerce In simple terms Mobile Commerce is any transaction, involving the transfer of ownership or rights to use goods and services, which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device or data transfer. This is the old new buzz in the town. The concept of using mobile phone in place of credit cards and hard cash was pushed long ago, when neither of such services nor the consumers were matured. But with the new technological developments both in hard ware and software specifications, the concept of Mobile commerce has come into tune once again. The different payment methods used to enable M-commerce are

• Premium-rate calling numbers, • Charging to the mobile telephone user's bill or • Deducting from their calling credit • Registration of a credit card that is linked to a

SIM card. • Using encrypted microchips capable of data

transfer Services like Mobile banking, Mobile ticketing, money transfer, Mobile payments, content purchasing, Mobile purchasing will have a huge influence on the means by which we do our day to day trivial commerce, and when summed up will become a big source of revenues for mobile platforms. 3. Challenges & Conclusion All said monetization of mobile platform is not as easy as it seems, because of its unique characteristics. There is huge population which is not yet in the reach of these services [10]. Excess of players is a critical challenge that everyone faces because it is very easy to duplicate any new service and only requires limited resources in the initial stage, thereby denying the rightful owners their due share. Privacy is main deterrent for the free flow of any of these services and concerns over it mount as the developers move in. Ergonomics of mobile phone devices is also reasonable for the slow growth of such services, and this can be overcome by new input techniques [11], additional features and design changes is the software applications which makes the life of the user more comfortable. As the marketers move in the customers move out, and this phenomenon has repeated itself in our past experiences. So the arrival of such people should be finely integrated into the services. In case of

mobile community platforms the social network fatigue may soon creep in, thereby gradually decreasing the footprint of the consumers which will impact the advertising revenues, this can be overcome by constantly innovating your services and inducing your customers towards this platform for a more productive purpose. The rate and intensity at which the Mobile phones are integrating into our daily life provides entrepreneurs with enormous potential for providing products and services which were not even dreamt in the past by common man. Mobile communications has already changed our social behavior and be ready for many more surprises in the future.amt in the past by common man. Mobile communications has already changed our social behavior and be ready for many more surprises in the future. Findings of some studies states that the features added so far to mobile platforms are not considered to be adding value and useful by the consumers rather they are perceived as “gadgets”. This brings us to the basic and essential marketing concept that enterprises initially should try satisfy the needs of the customer and then the revenues will automatically flow. It is a futile attempt trying to create a unique business model for a service which is either not wanted by customers or way ahead of its time. The most important issue that the corresponding parties involved must consider are the human and social dimensions and these amazing opportunities would turn sour if the mobile platforms are only seen through the economics and technical lenses. Finally I would say that there is no single way to secure your revenues, it should always be a combination of different broad ways as stated above and the business model should be appropriate to the service you provide. Traditional approached will not solve your problems and you should tweak many of those methods to suit your service but at the same time you need not reinvent the wheel. 4. References [1] Richard Han and et al, “WhozThat? Evolving and ecosystem for context aware mobile social networks “, IEEE Network, August 2008. [2] Freemium concept by Chris Anderson http://www.wired.com/techbiz/it/magazine/16-03/ff_free [3]Bharat Rao, Louis Minakakis, “ Evolution of Mobile location based services”, Communications of the ACM, Pages 61-65, December 2003. [4] Pieter Ballon, Nils Walravens, Antonietta Spedalieri, Claudio Venezia, “An Advertisement-based


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Platform Business Model for Mobile Operators”, 12th International ICIN Conference, October 2008 [5]http://en.wikipedia.org/wiki/Short_message_service http://mobilejones.com/2007/07/27/you-might-be-paying-1000-per-mb-for-sms/ [6]http://www.mobilemarketer.com/cms/news/research/2323.html, IDC [7] http://webdevstudios.com/services/social-network-applications/ [8]http://sender11.typepad.com/sender11/2008/04/mobile-screen-s.html [9]http://wapedia.mobi/en/Facebook [10]http://www.dri.co.jp/auto/report/rncos/rnruralindmob07.htm [11]www.wiwi.uni-due.de/fileadmin/fileupload/I-PERVASIVE/mobilehci/01_MobileTextEntry_Scott-MacKenzie_mobileHCI2008.pdf


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Business Aspects of the Internet of Things:Mobile Marketing

Gilad GeronSwiss Federal Institute of Technology Zurich,

Department of Management, Technology and Economics,[email protected]

Abstract

As the development of mobile phones advances, newtechnologies are introduced to the users allowing them tocommunicate and interact with their peers in new ways.These new ways of interactions are viewed as a great po-tential for marketers, who can now target their audiencewith more precision and with more attractive and interac-tive contents. This paper aims to examine mobile phonesas a marketing ground and how the emergence of new tech-nologies, such as social networks, will affect the future ofadvertising.

1. Introduction

In the past, marketeers have used mass media mediumssuch as newspapers and television as their major channelfor reaching large audiences. At the time, this approachhad effective returns on investment because there were onlya limited number of television channels and newspapers.However, these days, there are hundreds of television chan-nels, which means that viewers are more scattered and thenumber of viewers per channel is smaller. This makes itmore difficult to target a large number of viewers and there-fore reduces the efficiency of advertisement campaigns ontelevision. Moreover, according to Newspaper Associa-tion of America, there is a decrease in newspaper adver-tisement expenditure and an increase in online newspaperadvertisement,[4] which may suggest that consumers areshifting their preferences towards digital sources of infor-mation (perhaps because the information provided digitallyis updated at a much higher frequency). The changes whichare occurring to the ’traditional’ mass media mediums re-quire the conventional marketing strategies to adjust. Themarketing world is in transition and mobile phones are be-coming more and more the center of attention. The purposeof this paper is to explain why mobile phones are becom-

ing increasingly popular and to analyze the latest trends ofmobile marketing.

Before diving into the concept of mobile marketing, wewill briefly define a couple of general terms of marketing.Marketing is an organizational function and a set of pro-cesses for creating, communicating, and delivering valueto customers and for managing customer relationships inways that benefit the organization and its stakeholders.[2]Marketing can be divided into 2 categories, push marketingand pull marketing. Push marketing is where the marketeer”pushes” promotional information or product to the audi-ence. Pull marketing on the other hand, is where the mar-keteer generates customer interest to ”pull” the promotionalinformation.

Mobile Marketing is defined as the use of the mobilemedium as a communications and entertainment channelbetween a brand and an end-user.[9] Mobile marketing canbe used for various purposes, such as:

• Communication channel - Using the phone’s commu-nications capabilities in order to transmit promotionalinformation to target audience. For example, a brandmay choose to notify its customers about the releaseof a new product by sending them an SMS or MMSmessage with the promotional information.

• Purchasing channel - Allow customer to carry outmonetary transactions through the use of a mobilephone. An example of this channel is the use of amobile phone to pay for merchandise or transfer fundsfrom one person to another.

• Relationships channel - Allow brands to build andmaintain a relationship with their customers. For ex-ample, a brand may offer a customer care chat servicethrough SMS or through mobile internet.

• Delivery / distribution channel - Delivering a service tothe customer by using a mobile phone. For example, acustomer may choose to purchase a cinema ticket andreceive the ticket on his mobile phone.


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• Usage medium - This is an emerging aspect which isrelated mostly to smart phones. It involves using themobile phone as one would use his personal computer.With the constant improvements in storage space andcomputing, mobile phones are becoming more andmore like pocket-sized computers. An example of suchusage is the downloading of novels onto the mobilephone.

• Entertainment channel - Offering customers entertain-ing materials such as mobile games, music, movies,ringtones and alike.

2 Background

At the end of 2007 mobile marketing expenditure wasestimated to be around 3 billion dollars. By the end of2011 mobile marketing expenditure is expected to reach19 billion dollars[7] and over half of brands are expectedto spend between 5% and 25% of their total marketingbudget.[3] These predictions show that companies considermobile marketing to take an important role as part of theirmarketing strategy in the upcoming years.

There are many reasons why mobile phones are becom-ing increasingly attractive for marketing purposes. One ofthe main reasons is their popularity. The number of mo-bile phones users is rapidly increasing and is estimated tohave reached a staggering 4 billion users by the end of2008, which is equivalent to roughly 60% of the world’spopulation.[1] This fact by itself is enough to make mobilephones extremely desirable for marketeers, however, thereal attraction lies in the characteristics of mobile phones.

One thing which sets apart mobile phones from othermass medias is the fact that they are always turned on.Moreover, people tend to be ’engaged’ to their mobilephones in the sense that they carry their phones with themeverywhere they go. This means that theoretically, the au-dience is reachable at all times. Mobile phones are con-sidered as the first so-called ’private’ mass media and thesecond interactive media (the first is the internet).[10] Whatmakes mobile phones so personal is the fact that all of one’sinformation is stored on it, such as all their friends’ and col-leagues’ contact information, as well as all messages andcommunication records they had with their peers. Mobilephones are so personal, that a Wired survey carried out in2006 has revealed that 60% of married couples will notshare their phone with their spouses.[10] This means thatthe accuracy in which marketeers can target their audienceis extremely high, as we know exactly who is using it. Fig-ures suggest that the accuracy of tracking audience on mo-bile phone is as high as 90% compared to 10% and lessthan 1% on internet and television respectively.[10] Due tothe fact that personal computers are less abundant than mo-

bile phones (one personal computer per household versusone mobile phone per person) makes it harder to identifythe real user and his behavior. Although television sets aremore abundant than mobile phones, television is even lessaccurate media because it is practically impossible to iden-tify who is watching the television at any given time andrely on polls in order to make estimates, which do not nec-essarily portray the customers’ real behavior. With mobileinternet, every click that the user makes is sent directly tothe provider and therefore can be tracked with extreme pre-cision. For the reasons explained above, marketeers viewthe accuracy which mobile phones offer as a gold mine formarketing. Privacy issues in this field are very controversialand could be discussed at great length. In this paper, wewill simply assume that the users are fully aware that theyare being monitored and have given their consent.

To put a cherry on top of the marketing heaven that mo-bile phones offer for tracking customer behavior, they alsooffer with pinpoint accuracy not only what the customer isdoing but more importantly from where and when. Thisis the only media which can offer such vital information.Being able to know where the customer is at all times, hasgiven birth to location based services. In mobile market-ing, location based services applications are advertising ormarketing services that use specific location information fordelivering the right message to the right person at the rightplace AND time.[5] Examples of location based servicesare: requesting the location of a nearby business or service,receiving a step-by-step instructions on how to get to thatlocation and being notified when approaching a certain lo-cation and/or person. These services give businesses a greatchannel on which they can communicate their location andoffer real time information to the users. Mobile phones havemany built in sensors which could be used to enhance loca-tion based services’ accuracy and experience. For exam-ple, the built in camera of the mobile phone can be usedtogether with an image recognition software in order to cre-ate an interactive, real-time tourist guide. In the future, wecan expect to see location based services becoming moresophisticated and using more and more sensors, allowingmarketeers to target their audience with more precise andinteractive content.

3 Mobile payments

Another characteristic which makes mobile phones at-tractive is the fact they have built-in payment capabili-ties. Over 12 million consumers in Japan alone are us-ing mobile payment and more and more shops, kiosks andmetro stations are getting equipped with mobile paymentcapabilities.[13] In South Korea all credit card companiesenable their credit cards on the customers’ mobile phone bydefault and offer to send an ’old fashioned’ credit card by


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mail if the customers request so.[10] Many mobile phonecompanies are now developing various technologies thatcould facilitate the mobile payment process. An exampleof such technology is Near-Field Communication (NFC),where a device can read data through radio signals whencoming in close range with an NFC tag that stores the data.As these technology is still under development, we are stillto face just how big this market will become. In the fu-ture mobile phone will have an immense impact on the wayusers shop and pay for their commodities. One could arguethat the days of the wallet are numbered and that it is a mat-ter of time before the ’e-wallet’ replaces it. Even though theadoption rate of mobile payment is rather high, it remainsto be seen whether it could replace todays conventional pay-ment methods.

4 Mobile Applications and Entertainmentstores

The release of Apple’s iPhone had a significant impacton the way people viewed smartphones. Before its release,smart phones were rather sophisticated to use and were tar-geted mostly at business people as their main audience. Ap-ple has managed to change this perception by providing auser-friendly interface and an attractive design and focusedmainly consumers. Apple has also released the AppStore,which is an electronic market place where third-party mo-bile applications and games can be sold. The user maybrowse through the store and with a few clicks download thedesired application or game directly onto his mobile phone.In the first month of its release, Apple has sold an averageof $1 million a day in applications, totaling to about $30million.[15] This was a wake-up call for many companies,who have seen the true potential of smart phones. For exam-ple, search-engine giant Google has released its own mobilephone operating system known as Android and the Androidmarketplace, which have very similar characteristics to Ap-ple’s iPhone operating system and AppStore. Other smart-phone platforms, such as Symbian and Windows Mobile arealso expected to come out with similar services in the nearfuture.

We will examine the pricing-model of the AppStore(other marketplace use very similar pricing-models). Theway these digital marketplaces work is the following. Adeveloper for the iPhone has to pay a one-time license feein order to be able to run his developed applications on hisiPhone. When the application is ready to be published, itis sent to Apple who checks the integrity of the applicationand determines whether it brings added-value to the iPhoneand approves or disapprove the application. Once the appli-cation is approved it can either be published free of chargeon the AppStore, in the case where the application is givenaway for free. Alternatively, in the case where a devel-

oper decides to charge for the application, Apple takes 30%commission for each transaction made by the user. Thisis a win-win situation for both Apple and the developers.Apple benefits are two-fold. Firstly, for each applicationwhich is released, the value-added of the iPhone increasesand therefore becomes more attractive to potential buyers.Secondly, they make big revenues from operating the mar-ketplace. For developers, Apple offers a cost-effective so-lution for sales and distribution of their software to millionsof users. Since developers’ revenue is proportional to theamount of units of software sold, the software which is di-rected at consumers is designed to be more attractive to theuser and contains more interactive interface in order to max-imize their profit by attracting the biggest amount of con-sumers possible. Due to the popularity of these marketplaceplatforms, many brands nowadays, offer free software andadvergames to promote brand recognition and customer en-gagement. Advergaming is an immersive mix of advertisingand entertainment that takes the form of video games.[12]Successful advergames are likely to cause word-of-moutheffect, where happy gamers tend to recommend the game totheir peers and therefore advertise the brands further.

The mobile entertainment industry is not limited togames and software. Mobile music and videos are also abig source of income. In 2006, mobile music generatedover 8.8 billion dollars[10] and is projected to reach 14.6billion dollars by 2013.[16] Moreover, ringtones are saidto make up to 10% of the music industry revenues world-wide. These confounding figures, emphasize the potentialof mobile phones as mobile entertainment devices. As mo-bile internet connection become faster and the subscriptionfees become flat, it is likely to see companies providing fullvideos delivered directly on the clients’ phones.

5 Mobile Internet

Mobile phones have now surpassed personal computersnot only in number, but more importantly in accessing theinternet. There are 405 million mobile internet users andthese numbers are expected to double by 2013, according toeMarketer.[6] Big internet advertisement companies, suchas Google, are now rushing to mark their territory and grabtheir share of the mobile internet market by using similartechnology to the technology they offer on normal internet.There are some differences in the behavior of mobile inter-net compared to normal internet users. These are mainlydue to mobile limitations such as internet speed, internetcompatibility limitations and screen size. Mobile internetusers have a more direct approach to internet and will nor-mally use it for rather short periods of time in order to fetchimportant information that they desire to have on the spot.Due to these limitations, mobile marketeers need to createadvertisements which do not interrupt the user yet attract


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his attention. Therefore there is still no common method foradvertising on mobile internet, however, due to the growingmarket size it is just a matter of time before a norm willappear.

Mobile internet is not the only aspect of the internetwhich is advancing. Web 2.0 is considered as the secondgeneration of the world wide web and came to light aroundthe year 2004. The Web 2.0 concept is based on smooth,interactive interfaces, easy communication, secure informa-tion sharing and most importantly collaboration on the in-ternet. Web 2.0 encourages people to find, share and pro-duce information on the internet in order to maximize userexperience on the web. People can share photos and videosand make them accessible to anybody in the world, and withthe help of a mobile internet, from anywhere in the worldand at any given time.

Web 2.0 lets people create their own identity on socialnetwork such as Facebook. Facebook is a platform whereusers can create friends and groups of friends and share in-formation between them. The users’ identities can be moni-tored and their behavior can be analyzed to provide the userwith appropriate products and services. For example, if auser belongs to a group for weight watching, it is likelythat he would be interested in related products and com-panies could advertise accordingly. In addition there aresocial shopping sites, where a user can recommend to hispeers products and services which he likes. The user cancreate himself a reputation by getting reviewed by his peerswho may deem the information provided as useful or not.Users with an extremely high reputation can be consideredas ’Alpha Users’. The Alpha User is ”someone who lovesto communicate with everyone and keeps the social groupconnected and informed. The Alpha User is also earlier inadopting most products and/or services than the peers on thesame social network”.[14] Once identified, Companies maydecide to sponsor Alpha Users and therefore letting them doall the advertisement, which will then trickle down the restof the network.

Another important thing to mention with social network-ing is that we can measure what we consume but more im-portantly with whom we consume it with. This is a veryimportant piece of information as we know not only the sizeof the audience but also their association with one another.Companies may analyze the group behavior and thereforeadjust their marketing campaigns in order to maximize theirefficiency to the particular target groups.

6 Pervasive Advertisment

Pervasive advertisment is a special case of mobile mar-keting, where the scope of mobile devices extends to’things’ or pervasive computing objects. The principle be-hind pervasive computing is the opposite of virtual reality.

Virtual reality attempts to bring the person into the virtualworld, whereas pervasive computing brings in virtual com-ponents and integrates them with the real world objects.An example of such a device is Microsoft’s Surface.[8] Mi-crosoft Surface is a computing platform with a large inter-active touch screen in the form of a table. This platform canrecognize and access mobile devices when they come nearit. Data stored on mobile devices (such as music, videos,photos, documents, etc...) can be viewed and manipulatedon the Surface and transfered from one device to anotherwith a simple drag-and-drop action. The ability to drag-and-drop content to and from devices with such facility is agreat advantage for marketeers. For example, a coffee housemay adopt these ’smart tables’ and increase the value-addedof its services by offering its clientele a new way of interact-ing and sharing with one another. The coffee house can alsoincorporate advertisements and promotions in the softwareof the table to increase brand recognition and sales.Similarly, this type of technology could be integrated intoa ’smart billboard’. The obvious advantage these billboardshave over traditional billboards is that they offer digital ad-vertisement which is more attractive. A billboard may showa promotional video or offer digital coupons with GPS co-ordinates to all stores that offer the promotion, which canbe easily dragged-and-dropped onto mobiles. The billboardadvertiser can charge the companies on a per-dowbload ba-sis. The beauty of this form of advertisement is the factwe can monitor all interactions with the billboard and builda ’preferences profile’ for each mobile phone (we may notknow the identity of the owner, but we can see what he likesaccording to the content he downloaded). This informationcan be very useful to both the smart billboard advertiser andthe companies using the billboard services. Since we knowwhere the coupon was picked up and where it was used,we can monitor how effective each individual billboard isin real time. This gives leverage to the advertiser, who cantherefore charge extra fees for this information. The mar-keting teams of the companies get more accurate feedback,which in turn can help them improve their marketing ef-ficiency. To take this concept a step further, the billboardadvertiser can make its services location aware. By usingthe preferences profile, the advertiser could target its adver-tisement more accurately at the audience in the proximity ofeach billboard. For example, if the majority of the peoplearound a certain billboard have downloaded on their phonea promotion for product X, then show an advertisementof product X. This is just a simple, straight-forward solu-tion and more complex algorithms and artificial intelligencecould be applied in order to determine which advertisementshould be showed at each scenario more accurately. An-other use of location aware billboards is to offer a guidanceservice to the store of a certain coupon. In other words,let us imagine that a person enables the guidance option on


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his mobile coupon. When he approaches a location awarebillboard, the billboard should say for instance: ”walk 100meters in this direction”. This way the environment aroundthe user changes as he walks through the streets and guideshim towards the store. These are only a few examples ofpotential uses of pervasive computing devices and goes toshow just how potent pervasive advertisement can be whenused alongside mobile phones.

7 Conclusion

Since its invention, the mobile phone has evolvedtremendously. The fierce competition in the mobile phoneindustry has led mobile producers to encapsulate more andmore features and gadgets with every product cycle. Mobilephone are becoming smaller and more powerful. Clearly,the point where a mobile phone is used solely for makingphone calls is ancient history. Nowadays, the mobile phonehas become so advanced that it incorporates pieces of all ofits mass media predecessors namely, the print, the record,the cinema, the radio, the television and the internet.[11] Aseach media was considered more powerful than its prede-cessor, the mobile phone is no different especially since ituses the other mass medias and can take advantage of allof their positive characteristics. With its wide reach, its fastadaption growth rate and its high level of interactivity, thereis no doubt that the mobile phone is the dream device formarketeers. The options and opportunities for advertisingare countless.

In the future however, we can expect mobile phones tonot only mash-up with hardware but also with software.As mobile phones have increasing computing power theywill continue to join together different hardware, softwareand mass medias. For example, imagine a phone appli-cation which uses its phone’s camera together with bar-code recognition software to read a product’s barcode thenconnect through mobile internet to a social network whereusers compare prices and reviews about the desired prod-uct. The result is a mobile social commerce and reviewframework.This application takes advantage of the phone’scomputing power and imaging capabilities as well as prof-iting from the advantages of web 2.0 and social networks/ commerce. From a marketing point of view, this is anentirely pull marketing strategy and unlike other pull mar-keting strategies, it requires very little investment from thecompany’s behalf. Given the immense power of social net-works, it is likely that we will see social mobile marketingbecoming popular.

Despite the popularity of mobile phones, it is very un-likely that mobile marketing will force other forms of mar-keting to disappear. Mobile marketing will become moremain stream but marketing in newspapers and other me-dias are still effective. Perhaps other mass media forms will

be used to increase customer knowledge about mobile ser-vices.

With their versatile capabilities, mobile phones can beused as a binding link to connect between reality and dig-ital world. Using different technologies (such as, NFC,barcodes, wireless networks, GPS, image recognition soft-ware), real world ’tags’ can be linked to digital tags andtherefore offer consumers a greater added value. Perva-sive computing devices give us a glimpse into the digitalworld through everyday objects and allow us to interactwith the digital world with extreme usability. As computingunits become smaller and cheaper it is likely that more andmore objects will become ’smart’ and incorporate comput-ing chips in them, enabling new forms of interactions (andthus marketing opportunities) between mobile phone usersand the environment.

References

[1] S. Acharya. Worldwide mobile cellular subscribers to reach4 billion mark late 2008. http://www.itu.int/newsroom/press_releases/2008/29.html,September 2008. Accessed on the 28th of April 2009.

[2] American Marketing Association. Dictionary.http://www.marketingpower.com/_layouts/Dictionary.aspx?dLetter=M. Accessed on the20th of April 2009.

[3] Cambridge Marketing colleges. Mobile marketing.www.marketingcollege.com/upload/52438%20MobileMktngMaster.pdf, May 2007. Accessed onthe 26th of April 2009.

[4] ComCorp. Increase online newspaper ad re-sults to decrease on print ads. http://www.comcorp.com/articles/news/increase-online-newspaper-ad-results-to-decrease-on-print-ads/, September 2007.Accessed on the 25th of April 2009.

[5] L. Fields. Location based services a mar-keters dream. http://www.mmaglobal.com/articles/location-based-services-%E2%80%93-marketer%E2%80%99s-dream. Accessed onthe 28th of April 2009.

[6] Google. Google adwords - google mobile ads. http://services.google.com/adwords/mobile_ads.Accessed on the 28th of April 2009.

[7] D. Halperin. Mobile marketing and advertising tobe worth $3 billion by 1q 2008, says abi research.http://www.businesswire.com/news/google/20070410005730/en, April 2007. Ac-cessed on the 28th of April 2009.

[8] Microsoft. Microsoft Surface website. http://www.microsoft.com/surface/. Accessed on the 22nd ofMay 2009.

[9] Mobile Marketing Association. http://www.mmaglobal.com/wiki/mobile-marketing.Accessed on the 28th of April 2009.


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[10] A. Moore. Mobile phones as mass media: Mod-els for content distribution - part 2. http://www.masternewmedia.org/media/mobile-phones/mobile-phones-as-mass-media-white-paper-part-2-20070711.htm, July 2007. Accessed on the28th of April 2009.

[11] A. Moore. Mobile phones as mass media: The upcom-ing technological revolution - part 1. http://www.masternewmedia.org/media/mobile-phones/mobile-phones-as-mass-media-white-paper-2007076.htm, July 2007. Accessed on the 28th ofApril 2009.

[12] L. Obringer. How advergaming works. http://money.howstuffworks.com/advergaming.htm. Ac-cessed on the 28th of April 2009.

[13] W. Turler. Votre telephone: bientot un porte-monnaie.http://www.largeur.com/expArt.asp?artID=2078, may 2006. Accessed on the 28th ofApril 2009.

[14] C. Valdecantos. Are you an alpha user? http://consultantvalueadded.com/2008/06/19/are-you-an-alpha-user/, June 2008. Accessed onthe 28th of April 2009.

[15] WallStreet Journal. Iphone software sales take off: Ap-ple’s jobs. http://online.wsj.com/article/SB121842341491928977.html, August 2008. Ac-cessed on the 28th of April 2009.

[16] M. Walsh. Mobile music revenue to reach $14.6 billion.http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=100847,February 2009. Accessed on the 28th of April 2009.


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Why Mobile Payment still has some way to go in Switzerland

Stefan Wengi Department of Management, Technology and Economics

Swiss Federal Institute of Technology (ETH), Zurich, Switzerland [email protected]

Abstract

In 1998 first trials for mobile payments at a Coca Cola vending machine were done in Finland. Although the proliferation of mobile phones has been unprecedented in subsequent years and although mobile payment is often considered being a killer application, mobile payment is still a niche player at least in the Swiss market. This paper provides an introduction to mobile payment focusing on NFC based approaches. Using an analysis of the stakeholders it considers their different agendas and explains why mobile payment still has some way to go in Switzerland. Some possible deployment scenarios round up the analysis. 1. Introduction

According to [1] mobile payment can be defined as payments for goods or services initiated, authorized or completed from a mobile phone or similar device.

For more than 10 years there have been predictions that mobile payment is basically just around the corner. Except for some countries in Asia (and lots of trials around the world) [2] these predictions have not become reality yet. In particular the situation in the Swiss market still seems to be quite difficult since there is no clear path of deployment on the horizon yet.

This paper tries to shed some light on the various aspects of mobile payment. It focuses on the stakeholders with their different agendas and tries to deduce some reasons for the delays in the deployment of mobile payment in Switzerland.

The paper is organized as follows: In section 2 we take a look at different mobile payment scenarios. In section 3 we explain Near Field Communication (NFC), which lies at the heart of proximity mobile payment. In section 4 we describe the topic of NFC payment systems and procedures. Section 5 provides an analysis of the four major stakeholders. In section 6 we consider delaying factors for the deployment of mobile payment in Switzerland. In section 7 we sketch 3 scenarios for deployment and in section 8 we draw our conclusions.

2. Mobile Payment Scenarios

Complementing the definition of mobile payment in [1] the Smart Card Alliance [2] further distinguishes between remote mobile payments and proximity mobile payments. The most obvious differences between these two kinds are speed, convenience and the fact that proximity payment can use the existing payments processing infrastructure [2].

Kreyer et al. [3] proposed four types of relevant mobile payment scenarios out of which mobile commerce (MC) and stationary merchant (SM) are the most prominent ones that also promise a real improvement in customer value.

Combining proximity and remote payment with the mentioned scenarios we end up with a classification scheme as depicted in figure 1.

Figure 1. Classification Scheme

The relative attractiveness of the four combinations

presented in the classification scheme largely depends on today’s payment infrastructure in an economy. In emerging markets where the proliferation of automated teller machines (ATMs) and point of sale (POS) systems supporting cards is still relatively sparse people are already using remote payment schemes e.g.


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based on SMS. However in countries like Switzerland these remote payment schemes seem not to be very attractive compared to the existing methods of payment. As an example paying for parking with the service offered by PostFinance and ePark24 requires dialing a phone number and performing 4 steps of entering data on the phone’s keypad [4].

Given this reasoning and given the fact remote payments can somehow be considered as a technical fallback for proximity payments the remaining parts of this paper are focusing on proximity mobile payment.

Proximity payment using an NFC enabled mobile phone (see below) can be as simple as touching a designated area on a vending machine and pushing one button to authorize the transaction with the amount shown on the phone’s display.

3. Near Field Communication (NFC)

In order to grasp the potential of proximity mobile payment a basic understanding of Near Field Communication (NFC) technology is essential.

NFC is a short-range, standards-based wireless connectivity technology based on radio-frequency identification (RFID) that can be used for proximity communication over a distance up to about 20 centimeters [5]. Currently transfer rates of 106kbit/s, 212kbit/s and 424kbit/s are offered with higher rates being expected in the future. When two devices communicate using NFC one of them must act as a reader/writer while the other then behaves like an NFC tag comparable to an RFID tag (chip containing some data and connected to an antenna).

The NFC forum that at the end of 2006 had over 80 members from industries such as mobile device manufacturing, infrastructure and technology vendors as well as payment providers is publishing standards in the area of NFC. Standards from ISO, ECMA and ETSI form the foundation of NFC specifications. In particular NFC is compliant with ISO 14443 the main international standard for smartcard interoperability making it possible for an NFC tag to act like a contactless smartcard.

Envisioned applications of NFC do not only include payment but also things like ticketing, peer-to-peer communication or service initiation e.g. employing smart posters or product packages in stores. The main attractiveness of NFC in these fields of usages comes from the fact that people can use a simple act of touching or placing their device close to something in order to initiate a desired service.

Since the bandwidth of NFC is comparably low many usage scenarios employ it for conveniently initiating communication. Thanks to the proximity

requirement this initiation process can cover various security aspects like authentication or authorization. For transportation of the actual workload the communication peers can then switch to a faster communication method.

The availability of mobile phones with NFC capabilities is still relatively low. However according to sources on the Internet [6] vendors like Nokia, BenQ, Motorola, Samsung and Kyocera are offering NFC models today already.

It is important to note that in addition to mobile phones many other devices like cash registers, other POS equipment, ATMs, posters, bus stops, vending machines, parking meters, entry systems and product packages are foreseen to become NFC enabled.

Industry players like Innovision [5] expect the first mass-market adoptions of NFC technology in relatively low-financial value applications that build on existing payment and communications infrastructure thereby not requiring large investment in new back-end infrastructure.

4. NFC Payment Systems and Procedures

Today there are four main systems of payment being supported and used in Switzerland: (1) cash (bills & coins), (2) debit cards (Maestro & Postcard), (3) credit cards (MasterCard & Visa) and (4) Maestro eCash.

From a technology point of view all their usage patterns can be supported by mobile payment systems based on NFC. These systems can be classified according to the amount being paid (micro vs. macro) and the NFC role of the mobile device (tag vs. reader/writer). For our analysis we are selecting 2 plausible setups: (a) micro, tag and (b) macro, reader/writer.

System (a) can be thought of as a competitor to cash and Maestro eCash. The human interaction on the mobile phone is reduced to a minimum and the NFC chip is working in tag mode e.g. containing some preloaded amount of money from which the charge is being deducted. Simply touching some reader area with the mobile phone and pushing a single button (e.g. for activation) performs payment.

In the case of system (b) the mobile phone acts as some sort of terminal communicating with the POS infrastructure in reader/writer mode. The amount to be charged is read from the POS and the user can interact with the phone e.g. choosing options or authorizing payment.

So far we have looked at the process, as it is perceived from the customer perspective. However this is only the tip of the iceberg because for all non-cash


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payments there is a need for quite complex (back-end) systems making it all possible. In general the following processes can be identified: (1) issuing, (2) authorization, (3) batching, (4) clearing/settlement and (5) funding. In addition there are many supporting processes like renewal, replacement, chargebacks, services for merchants etc. Figure 2 shows a version of a credit card payment process illustrating the flow of transaction data and money (source: apacs.org.uk). For simplicity reasons the settlement between the cardholder’s and the retailer’s bank has been omitted.

Figure 2. Credit Card Payment Process

In principle today’s back-end systems could also be

used for processing mobile payments. However mobile payment is adding new stakeholders (e.g. mobile operators) and some complexity to the provisioning process.

The variety of mobile phone form factors and the fact that personalization needs to be done when the phone is already in the user’s hand are the two main issues that need to be addressed in provisioning

In order to do that some services for provisioning and personalization over the air (OTA) have been developed. These OTA services mandated the introduction of a trusted service manager (TSM) who will be aggregating the applications from different service providers and perform card management and provisioning of secure elements to the mobile devices.

On the handset itself it is of importance where sensitive data like payment credentials or even applications are being stored in order to protect their integrity and confidentiality. Three potential storage locations are proposed by the SmartCard Alliance [7]: (1) a secure element embedded in the handset, (2) a memory card (e.g. a miniSD card) or (3) the SIM card.

5. Stakeholders In comparison to established payment systems the

set of stakeholders significantly grows when talking about mobile payment. The following two tables list the stakeholders as identified in [2] completed by banks as one important stakeholder that was left out in there. The stakeholders colored in green are basically those dominating today’s payment infrastructure.

Table 1. Traditional Payment Stakeholders

Stakeholder Role Consumers Using the mobile payment devices Issuers Issuing mobile payment capabilities Merchants Accepting mobile payments Acquirers Supporting merchants acceptance of

mobile payments Payment networks Setting standards and promoting

acceptance by all parties throughout the network

Issuing and acquiring payment processors

Processing payments acting on behalf of acquiring and issuing banks

Banks Providing customers with accounts and the ability to transfer money between them

Table 2. Additional Payment Stakeholders

Stakeholder Role Mobile network operators (MNOs)

Ensuring a supply of mobile phones with NFC capabilities and supporting payment services on their networks

Chip and handset manufacturers

Supporting branded financial applications

SIM/payment software developers

Providing branded financial applications

Trusted service managers (TSMs)

Provisioning the payment application to the mobile device (OTA)

Proprietary payment application providers

Offering payment applications for specific services (e.g. transit agencies’ payment systems)

Specialty application providers

Adding additional value to mobile payments (e.g. PayPal enabling C2C payments)

All these stakeholders have their specific agendas

with some commonalities: acquiring plus retaining customers and making money.

Some industry observers consider mobile payment to be a disruptive technology since it allows simpler and more convenient solutions with different attributes that have not been valued by existing customers [7] [8]. Since Markides suggests that disruptive innovations are less likely to be driven by the customer side [9] we focus on the supply side in our analysis


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below. However the customer eventually decides whether a mobile payment system will succeed on the market. In this decision the fulfillment of 3 major categories of requirements will play a crucial role: security, costs and convenience.

Technology providers like hardware and software developers can be considered second line suppliers catering to the main stakeholders. For this reason we do neglect them in our analysis as well.

A very important new stakeholder in the payment business are the mobile network operators because (1) they have massive direct customer contacts, (2) they provide the mobile handsets thereby dictating features and (3) they are looking for new ways to increase customer loyalty.

5.1 Roles and Interests

The following tables summarize the roles and

interests of the four stakeholders that where identified as most important.

Table 3. Mobile Network Operators (MNOs)

Examples: Swisscom, Sunrise, Orange Role • Control the proliferation of NFC technology on the

handsets • Dictate the hardware and software requirements to the

handset manufacturers • Often certify and load the applications to the phone

(although this is changing in particular with smartphones)

• Will ultimately control which virtual cards residing in the wallet on the handset

Interests • Making mobile phones more attractive and important to

the users • Increasing customer loyalty • Decreasing customer churn • Increasing traffic on their networks • Getting a share of the transaction fees, boosting the

average return per user • Encourage consumers to upgrade to new NFC-enabled

phones • Making other use of the NFC-enabled handsets (e.g. in

marketing) • No big interest to share customers with other entities

Table 4. Merchants

Examples: Migros, Coop, Valora, McDonalds, SBB Role • Charge for goods sold to customers • Offer different methods of payment to the customer Interests • Reliability of the payment system • Increased revenue:

o Ticket size o Number of transactions o Wallet share of the merchant’s own cards o Customer loyalty o Attracting new customers

• Reduced expenses o Cost of downtime (contactless technology) o Cash handling expenses o Operational expenses (e.g. electronic receipts, coupons and

customer cards) • Payment convenience, security and speed • Low transaction costs • Low investments in payment infrastructure • Simple setup and operation of payment infrastructure

Table 5. Financial Industry:

Banks, Issuers and Acquirers Examples: UBS, PostFinance, Cantonal Banks, Viseca, Six Card Services and Multipay Role • Providing customers with accounts and the ability to

transfer money between them • Offering payment methods and means to customers • Issuing mobile payment capabilities • Positioned as the most trusted provider for financial

services Interests • Keeping their benefits of processing payments • Keeping their revenue or having a compelling reason to

share it • Increasing electronic payment transaction volume from

replacing cash sales • Making proximity payment one part of their strategy

Table 6. Payment Networks

Examples: MasterCard, Visa, Eufiserv (PostFinance) Role • Setting standards and promoting acceptance by all

parties throughout the network • Providing brands with a high recognition factor

signaling payment acceptance Interests • Keeping their position as a core enabler in the payment

industry • Increasing global market share in the payment industry • Increasing revenues through higher transaction

volumes • Making proximity payment one part of their strategy

5.2 Strategic Positions

Following up on the roles and interest of the four main stakeholders we analyze their strategic position in the following tables. The method being used is a simplified SWOT analysis combining strengths with opportunities and weaknesses with risks.


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Table 7. Mobile Network Operators (MNOs) Examples: Swisscom, Sunrise, Orange Strengths and Opportunities • Strong market presence • Large customer bases • Established procedures for customer billing • Control over handsets, their configuration and

distribution • Close link to technology providers Weaknesses and Risks • No experience in the payment business • No experience in the banking business • Customer trust? • Dependent on handset manufacturers and standards • Market fragmentation (in particular internationally) • Market entry of MNOs complicates the overall picture

of relationships • The established players might look at them as a threat • Various potential business models to choose from

Table 8. Merchants

Examples: Migros, Coop, Valora, McDonalds, SBB Strengths and Opportunities • Control over the POS • Generation of revenue (money flow) • Relations with established payment providers and

systems • Bigger merchants: economies of scale Weaknesses and Risks • Significant investments in new POS infrastructure

lately • Very efficient cash handling processes make it hard to

justify investments in mobile payment systems • Waiting position due to the nature of disruptive

technology

Table 9. Financial Industry: Banks, Issuers and Acquirers

Examples: UBS, PostFinance, Cantonal Banks, Viseca, Six Card Services and Multipay Strengths and Opportunities • Market presence • Large customer base • Part of the existing payment systems • Existing relationships and alliances • Highly optimized processes Weaknesses and Risks • Increased costs due to activities in the areas of

customer service, device tracking, application and key management

• No control over distribution and form factor of the payment device

• Reluctance to deploy payment applications to customer owned mobile devices

• Risk of MNOs taking over the role of banks in payment thereby establishing competition for the existing methods of payment

Table 10. Payment Networks Examples: MasterCard, Visa, Eufiserv (PostFinance) Strengths and Opportunities • Market position and presence • Large customer base • Existing relationships and alliances • Highly optimized processes • Strong position in setting standards for the payment

industry Weaknesses and Risks • Risk of loosing market share to new entrants from the

mobile communication industry or to new third parties • Loosing control over the form factor of payment

devices • Increased costs to deliver payment technology to the

payment network • High transaction costs for merchants may lead to the

surge of alternative providers

5.3 Analysis Summary Summarizing the analysis of the different core

stakeholder reveals a very difficult situation with conflicting interests and a low probability of a seamless cooperation between the various players. In this situation a business model that delivers value to all stakeholders is an important requirement but very difficult to come up with.

Looking at possible paths of development in the domain of proximity mobile payment the future role of the mobile network operators is key.

Recent developments even augmented this fact with the full support of the ETSI-endorsed Single Wire Protocol (SWP) by the GSMA (the global trade group for the mobile industry). This aforesaid SWP standard is providing the interface between a handset's SIM and the embedded NFC chipset within the handset. This means that secured communication from within the mobile device to the handset has to be passing the SIM card. So even if the mobile network operator (MNO) is not selling the customer’s handset it can still control which applications e.g. for payment or ticketing can be downloaded to their subscriber’s SIM cards.

In November 2008 the GSMA called for mass-market NFC handsets by mid-2009 [10]. Some industry observers doubt there will be any significant deployments of NFC phones until 2010 but in any case if the SWP standard prevails this will pretty much push MNOs into the pole position and new third party payment providers into a niche.

Unfortunately the strengthened position of the MNOs makes the overall situation even more complex. In order for mobile payment to be successful on the market it should be standardized and comprise as little fragmentation as possible. However many scenarios being discussed, alliances being built and trials being


49

run (e.g. the one of Swisscom with Selecta and Legic [11]) only cover specific use cases and do not integrate all the stakeholder thereby risking market fragmentation. In terms of diffusion models for mobile payment a fragmented market automatically results in very little or reduced network effects which are crucial for the overall success of mobile payment. 6. Delaying Factors and Countermeasures

Following our analysis of the major stakeholders with their agendas we are trying to identify major factors, which could be responsible for further delay of NFC based payment scheme deployment in Switzerland. In the following table the individual factors are combined with potential countermeasures to alleviate the problems.

Table 11. Delaying Factors & Countermeasures

Delaying Factor Potential Countermeasures Existing high standard and coverage of electronic payment in Switzerland

• Wait for the breakthrough of mobile payment schemes in other European countries

• Identify areas of usage where mobile payment promises the highest overall benefits (e.g. micro payments, parking, vending machines)

Chicken and egg problem (no NFC enabled phones, no POS infrastructure)

• Identify and promote additional use cases for NFC enabled phones

Swiss customers still prefer cash and retailers optimized there costs for cash payments down to 0.2% of the purchase amount [12]

• Very difficult to overcome in the short term

Recent investment of retailers (e.g. Coop and Migros) in new POS terminals

• Include retailers in a later stage of the rollout plan

• Develop an NFC extension module for existing POS terminals (if technically feasible)

Availability of NFC enabled handsets

• Wait for the international breakthrough of NFC enabled handsets

Low interests of some stakeholders

• Introduction of services by other stakeholders which eventually could lead to increased pressure

Difficult to kicking off network effects

• Implement a stepwise approach with a clever rollout plan

Small market in Switzerland does not encourage early adoption

• Wait for the breakthrough of mobile payment schemes in other European countries

7. Deployment Scenarios

Considering the complexity of the overall situation it is quite difficult to come up with reasonable and sustainable scenarios for the deployment of proximity mobile payment in Switzerland. Of course the situation will also be influenced by international developments and alliances being built. The following three scenarios illustrate different setups in terms of orchestration and rollouts. 7.1 MNO Centric

In the MNO centric scenario the operators attack the

existing payment systems by providing their customers the opportunity to be charged for purchases on their mobile bill. As an alternative prepaid schemes could be offered which also have the advantage of lower liquidity requirements on the side of the network operators. The Focus for the initial rollout would probably be on micro payments at vending machines and for services like parking. Direct alliances of MNOs with merchants are necessary to get this scenario going. In a second stage this payment system could be extended to support payments at kiosks, quick-serve restaurants and drive-ins. Even later macro payments e.g. at the POS of retailers could be taken into consideration however this would probably require alliances with the financial industry.

7.2 Soft Card

In the U.S. and also in Asia (e.g. Hong Kong and

Korea) there is a significant momentum towards contactless smartcards [2]. Products supporting this technology include MasterCard PayPass and Visa payWave. Many POS terminals in theses countries already support this method of payments and growing support is expected.

Thanks to the smartcard support defined in the NFC standards payments at theses terminals can also be made with an NFC enabled phone holding an embedded soft card. This scenario enables a stepwise deployment with the mobile phones gradually taking over the role of contactless smartcards while make use of an established payment system. Since both MasterCard and Visa are very big global players it is very likely that their standards for contactless smartcards will be deployed in Switzerland some day.

7.3 Big Alliance

A third scenario is an alliance of all major stakeholders. In particular this scenario would include


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the Six Group (former Telekurs) as an intermediary and service provider for merchants. The services offered could be based on existing payment systems and would provide the highest potential for network effects kicking in quickly. However it is questionable whether a business model satisfying all stakeholders can be developed. 8. Conclusions

In this paper we identified major factors that are responsible for the delayed deployment of mobile payment in Switzerland. In combination with the different agendas of the various stakeholders and the necessity for a business case that benefits all involved parties this explains some aspects of the problem with its high overall complexity.

The presented scenarios for deployment (MNO centric, soft card and big alliance) can be regarded as possible rollout paths of the new payment method each with its own advantages and disadvantages.

It remains to be seen whether one of these scenarios will prevail or if the Swiss market will await further developments in major European countries before making any bold moves. 9. References [1] K. Pousttchi, M. Schiessler, D. Wiedemann. Analyzing

the Elements of the Business Model for Mobile Payment Service Provision. Sixth International Conference on the Management of Mobile Business (ICMB 2007)

[2] Smart Card Alliance. Proximity Mobile Payments: Leveraging NFC and the Contactless Financial Payments Infrastructure, Whitepaper

[3] Kreyer, N., Pousttchi, K. and Turowski, K. (2002b). Standardized Payment Procedures as Key Enabling Factor for Mobile Commerce. In Proceedings of the EC-Web, E-Commerce and Web Technologies (Bauknecht, K., Quirchmayr, G. and Tjoa, A.M. Eds.), 400-409, France, Aix-en-Provence.

[4] ePark24 (URL: http://www.epark24.ch, browsed 04-08-2009)

[5] Innovision. Near Field Communication in the real world – part 1: Turning the NFC promise into profitable, everyday applications

[6] Touchatag: What mobile phones are NFC enabled? (URL: http://www.touchatag.com/faq/what-mobile-phones-are-nfc-enabled, browsed 04-08-2009)

[7] J. Bower and C. Christensen. Disruptive technologies: catching the wave. Harvard Business Review, 73(1):43–53, January 1995.

[8] S. Walsh. Roadmapping a disruptive technology: a case study. the emerging microsystems and top-down nanosystems industry. Technological Forecasting and Social Change, 71:161–185, 2004.

[9] C. Markides. Disruptive innovation: In need of better theory. Journal of Product Innovation Management, 23(19-25), 2006.

[10] Near Filed Communications World: GSMA calls for mass market NFC handsets by mid-2009. (URL: http://www.nearfieldcommunicationsworld.com/2008/ 11/19/3235/gsma-calls-for-mass-market-nfc-handsets-by-mid-2009/, browsed 04-08-2009)

[11] Legic Identsystems Ltd: LEGIC embeds badge and purse into NFC mobile phones. (URL: http://www.legic.com/en/dyn_output.html?content.void=6038, browsed 04-08-2009)

[12] J.Ondrus, Y.Pigneur. Cross-industry Preferences for Development of Mobile Payments in Switzerland. Electronic Markets. 17:2,142-152, 2007

[13] Innovision. Near Field Communication in the real world – part 2: Using the right tag type for the right NFC application

[14] J.Ondrus, Y.Pigneur. A Systematic Approach to Explain the Delayed Deployment of Mobile Payments in Switzerland. Proceedings of the International Conference on Mobile Business (ICMB 2006)

[15] J.Ondrus, Y.Pigneur. An Assessment of NFC for Future Mobile Payment Systems. Sixth International Conference on the Management of Mobile Business (ICMB 2007)

[16] K.Pousttchi, M.Zenker. Current Mobile Payment Procedures on the German Market from the View of Customer Requirements. Database and Expert Systems Applications, 2003


51

Persuasive Technology in Motivating Household Energy

Conservation

Yi Bing Tan

ETH Zurich, Department of Management, Technology and Economics

[email protected]

Abstract

This paper reviews the role of existing

persuasive technologies in overcoming the action-attitude

gap with regards to household energy consumption.

Persuasive tools in the form of smart meters and energy

display devices empower households in curtailing energy

consumption by providing continuous feedback, while

Web 2.0, particularly social networking sites, is critical in

reaching out to the masses to recruit households to the

cause. These two mediums are complementary and

should be used in conjunction to achieve persistence in

energy savings.

1. Introduction

One of the most daunting challenges facing

mankind today is sustainable development. Since the

Industrial Revolution, global energy consumption has

increased 450-fold, with the main bulk of energy coming

from non-renewable resources such as oil, coal and gas

[1]. While the general consensus is that this is essential

for economic growth, the impact on the natural

environment has undeniably and severely affected the

ecosystems, and will also compromise human life and

civilisation in the long run. It is therefore imperative that

energy usage be curtailed and controlled to a more

sustainable level.

One of the main levers for sustainable

development is technology. With technology so firmly

embedded in the everyday life, there exists many

opportunities for technology to influence user behaviour.

However, to successfully carry out persuasion, there is a

need to consider the psychology of human decision

making process. This is particularly important to address

the long-standing existence of an attitude-action gap [2].

While environmental awareness of issues such as global

warming and climate change is at an all-time high,

adoption of eco-behaviour is still limited to the

environmentally-conscious.

This paper attempts to draw insights from

various theories in social psychology to understand how

persuasive technologies can play a role in motivating eco-

behavioural change. While the adoption of eco-behaviour

is evidently desirable in all aspects of life, I will limit our

discussion to household energy conservation behaviour.

In the first section, I will look at the effectiveness of

various intervention strategies in household energy

conservation, particularly the role of feedback, and how

current technologies embedded in computing devices can

bring about these strategies. Next, I investigate the role

of Web 2.0 in carrying out persuasion on the web,

particularly in recruiting the masses into adopting eco-

behaviours as well as in helping to enforce a persistent

behavioural change- that is, in making eco-behaviour a

habit.

2. Background

2.1 Psychology of action-attitude gap

There exist many theoretical frameworks under

the study of environmental psychology that aim to

explain the gap between environmental awareness and

adoption of eco-behaviour. One model proposed by Blake

[4] examines the barriers between environmental concern

and pro-environmental behaviour. As shown in Figure 1,

these barriers are namely individuality, responsibility and

practicality. Individual barriers are related to the personal

attitudes and value system of an individual; this

represents the most significant barrier for people who are

less than environmentally conscious. Responsibility

barrier describes the ‘locus of control’ of an individual.

This represents an individual’s perception of his ability to

influence the situation through his own behaviour. The

third barrier refers to social and institutional constraints

that prevent people from taking up pro-environmental

behaviour, such as lack of time, money or information.


52

Figure 1: Barriers between environmental concern and action

[4]

While there are many other factors which

influence an individual’s decision in adopting eco-

behaviour, this model is nevertheless useful in that it

combines both internal and external factors. The

responsibility barrier is especially pertinent in our

discussion; given the scale of environmental degradation,

most people feel that they cannot make an impact. Just as

how people may not feel the urgency of environmental

issues due to the slow and gradual process of ecological

destruction, changing behaviours will not improve the

situation overnight, and a sustained effort is needed.

Thus, technology not only plays a role in empowering

people to change, but also connects people to show that

they can make a difference through a concerted effort.

2.2 The role of persuasive technology

While persuasion using technology may not be

something new, B.J. Fogg was the first to formalize this

concept in his book of 2003. Persuasive technology is

defined as any interactive computing systems designed to

change people’s attitudes or behaviours [5]. To illustrate

the three roles computing technology can play, Fogg

introduced the framework of the functional triad:

computing technology as a tool, media, and social actor.

The functions of these three roles are depicted in Figure

2. While there exists some valid criticism against the

invention of the idea of a ‘functional triad’ [6], the

persuasion strategies listed based on each of these three

roles, particularly the role of computers as a tool and

medium, are nevertheless still useful and should be

considered. A summary of persuasion strategies for these

two corners of the function triad is presented in Table 1.

Figure 2: The functional triad: Computers in persuasive roles [5]

Computers as Persuasive Tools

1. Reduction: persuading through simplifying

2. Tunnelling: guided persuasion

3. Tailoring: persuasion through customization

4. Suggestion: intervening at the right time

5. Self-monitoring: taking the tedium out of

tracking

6. Surveillance: persuasion through observation

7. Conditioning : reinforcing target behaviours

Computers as Persuasive Medium

1. Simulated cause-and-effect scenarios

2. Simulated environments

3. Simulated objects

Table 1: Summary of persuasive strategies

2.3 Households are an important target group

Households represent an important target group

when it comes to energy conservation. While the

industrial sector may still be leading in CO2 emissions,

tough measures exacted by governments worldwide have

resulted in a gradual decrease in industrial emissions over

the years. Emissions from the residential sector, on the

other hand, have increased at a rate of roughly 1.5%

annually. In 2007, this sector accounted for 20.7% of

totally energy-related CO2 emissions in the US [7]. A

similar scenario is observed in the U.K., where residential

sector accounted for 23% of total greenhouse gas

emissions that year [8]. As such, the aim is not only to

curtail the rise of household emissions, but also to

achieve persistent reductions in household emissions.

3. Persuasion through devices

3.1 Overview of intervention strategies

Extensive studies have been conducted to

investigate the effectiveness of intervention strategies in

household energy conservation. One of the most

important strategies is the role of feedback. Since energy

use is invisible to the user, the idea of providing feedback

about electricity usage is to educate residents and


53

empower them with the knowledge to control and curtail

usage. A review of literature shows that direct feedback

can generate savings from 5-15% [9], while anecdotal

evidence describes savings as high as 40% [10]. The

effectiveness of feedback has also been shown to be

maximised when it is provided continuously in real-time.

Other intervention strategies that have been proved

effective are providing comparative or group feedback,

goal setting and tailoring of information [11].

3.2 Smart meters and energy display devices

These intervention strategies have been made

possible on a large scale with the advent of smart

metering and real-time energy display devices. Smart

meters differ from conventional meters in their ability to

continuously measure and record electricity, water or gas

consumption in households. In addition, they will also be

connected via a communications system for supplier

metering purposes. This means that residents will have

remote access to data, hence possibly paving the way for

home energy management systems in the future [12].

Currently, there are 40 million smart meters in use

worldwide, with 100 million installations planned for the

next few years [13]. While smart metering is definitely

desirable, as evidenced by government intervention

worldwide to provide for it, its nation-wide

implementation would take time due to the need to set

common technical standards to ensure interoperability of

meters [14].

The other alternative readily available now is

real-time energy display devices. This range of persuasive

tools is different from smart meters in that they only

provide consumption data to consumers and not to

suppliers. Typically consisting of an external reader/

transmitter and a display device, they are cheap and easy

to install. To enhance its usability and attractiveness,

these products are often designed to appeal to the

aesthetics with their interfaces kept simple and intuitive.

These devices are an example of self-monitoring

persuasive strategy mentioned by Fogg. Devices such as

Wattson have a cumulative memory feature which allows

monitoring of energy usage over a period of time. This

makes it easy for household to track peak electrical

demands and adjust their energy consumption behaviour

accordingly. The attractive and interactive design has also

motivated users to conduct their own cause-and-effect

simulations at home using Wattson as a persuasive media;

case studies of Wattson users describe the fun of

switching appliances off and observing changes in colour

cues to identify the most energy-intensive appliance [15].

Some of these devices have set up an online community

to support the adoption of eco-behaviour. An

investigation of Wattson online community shows the

number of connected devices, energy used per day and

the amount of money spent. While no further information

was provided on its exact features, an online community

definitely has huge potential to create long-lasting

behavioural change. This will be further discussed later.

3.3 Persuasive tools that utilise ambient display

There also exist many innovative gadgets which

utilise ambient displays to provide information about

energy usage. One such gadget which stands out as a

persuasive tool is the SmartSwitch invented by Stanford

students. Incorporated with a network connection and a

brake pad, the SmartSwitch judges the level of energy

consumption in the house and provides resistance when

the level of electricity usage is deemed high, making it

harder for a switch to be turned on [16]. This technology

not only provides intervention at the right time, hence

fitting in with the principle of suggestion, it also

reinforces the target behaviour of not turning on

additional lights through operant conditioning, hence

acting as a conditioning technology. The effectiveness

can be expanded upon by incorporating an input for goal

setting, where the level of electricity usage (at which

resistance sets in) can be determined by households.

Figure 3: Wattson and its computer interface [15]

4. Persuasion on the web

The drawback of devices and gadgets as

persuasion tools is the implicit need for intrinsic

motivation. Households have to want to change their

behaviours in order for them to take the first step of

purchasing (except in the case of smart meters) and to

fully utilise the feedback mechanisms provided.

Moreover, the persistence of thus-induced eco-behaviour

is questionable. The few studies where follow-ups were

included have shown that positive effects of intervention

were not maintained [17]. Here, we propose Web 2.0, in

particular social networking sites (SNS), as a complement

to persuasive tools. We shall investigate its potential to

persuade the masses, including the less than

environmentally conscious, to adopt eco-behaviour, as

well as its ability to engage individuals in eco-behaviours

in a sustained manner.


54

4.1 Psychology of differential participation

Before we can leverage upon Web 2.0 and its

various persuasive technologies, it is useful to gain some

psychological insights into how and why individuals

participate in social movements. According to a study

done by Passy and Giugni [18], social networks have

three important functions: they structurally connect

prospective participants to an opportunity to participate

(i.e. recruitment); socialise them to a protest issue; and

shape their intensity of participation. One crucial

determinant of the intensity of participation is the

perception of one’s contribution to the cause. If an

individual feels that his involvement can have an impact

on the cause, he would be motivated to participate more

intensely. On the contrary, the collective effectiveness of

the organization does not matter as much. Also,

recruitment by informal networks characterised by

interpersonal ties is more likely to elicit a higher level of

participation than recruitment by formal means, for

example through membership. Other determinants of

participation level include: subject availability (amount of

time households can spare for this activity) and the fit of

the movement’s ideology with the life goals and activities

of participants.

Next, existing examples will be used to

investigate how Web 2.0 makes use of persuasive

technologies to appeal to the psychology of individuals

and motivate them to engage in the environmental

movement.

4.2 Recruitment via mass interpersonal

persuasion

Web 2.0 marks a new era of using the web as a

platform, with user participation, openness, and network

effects as its key characteristics [19]. One of the key

trends is the explosion of social networking sites. With

45% of web users actively participating on these sites

every day [20], this presents a new form of persuasion:

Mass Interpersonal Persuasion (MIP). MIP refers to the

empowerment of individuals to change attitudes and

behaviours on a massive scale, particularly via online

social networks [21]. Facebook is one of the largest SNS

with more than 175 million active users [22]. Most users

on Facebook are connected to friends in numbers from

hundreds to thousands. This presents a huge target

audience for social influence by any Facebook user.

Combined with the automated structure available to all

users, anyone can persuade connected online friends to do

things with ease.

One example of an automated structure is the

events function, where users can create an event with a

few clicks and invite friends to participate. This plays

upon the psychology of differential participation

aforementioned; since people are being persuaded by

people they know, the invitation becomes more credible,

and hence people are more likely to accept and

participate. Earth Hour is one such event created and

reached massive scale worldwide. It achieved 1.1 million

online social network friends to commit to switching off

their lights for one hour on 28th

March. There is no way to

check if every one of these online friends stuck to their

commitment, but by leveraging on social networking

sites, huge publicity was created. Landmark buildings

such as Big Ben in London and Bird’s Nest in Beijing

switched off their lights [23], and reduction in electrical

usage was reported in various cities worldwide [24].

The power of SNS in recruiting masses can be

attributed to the bandwagon effect: people often do and

believe things just because many people do and believe

the same things. Earth Hour is an example of persuading

people who would have cared less about saving the

environment into turning their lights off for one hour just

because they were invited to, and because their friends

were doing so. There are also other features on Facebook

which can be just as effective in garnering totally

unexpected behavioural changes from people. If, for

example, Wattson users were to post updates on their

status about how much fun they were having

experimenting with the gadget, people who are less than

environmentally conscious could be motivated to

purchase one, just because they want to join in the fun!

4.3 Achieving persistent savings through user

engagement

To achieve persistence in savings, there is a need

to consider internal motivation as opposed to external

incentives and controls [25]. Here I propose Web 2.0 as a

platform for social reinforcement, for providing

recognition and support through community building and

group participation.

The effectiveness of group participation in

effecting sustained behavioural change has been

demonstrated by EcoTeams in the Netherlands [26].

While the EcoTeams had a monthly meeting to exchange

information about energy-saving options, the Internet

makes it possible to do the same from the comforts of

one’s home via online communities. The advent of Web

2.0 has only increased the sophistication of these online

communities, especially with regards to the sharing of

user created content. Not only has the emergence of sites

such as YouTube and Flickr allowed individuals to

upload videos and photos, the introduction of folksonomy

makes it easy for others to retrieve relevant content along

natural axes generated user activity through tagging. The

rise of blogging also makes it possible for anyone and

everyone to share their thoughts and ideas, with the


55

complementing RSS technology allowing their audiences

to subscribe to their webpage and receive notifications

every time that page changes. The result is a ‘live web’,

where things are happening all the time [27].

Do The Green Thing is one such community that

actively engages members in adopting eco-behaviour.

Users are encouraged to upload ‘brilliant videos and

inspiring stories’ to help inspire others. Any green action

can be twittered to the website and this will be reflected

in the form of dialogue box on Google map to show who

is doing what where [28]. This inadvertently creates a

sense of involvement for the members as publicly

acknowledging that they have made a difference, no

matter how small and insignificant their action may seem.

Members may then be motivated to do more green things

since they now feel that their actions do indeed contribute

towards the cause. Another example of the power of

online community is 1BOG, acronym for ‘one block off

the grid’. The aim is to organize communities to buy solar

panels in bulk in order to get bulk purchasing discounts

from suppliers, with the internet platform providing

community support via knowledge-sharing [29].

The ease of creating content and having an

audience for it can play an important role in helping

households persist in their eco-behaviours. While active

participation in terms of content creation and participation

in online communities will still be contingent on subject

availability (a determinant of participation level

aforementioned), Web 2.0 as a platform increases the

convenience and decreases the time and effort required

for intense participation. Since members on social

networking sites tend to associate with others who have

similar values and interests [20], this makes it easier for

households to find an online community that offers a

better fit with their life goals and activities.

5. Merging the two mediums

In this section, the possibility of merging the two

mediums, devices and the Web, to further increase their

persuasive power in motivating eco-behaviour change is

investigated.

A critique against the effectiveness of real-time

energy display devices is their lifecycle of usefulness

[30]. After the initial excitement of the learning and

exploration phase wears off, how many actually sustain

their eco-friendly activities, such as unplugging the laptop

every night? To prolong their lifecycle of usefulness, one

possibility is to leverage on community support enabled

by the web.

As mentioned in section 3.2, online

communities have a huge potential to support sustained

behavioural change effected by real-time energy display

devices. Firstly, households can set an energy saving

target and announce it to their online community as a sign

of commitment. According to the goal-setting theory,

having a goal can be an important determinant of

performance, and the goal-performance relation is

enhanced when there is a commitment [31]. The online

community can help by allowing households to commit

publicly to their goals, and provide support through the

establishment of a network. The posting of energy data

online will allow the community to help in monitoring

and providing feedback to the household as well.

Secondly, access to energy data of other households

provides comparative feedback. This can increase

effectiveness of energy conservation efforts [32]. This

also complements the principle of surveillance suggested

by Fogg, which theorised about an additional aspect of

persuasion through observation of others. Moreover, the

knowledge of being observed will have a Hawthorne

effect on oneself, hence motivating households to commit

to desirable eco-behaviour.

The integration of real world objects with the

internet is also another idea that has been in existence for

some time. Made possible by recent advances in

miniaturization, sensor and communication technology,

the vision is for items to have their digital proxy, hence

merging the green world (physical world) with the blue (

digital world), resulting in an internet of things [33]. One

application is to allow real-time energy display devices

to automatically upload household energy data onto the

web. Tweet-a-watt is an innovative, first-of-its-kind

device that incorporates a wireless module. This

transmits data to a nearby computer and publishes

household energy data to their Twitter1 account [34]. A

possible expansion on this idea will be allowing

households to choose which online community they

want to upload their energy data to. By linking energy

data to a chosen community, particularly communities

with a green focus such as Do The Green Thing or the

Earth Hour group on Facebook, households will be more

motivated to participate since they are already active in

that community, with the community playing a critical

supportive role in their eco-behavioural change.

6. Conclusion

Persuasive technology plays an important role in

closing the action-attitude gap. Persuasive tools in the

form of smart meters and real-time energy displays

increase households’ locus of control by providing

continuous information on energy consumption, hence

targeting the barriers of responsibility and practicality.

Social networking sites can overcome individuality

barrier through mass interpersonal persuasion to recruit

1 Twitter is one of the largest social networking sites which allow users

to send messages to their online Twitter account from sms, web, mobile web, instant message, or from third party API projects.


56

even non-environmentally conscious households into the

cause, whereas web 2.0 and the Internet of Things

enhance the effectiveness of community support through

increased connectivity and reduced efforts.

One area of concern is the ethics of persuasion,

particularly with regards to the use of surveillance

techniques in monitoring household energy consumption.

While the intention may be benign, it can also be viewed

as an invasion of privacy. There are two points to note

with regards to this issue. First, it is important that such

surveillance technologies are designed with the intention

of being supportive instead of punitive. Second, it is

essential that households are aware of the persuasive

intent of these technologies, that their energy

consumption is being continuously recorded , and

permission should be obtained before such information

are uploaded to websites.

The other area of concern is the profitability of

business opportunities in this area. Currently, green

persuasive technology remains confined to a niche

market, where some may argue it is too small for the

sustainable growth of a firm. However, the market for

real-time energy display devices, though saturated, is an

example of how a useful, well-designed gadget can be a

successful hit, especially with growing environmental

awareness amongst the public.

In conclusion, persuasive technology

incorporating psychological means has vast potential for

promoting and building sustainable development.

Appropriate guiding principles will be needed to prevent

unethical misuse. These may not be an easy task, but will

most certainly be useful for the sustainability movement.

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Sustainability, Slide 7. Group for Sustainability and

Technology, ETH Zurich.

[2] 2. Kollmus, A. and Agyeman, J.( 2002). Mind the Gap:

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barriers to pro-environmental behaviour? Environmental

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57

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ladyada/.


58

Roomba to Roomie: Robots are entering our homes and our lives

Zacharias Annu

Department of Management, Technology and Economics, ETH Zurich

[email protected]

Abstract

From appliances to room-mates, robots are slowly

but surely entering our homes and our lives. If we are

to go by Bill Gates’ prediction there would be a robot

in every home by 2025. But given the costs and

complexity needed to build consumer robots, this

prediction could be termed a little ambitious. This

paper aims to look into the different robots available

in the market for home use, a brief insight into the

experiences of some of the domestic robot owners and

the challenges facing the consumer robotics industry.

Finally the paper tries to hint on certain unanticipated

risks and ethical problems linked to the field of

consumer robotics, leaving enough room for

discussions and further research.

1. Introduction

Robotics is set to bring a revolution in

automation of the ordinary household tasks of

cleaning, cooking, washing, gardening, household

repair, and shopping. Most of the consuming tasks

of ordinary life can be automated to some extent,

leaving more time for leisure activities. Robots are

even set to provide more variety to entertainment.

Mobile robots that operate independently of

the operator have arrived. Core robotics research and

advances in robotic technology can be applied across a

variety of robotic forms and functionality. With each

new round of innovation, a type of technological cross

pollination occurs that improves existing robotic

platforms and opens up other avenues where intelligent

mobile robots can be employed, effectively creating

new markets.[1]

The emergence of a market for intelligent

mobile robots for use in homes presents many

opportunities. Units used in homes are also useful in

workplaces and public spaces, airports, under the sea,

and on the battlefield creating synergies creating

economies of scale that make systems more useful and

inexpensive in all the various industry segments

impacted.[1] What is good for a robotic unmanned

ground vehicle is also good for a robotic vacuum and

lawn mower. Multiple technological, cultural, political

and market forces share a quantum singularity that has

brought mobile robotics to the point where consumer

markets can evolve. This is a phenomenon that will

have a major impact on the way we live our lives. [1]

Manufactures and roboticists however have

to put up with greater challenges that they face in

making these gadgets more useful and acceptable to

consumers. Their greatest challenge is probably in

creating robots that are mobile, dexterous and socially

intelligent. Currently in the market, we find a robot

that has one of these features, but one that has all of

these features is still in the confines of the laboratory.

This explains why the first users of the vacuuming

robot were puzzled by its Frisbee shape, so much so,

that some preferred to call it an automized floor

cleaner than a robot. These robots were definitely

different to what people had been introduced to, by the

numerous science fictions as early as in the 1930s. But

that has not deterred people from interacting with these

objects. We are seeing the phase where robots do

things „for‟ us and are moving into a phase where

robots will be doing things „with‟ us. Few robot

enthusiast go a little further to claim that robots would

be a part of the future family. Therefore it makes it

more important for us to understand the social impacts

of robotic technologies.

The aim of this paper is to list the home robot

applications currently available in the market, highlight

few challenges the makers face and state few reasons

of slow adoption of these gadgets which together could

imply that the predictions of some ardent lovers of

technology could be a little ambitious. This paper is

structured as follows: after looking into generic

applications, some interesting market figures of home

robots are shown. Section 3 describes what the users

expect; followed by what the manufactures and

hobbyist can offer given the various constraints and

challenges they are faced with. Section 5 briefly

describes the other side of the story with a word of

caution. The final section looks into the future of home

robots.


59

2. Applications, market figures and

projections

Here are some benefits that home robots offer (or

could offer) today.

Cleaning & Housekeeping: Currently there are many

models in the market that clean and mop the floor,

clean swimming pools and clear gutters. Cleaners

already on the market carry a battery of electronic

sensors that are meant to prevent them dropping off the

edge of the stairs, to bypass obstacles like furniture,

and size up a room. Several home robots can even

carry dishes and other small loads from room to room.

This is seen as a help for the physically challenged and

the differently abled.

Security & Hazard Detection: Home robots could

easily be tied into a computerized home security

system, and the robot's mobility would allow more

areas in the home to be protected. Robots in the near

future will use advanced AI (artificial intelligence) to

monitor our homes, make sure everything is

functioning properly and watch out for intruders. It

would be fairly easy to attach fire, smoke, carbon

monoxide, and other detectors to a home robot. Every

night the robot could "make the rounds" to ensure that

everything is okay. [2]

Helpmate and home companion: Just imagine that

every morning your robot could roll into your bedroom

and wake you up; once the robot senses that you are

out of bed it will follow you into the bathroom and

deliver up-to-the minute news, weather, sports, and

stock market information. [2].

Home Automation: It would be a fairly easy task to

connect a robot to a home automation system. The

robot, linked to your PC, would then have access to

lights, security features, and more. [2]

Entertainment: Robotics is an exciting hobby for

many people around the world. There are countless

clubs, websites, and books that have been written for

those who are interested in the topic. "Humanoid battle

robots" are set to bring computer games alive.

Education: A home robot could not only teach about

robotics but also spatial navigation, mapping, dead

reckoning, programming, and more.

Child Care: The technology already exists to use a

robot to check on the kids while we are away from the

house. Now with improvements someone could

“drive" the robot around from a remote computer and

receive live pictures of everything that the robot sees.

Pest Control: Small robots may one day scurry around

our homes at night, locating and smashing cockroaches

and other unwanted guests. [2]

Fetch & Find : Using robot vision and an arm, the

robot would navigate to the kitchen, open the

refrigerator door; grab a beer off a bottom shelf, close

the door, and return. Robots could also have attached

RFID readers and assist in searching tagged items for

e.g. keys and cell phones when misplaced.

The International Federation of Robotics

Statistical Department, which is hosted by the VDMA

(Verband Deutscher Maschinen- und Anlagenbau -

German Engineering Federation) Robotics and

Automation association, publishes the study World

Robotics every year. The next few paragraphs present

some highlights of the report released on Oct 2008.

[3].

Home robots are produced for a mass market

with completely different pricing and marketing

channels. Up to the end of 2007 about 3.3 million

vacuum cleaners and more than 110,000 lawn mowers

were sold. The total value amounted to about US$1.3

billion. As for entertainment and leisure robots, it is

estimated that about 2 million units had been sold up to

the end of 2007. It is expected that the cross-

fertilization of PC, home entertainment and robot

technologies will become a very substantial business

area in the near future. The total value of the stock of

entertainment and leisure robots amounted to US$1

billion. These are very low-priced robots.

Fig 1. Current figures and projections. [3]


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The market for robots for handicap assistance

is still small, but is expected to double in the next four

years. These robots have not yet taken off to the

anticipated degree, given their potential with regard to

both imaginable need and the existing technological

level of the equipment. In a longer perspective, say in

the next 10 years, and taking into account demographic

shifts and advances in technology, assistive robots for

disabled and handicapped persons as well as robotic

prostheses are certain to be a key area for service

robots. Some major research institutions are focusing

on developing prototypes of this kind of robots and

robotics-related devices.

Projections for the period 2008-2011: about

12.1 million units of robots for personal use to be

sold. It is projected that sales of all types of domestic

robots (vacuum cleaning, lawn-mowing, window

cleaning and other types) could reach over 4.6 million

units in the period 2008-2011, with an estimated value

of US$3.3 billion. The size of the market for toy robots

and hobby systems is forecast at about 4 million units,

most of which, of course, are very low-priced. About

3.2 million robots for education and training are

expected to be sold in the period 2008-2011. Sales of

all types of entertainment and leisure robots are

projected at well beyond 7.3 million units, with a value

of about US$1.8billion.

The figures mentioned above indicate that the

consumer robotics industry has a potential for growth.

The price of these products in comparison to the

perceived benefits that the products promise to offer is

one of the main criteria for customers‟ purchasing

decision. This could be the reason that the prices are

expected to drop in future to attract the mass market.

3. User experiences

Ever since home robots have been in the markets, it

has received mixed responses from users. Some see it

as a boon and others have different opinions. iRobot

Roomba vacuuming robots, is one of the best-selling

consumer robots till date. The iRobot Roomba has

been lauded by industry experts and consumers alike as

the first true practical and affordable home robot.

Many users have responded positively to this

invention. Though initially users were a bit surprised

and even skeptical of its form and capabilities, many

now vouch that Roomba would liberate users from

mundane household chores to spend more time with

family and friends.

There have been numerous studies on Roomba. One

such study [4] describes the expectations of people

around Roomba. The participants of the study

acknowledged that the Roomba was a robot but they

made a distinction between it and “other robots” .This

distinction seemed to be based on that fact that

Roomba was a consumer product – thus implicitly in

contrast with other robots that were either fictional or

tools used in science. The most common expectation of

robots given by participants in the study [4] was that a

robot would be “intelligent”, had the ability to learn

and gain knowledge of the environment over time and

adapt its behavior accordingly. The fact that Roomba

does not learn its environment quickly became

apparent to participants though understanding how it

navigated and maneuvered through space. The lack of

intelligence limited the attributions to Roomba.

Although nearly universally the Roomba did not match

the general expectations of “a robot”, this seemed to

have little effect on the actual use of the Roomba. Even

those participants who expressed disappointment that

the Roomba was not more intelligent, particularly that

it did not seem to ever “figure its way around,” did not

report using Roomba less because of this [4]. There

were other interesting behaviors seen among the

participants of the study. With Roomba to help,

cleaning was a concern for everyone in the home, not

just the female homemaker. To help Roomba clean,

householders made physical modifications to their

homes, a process referred to as roombarization.

Common types of roombarizaion included clearing up

wires, changing furniture layout, and tucking in rug

tassel [5]. Users even named their Roomba and were

very interested in how their pets interacted with it.


61

Fig 2. Nuvo [3]

For all their purported helpfulness, home robots are

largely about companionship as we see a new trend of

markets emerging for robots that function as

housemates or roommates. One such robot available

is Nuvo, which has been marketed as a household

helpmate and as a mobile baby monitor and security

device, because it can relay photographs to cell phones

that have access to the Internet. The increasing sales of

such robots show that they have created a new type of

enthusiasm among user. However this has created

special interest among social scientists who study the

human–machine interaction. Here is one such

interesting user experience: [6]

“Whatever its capabilities are, or will be, Nuvo has

a hard time living up to the expectations set by

1960's TV shows like "The Jetsons" and "Lost in

Space." I found myself wanting Nuvo to provide

magical servitude and sparkling wit. I wanted it to

accidentally drop the salt shaker in the mixing bowl

and then be able to laugh about it because it realized

it was funny, or perhaps not laugh because it was

annoyed at having made a mistake. I wanted it to

know the difference between the two emotions, and

the complex circumstances that can cause both to

arise.”

“I came to enjoy Nuvo's odd attention. When I

came in from jogging, I looked across the apartment

to see Nuvo facing me. When I said, "Nuvo, I'm

back," it bowed to me, a traditional Japanese

greeting. I decided to sleep with Nuvo next to me

on my large bed, plugged in and recharging through

the night. Its blue power light slowly pulsated, as if

it were breathing. My boyfriend called me the next

day and asked if I was sleeping in the same room

with Nuvo. When I told him we were sleeping in

the same bed, there was an awkward pause.”

Home robots are slowly moving from being just useful

to something that‟s sociable, robots with the capacity

to interact with people on psychological terms. This

opens up a new world of questions. But these

increasingly sophisticated devices challenge the idea of

human relationships and the very purpose and

importance of living things.

5. Challenges faced by the manufactures

We are moving beyond the stage where robots were

used only in controlled and therefore relatively simple

factory environments. The home is a much more

complicated environment with more unplanned and

unexpected elements that can show up. This presents

numerous challenges to manufacturers and hobbyist

alike. Bill Gates, the leader of the PC revolution

predicts that the next hot field will be robotics. He envisions a future in which robotic devices will

become a nearly ubiquitous part of our day-to-day

lives.[7] He believes that technologies such as

distributed computing, voice and visual recognition,

and wireless broadband connectivity will open the door

to a new generation of autonomous devices that enable

computers to perform tasks in the physical world on

our behalf. We may be on the verge of a new era, when

the PC will get up off the desktop and allow us to see,

hear, touch and manipulate objects in places where we

are not physically present[7]. However the software

giant does not shy away from pointing out the few

challenges faced by the manufactures of domestic

robots.

One such challenge is that robotics

companies have no standard operating software that

could allow popular application programs to run in a

variety of devices. The standardization of robotic

processors and other hardware is limited, and very

little of the programming code used in one machine

can be applied to another.[7] Whenever somebody

wants to build a new robot, they usually have to start

from square one. The Microsoft Robotics Developer

Studio (Microsoft RDS, MRDS) seems to be one

solution to the problem. It is a Windows-based

environment for robot control and simulation. It is


62

http://en.wikipedia.org/wiki/Microsoft_Windows

http://en.wikipedia.org/wiki/Robot

aimed at academic, hobbyist, and commercial

developers and handles a wide variety of robot

hardware. [8]

The popularity of robots in fiction indicates

that people are receptive to the idea that these

machines will one day walk among us as helpers and

even as companions. Nevertheless, although robots

play a vital role in industries such as automobile

manufacturing--where there is about one robot for

every 10 workers--the fact is that we have a long way

to go before real robots catch up with their science-

fiction counterparts. [7] One reason for this gap is that

it has been much harder than expected to enable

computers and robots to sense their surrounding

environment and to react quickly and accurately. It has

proved extremely difficult to give robots the

capabilities that humans take for granted--for example,

the abilities to orient themselves with respect to the

objects in a room, to respond to sounds and interpret

speech, and to grasp objects of varying sizes, textures

and fragility[7]. Even something as simple as telling

the difference between an open door and a window can

be devilishly tricky for a robot. But researchers are

starting to find the answers. One trend that has helped

them is the increasing availability of tremendous

amounts of computer power. [7]

Another barrier to the development of robots

has been the high cost of hardware, such as sensors

that enable a robot to determine the distance to an

object as well as motors and servos that allow the robot

to manipulate an object with both strength and

delicacy. [7] But prices are dropping fast and therefore

we are able to see some recent forays into the home

markets. If one wants to talk about burgeoning markets

for robotics, there's a whole slew of teleoperated

applications that are waiting to be tapped. But here is

also an added problem. If the robot was able to wash

up dishes on its own then this may be useful, but if it

has to be told how to wash up, where each plate is,

when to pick it up, when its clean, where to put it to

drain etc by a teleoperator then that lessens its value. It

looks like the same old problem robots have been

coming up against for years. We need Artificial

Intelligence of a sufficient standard to use the hardware

designs available to us to their fullest extent. Until AI

has reached this standard all the robots built for this

sort of environment have to be focused on one

"simple" task i.e. vacuuming or lawn-mowing. [9]

While advances in technology are giving us

answers to some problems, a major stumbling block is

presenting a good business case for a domestic robot.

Many inventions in the robotics field are seen as

germination for further research, but

whether there's yet a market that could sustain itself, is

still not clear. One example is the AIBO by Sony

(Japan), the production of which was stopped in 2005

because of reportedly unsatisfactory sales. On the other

hand iRobots Roomba has been rewarded for putting

customer‟s interest first. Roomba accomplishes a task

customers care about and does so at a price

competitive with other methods. No breakthrough

technologies were required, just familiar components

used in new ways. A simple set of principles helped

designers provide value to customers by keeping the

focus on the application, robot cost and functionality

and the system complexity. [10]

A burgeoning number of robotics innovators

have been inspired by the success of Roomba to move

beyond the primarily theoretical applications to which

robots had previously been consigned and are now

beginning to create robots to help people do real tasks

in the home. The latest research and development in

domestic robotics field is in sociable robots, an

autonomous robot that interacts and communicates

with humans or other autonomous physical agents by

following social behaviors and rules attached to its

role. [11] There have been some interesting

discussions in the design of these robots. Many

robotics engineers are working on humanoid forms,

instead of pursuing more imaginative, mobile,

futuristic designs, reason being that ordinary people

(especially the elderly) might interact more

comfortably with robots that have familiar shapes. In a

country like Japan, with senescing demographics, the

desire of an aging population for robots could be

enormous, both as personal assistants and as

companions. But roboticists have to remind themselves

of the hypothesis of „the uncanny valley‟ (The name

captures the idea that a robot which is "almost human"

will seem overly "strange" to a human being and thus

could result in a repulsive response [12]) to decide on

the design and business case for such sociable robots.


63

Fig 3. Human-like robots could create an

uncanny valley [12]

6. Word of caution

The scope of things one could possibly do

with home robots is ever-increasing with advancing

technology. Home robots are currently being used in

all walks of life, from child-minding robots to robots

that care for the elderly. These types of robots can be

controlled by a mobile phone or from a PC, allowing

input from camera "eyes" and remote talking from

caregivers. Sophisticated elder-care robots like the

Secom "My Spoon" automatic feeding robot; the

Sanyo electric bathtub robot that automatically washes

and rinses; and the Mitsubishi Wakamura robot, used

for reminding people to take their medicine, are

already in widespread use.[13]

Despite this, no international legislation or policy

guidelines currently exist, except in terms of

negligence. People in the likes of Professor Noel

Sharkey of the Sheffield University urge their fellow

scientists and engineers working in robotics to be

mindful of the unanticipated risks and the ethical

problems linked to their work. [13] They believes that

robots for care represent just one of many ethically

problematic areas that will soon arise from the increase

in their use, and that policy guidelines for ethical and

safe application need to be set before the guidelines

set themselves. According to few experts like Prof.

Sherry Turkle research into domestic robots has

demonstrated close bonding and attachment by

children, who, in most cases, prefer a robot to a teddy

bear[17]. Short-term exposure can provide an

enjoyable and entertaining experience that creates

interest and curiosity. However, because of the

physical safety that robot minders provide, children

could be left without human contact for many hours a

day or perhaps for several days, and the possible

psychological impact of the varying degrees of social

isolation on development is unknown.[13] At the other

end of the age spectrum, the relative increase in many

countries in the population of the elderly relative to

available younger caregivers has spurred the

development of elder-care robots. These robots can

help the elderly to maintain independence in their own

homes, but their presence could lead to the risk of

leaving the elderly in the exclusive care of machines

without sufficient human contact. [13]

Since Artificial Intelligence is becoming

more sophisticated and robots might be entering more

households, there may be important negative effects on

the human family system. People need to try and

remember that robots are still computers driven by

software and prone to crashing, hackers and such like.

Many also believe that allowing robots to do simple

everyday tasks would probably make us more

dependent on them and even lazier. These are all

realistic possibilities. These will cause a lot more

discussion and debate about technology, ethics, and

human life.

7. Conclusion

Although the home robot industry is predicted

to grow, experts say that the adoption is slow. [14] In

truth, the idea of robots in every home seems further

away today than it did four years ago. The reasons are

not entirely clear. It could come from a lack of interest

among consumers, a lack of imagination among

product developers, or a lack of tasks that could be

done well by robots. [15] There is a need for more

market study to understand consumer preferences.

Also home robots are vying for a place in markets that

can be easily substituted, for example people could

choose a real dog for Aibo or could start buying

wrinkle free clothes than buying a robot that could

iron.

The future, in time, will be far stranger. In

five years, the home robots are going to be more self-

sufficient, though not revolutionary. Given the average


64

development cycle for a new one, home robots in the

next few years are going to be similar to today's.

There will be more single-purpose robots taking care

of dull, dirty, dangerous tasks that do not require

significant manual dexterity. Robots are going to get

smaller even as their range of capabilities keeps

growing. They also will be networked so their

information applications become mainstream. [16]

Robots that serve as physical surrogates are going to be

affordable and commonplace. While there will be

exciting services of home robots in the offing, the

question of adoption and acceptance cannot be

answered. It seems that the multipurpose sociable

robots will remain in the research laboratories for a

while. Therefore the predictions of few about robotic

surrogates and helpmates in every home will take a

longer time to become a reality. However the consumer

robotics industry can flourish with better designs and

more single purpose robots like Roomba.

8. References

[1]http://www.electronics.ca/reports/consumer_electro

nics/cl eaning_robots.html

[2]http:// www.pioneernet.net/johnc/actuallydo.htm

[3]http://www.worldrobotics.org/downloads/2008_exe

cutive_summary.pdf

[4] Forlizzi, J. and DiSalvo, C. 2006. Service robots in

the domestic environment: a study of the roomba

vacuum in the home. In Proceedings of the 1st ACM

SIGCHI/SIGART Conference on Human-Robot

interaction (Salt Lake City, Utah, USA, March 02 - 03,

2006). HRI '06. ACM, New York, NY, 258-265.

[5] Sung, J., Grinter, R. E., Christensen, H. I., and

Guo, L. 2008. Housewives or technophiles?:

understanding domestic robot owners. In Proceedings

of the 3rd ACM/IEEE international Conference on

Human Robot interaction (Amsterdam, The

Netherlands, March 12 - 15, 2008). HRI '08. ACM,

New York, NY, 129-136.

[6]http://www.nytimes.com/2005/07/14/garden/14robo

t.html

[7]http://www.sciam.com/article.cfm?id=a-robot-in-

every-home&page=4

[8]http://en.wikipedia.org/wiki/Microsoft_Robotics_St

udio

[9]http://www.readybot.com/

[10] Jones, J.L., "Robots at the tipping point: the road

to iRobot Roomba," Robotics & Automation Magazine,

IEEE , vol.13, no.1, pp. 76-78, March 2006

[11]http://en.wikipedia.org/wiki/Social_robot

[12]http://en.wikipedia.org/wiki/Uncanny_valley

[13]http://www.sciencedaily.com/releases/2008/12/081

218141724.htm

[14]http://www.theage.com.au/articles/2004/10/28/109

8667898044.html?from=storylhs

[15]http://www.technologyreview.com/business/16503

/page1/

[16]http://www.pcmag.com/article2/0,2817,2238195,0

0.asp

[17]http://mitworld.mit.edu/video/588


65

http://www.electronics.ca/reports/consumer_electronics/cl%20%20%20eaning_robots.html

http://www.electronics.ca/reports/consumer_electronics/cl%20%20%20eaning_robots.html

http://www.pioneernet.net/johnc/actuallydo.htm

http://www.worldrobotics.org/downloads/2008_executive_summary.pdf

http://www.worldrobotics.org/downloads/2008_executive_summary.pdf

http://portal.acm.org/ft_gateway.cfm?id=1121286&type=pdf&coll=GUIDE&dl=GUIDE&CFID=10577695&CFTOKEN=46804650



http://www.nytimes.com/2005/07/14/garden/14robot.html

http://www.nytimes.com/2005/07/14/garden/14robot.html

http://www.sciam.com/article.cfm?id=a-robot-in-every-home&page=4

http://www.sciam.com/article.cfm?id=a-robot-in-every-home&page=4

http://en.wikipedia.org/wiki/Microsoft_Robotics_Studio

http://en.wikipedia.org/wiki/Microsoft_Robotics_Studio

http://www.readybot.com/

http://en.wikipedia.org/wiki/Social_robot

http://en.wikipedia.org/wiki/Uncanny_valley

http://www.sciencedaily.com/releases/2008/12/081

http://www.theage.com.au/articles/2004/10/28/1098667898044.html?from=storylhs

http://www.theage.com.au/articles/2004/10/28/1098667898044.html?from=storylhs

http://www.technologyreview.com/business/16503/page1/

http://www.technologyreview.com/business/16503/page1/

http://www.pcmag.com/article2/0,2817,2238195,00.asp

http://www.pcmag.com/article2/0,2817,2238195,00.asp

http://mitworld.mit.edu/video/588

Promising Business Applications of Vehicular Communication Systems

Michael Steiner

Department of Management, Technology and Economics, ETH Zurich

[email protected]

Abstract

Previous research in the field of vehicular

communication systems lead to the foundation of the

CAR 2 CAR Communication Consortium in 2002,

which is formed of major car members and suppliers in

Europe and pursues the development and introduction

of the underlying radio, networking and information

technology. With the emergence of Car-2-X

communication many innovative applications become

feasible. After a short introduction into different

categories in vehicular communication systems, this

paper describes the technology and its basic

architecture. Starting with safety and traffic efficiency

application, that are the main motivations for this

technology, it continues with some thoughts about the

economic background around a future market

introduction, which finally leads to a description of

several business applications including navigation

services, local commerce and insurance services.

1. Introduction

Vehicular communication systems are an emerging

type of networks in which vehicles and roadside units

are the communication nodes. They provide each other

with information, such as safety warnings and traffic

information. This field of technology is often referred

to as car-to-x (C2X) communication, as in these

systems a car communicates to several different

counterparts or even another car. The terms car-to-car,

car-to-infrastructure (public), car-to-enterprise (private)

and car-to-home indicate the different possible

communication pairs.

C2X communication enables a great number of use

cases in order to improve driving safety or traffic

efficiency and provide information or entertainment to

the driver. The first of these three use case categories is

safety. The use case of collision warnings allows

preventing rear-end collisions. During normal driving,

the equipped vehicles anonymously share relevant

information such as position, speed and heading. In

order to prevent an imminent rear-end collision, each

vehicle monitors the actions of its own driver and the

position and behavior of all other nearby vehicles.

When the system detects a critical proximity, it warns

the driver and he will have enough time to intervene

and avoid a crash. The second category is traffic

efficiency. Those use cases are meant to improve

efficiency of the transportation network by providing

information to the owners of the transportation network

or to the drivers on the network. For example, an

infrastructure constantly collecting data and predicting

traffic congestion on roadways can deliver routing

advices to the drivers that will shorten their travel time

by using alternate routes that are not congested. The

third category of use cases named infotainment and

others is meant to capture the remaining use cases

which are not directed at safety or traffic efficiency.

Many of these use cases interact more directly with the

vehicle owner on daily basis providing entertainment or

information on a regular basis. Others are transparent

to the driver but still perform a valuable function such

as increasing fuel economy or allowing diagnostic

information to be accessed more efficiently at a service

garage.

Figure 1 Use cases of vehicular communication [1]


66

Figure 1 visually recapitulates the communication

pairs mentioned at the beginning. Where car-to-car

mainly corresponds to the safety category of use cases,

car-to-infrastructure communication supports traffic

efficiency applications. Infotainment and other use

cases are based on car-to-enterprise and car-to-home

networks.

Today, such C2X communication systems hardly

exist, because of missing technology standards and

high entry barriers for car manufacturers. Nevertheless,

C2X communication is more and more understood as

the next big step in vehicle technologies and many

current projects are trying to lay the foundations for

standardization and commercial exploitation. They

contribute their results to a common consortium called

“CAR 2 CAR Communication Consortium” (C2C-CC)

that was founded in 2002 by six European car

manufacturers. Its objectives are to create and establish

an open European industry standard for C2X

communication systems based on wireless LAN

components, to guarantee European-wide inter-vehicle

operability and also to push the harmonization of C2X

communication standards worldwide [2].

The aim of this paper is to give an overview of the

technology and its applications in the field of vehicular

communication systems. Emphasis is on the business

aspects and on innovative commercial applications.

This paper is structured as follows. Section 2 describes

the technological approach and its issues. Section 3

outlines the motivational applications within the

categories safety and traffic efficiency. Section 4

provides the economic background which eventually

leads us to the section 5 describing some promising

business applications, before we finally conclude with

section 6.

2. Technology

The feasibility of the broad spectrum of application

scenarios stated above depends on a standardized open

communication platform. In this section, we shortly

describe the communication technologies and the

reference architecture of the network among the

different fixed and mobile nodes.

The C2C-CC [2] derived the radio system for the

car-to-car communication from the standard IEEE

802.11, also known as Wireless LAN. As soon as two

or more vehicles are in radio communication range,

they connect automatically and establish an ad hoc

network. As the range of such a single Wireless LAN

link is limited to a few hundred meters, every vehicle is

also a router and allows sending messages over multi-

hop to farther vehicles. The routing algorithm is based

on the position of the vehicles and is able to handle fast

changes of the ad hoc network topology. Hence, the

main technologies used to implement vehicular

communication systems are WLAN and GPS. In order

to fulfill the specific requirements of fast changing ad

hoc networks and for having communication protocols

supporting both active safety and infotainment

applications, the new WLAN standard IEEE 802.11p

has been defined. Its initial draft will be published in

July 2009 [3]. The standardization process of the

frequency bands utilized has even reached a milestone

in 2008, when the EU Commission has reserved an

EU-wide frequency band for car-to-x communications

applications [4]. According to the decision, a protected

spectrum (5.875 – 5.925 GHz) has been allocated for

safety and efficiency related messages. The first 30

MHz in the frequency band are reserved for safety

relevant applications and the remaining 20MHz can be

used for further extensions.

Having these base technologies for communication

between vehicles and roadside infrastructures, the C2C-

CC has defined a reference architecture as shown in

figure 2. It comprises three distinct domains: in-

vehicle, ad hoc, and infrastructure domain. As we will

see later, each of these domains proposes different

application scenarios.

Figure 2 Draft reference architecture [5]

The in-vehicle domain refers to a network logically

composed of an on-board unit (OBU) and potentially

multiple application units (AUs). An AU is typically a

dedicated device that executes a set of applications and

utilizes the OBU’s communication capabilities. An AU

can be an integrated part of a vehicle and be

permanently connected to an OBU. It can also be a


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portable device such as laptop or PDA that can

dynamically attach to an OBU. AU and OBU are

usually connected with wired connections, but the

connection can also be wireless, such as using

Bluetooth. The ad hoc domain is composed of

vehicles equipped with OBUs and stationary units

along the road, termed roadside units (RSUs). OBUs

form a mobile ad hoc network which allows

communications among nodes in a fully distributed

manner without the need for a centralized coordination

instance. OBUs directly communicate if wireless

connectivity exists among them, but even when no

direct connection is possible, dedicated routing

protocols allow multi-hop communications, where data

are forwarded from one OBU to another, until it

reaches the destination. The primary role of an RSU is

the improvement of road safety, by executing special

applications and by sending, receiving or forwarding

data in the ad hoc domain in order to extend the

coverage of the ad hoc network. Additionally, an RSU

can be attached to an infrastructure network, which in

turn can be connected to the Internet. As a result, RSUs

may allow OBUs to access the infrastructure domain.

In this way, it is possible for AUs registered with an

OBU to communicate with any host on the Internet,

when at least one infrastructure-connected RSU is

available. An OBU may also be equipped with

alternative wireless technologies and in such a way may

also communicate with Internet nodes or servers via

public or private hot spots. In case that neither RSUs

nor hot spots provide Internet access, OBUs can also

utilize communication capabilities of cellular radio

networks (GSM, GPRS, UMTS, HSDPA, WiMax, 4G)

if they are integrated in the OBU, in particular for non-

safety applications.

3. Motivational applications

As you could imagine now, the main motivations for

vehicular communication systems are increased safety

and traffic efficiency. The missions of all currently

running C2X projects, and especially the C2C-CC,

have in common that they name safety applications as

one of their primary goals. In the following, we have a

look at several ideas how to improve traffic safety and

efficiency.

When introducing the safety use case category, we

already described the concept of cooperative forward

collision warning. The idea is that when the vehicle

detects a critical proximity evaluating the shared

information about position, speed and heading of other

vehicles, it warns the driver via visual, auditory or

haptic displays. The pre-crash sensing use case

addresses the next step and assumes that a crash is

unavoidable and will take place. Similar to the

cooperative forward collision warning use case, it

requires that all vehicles periodically share information

with neighboring vehicles to predict a collision. Once a

collision is no longer avoidable, the involved vehicles

engage in fast and reliable communication to exchange

information such as more detailed position data and

vehicle size. This extra information provided to both

vehicles enables an optimized usage of actuators such

as air bags, motorized seat belt pre-tensioners and

extendable bumpers. A third interesting safety use case

is the hazardous location notification. It utilizes the

network of vehicles to share information that relates to

dangerous locations on the roadway, as for instance

slippery roadways or pot-holes. For instance, a vehicle

that experiences an actuation of its ESP (Electronic

Stability Program) system retains information about the

location and shares its knowledge with other vehicles in

the surrounding area. These other vehicles can then

provide the information to the driver or use it to

automatically optimize its chassis or safety systems. In

this use case it could even make sense to distribute the

information through ad hoc networks including

roadside units in order to reach further vehicles. Notice

that all three safety use cases mentioned so far have

some common characteristics. All vehicles involved

need the ability to share information with each other

and therefore must be equipped with car-to-car

communication systems. That is why a reasonable

market penetration is necessary in order to have a

safety impact. On top of this, these use cases require an

accurate relative positioning and vehicles need to trust

the information they receive from other vehicles. As we

see later, the requirement for trust will again be

important when it comes to commercially exploitable

business applications.

Although the main motivation of vehicular networks

is safety improvements, there are several other benefits.

Vehicular networks can help in avoiding congestion

and finding better routes by processing real time data.

This in return saves both time and fuel and has

significant economic advantages. The three prominent

use cases in the category of traffic efficiency are

shortly described in the following. First, there is the

obvious use case of enhanced route guidance that we

mentioned in the introduction. In this use case, the

roadside infrastructure is collecting data and predicting

traffic congestion on roadways throughout a large

region. This information regarding current and

expected traffic conditions helps the vehicle’s

navigation system to inform the driver about expected

delays or better routes that might exist. As this use case


68

is likely to route a number of people around congested

areas, the overall transportation system becomes more

efficient. The second traffic efficiency use case, green

light optimal speed advisory, provides information to

the driver in an effort to make their driving smoother

and avoid stopping [6]. As a vehicle approaches a

signalized intersection, it receives information

regarding the location of the intersection and the signal

timing. With this information, the vehicle calculates an

optimal speed using the distance to the intersection and

the time when the signal is green. When the driver

travels near this optimal speed, the traffic signal is

likely to be green and he will not have to slow down or

stop. The effect of this use case is less stopping on

roadways resulting in increased traffic flow and

increased fuel economy for equipped vehicles. Finally,

we have a look at the vehicle merging assistance use

case that allows merging vehicles to smoothly join

flowing traffic. When a vehicle enters an on-ramp to a

limited access roadway, it communicates with the

adjacent traffic that is already on the roadway. It

receives advices for specific maneuvers from the traffic

participants in order to allow a safe and non-disruptive

merge into the regular traffic.

Having these motivational applications in mind, we

see that for many use cases a significant level of market

penetration of C2X communication systems is

necessary in order to work properly. This leads us to

some economic thoughts provided in the following

section.

4. Economic background

Although there is a strong motivation for vehicular

communication systems by applications described

above, there are some severe issues regarding the

market introduction of C2X communication equipment.

For consumer technologies there are two mechanisms

that lead to a successful market introduction. Either

there is a visible added value of the technology for the

customer or a regulative order, which does not leave

alternatives, requires its use. A significant improvement

of road safety due to C2X communication might

actually justify the latter. But the catch to a regulative

introduction is that, to be issued, the effectiveness of

the C2X technology has to be proven first. In case of

technologies without network effects (like e.g. safety

belts) this might be achieved by crash tests and the

limited introduction in the field. But in case of C2X, a

certain penetration in the field is required before the

effects can be unambiguously shown. Hence, it cannot

be expected that a regulative order on the basis of

expected safety and traffic flow improvement is issued

before the penetration is reached. Owing to the network

effects the situation is equally tricky when investigating

the added value for the consumer. When a consumer

can only take advantage of a technology once a certain

market penetration is reached, he or she will not invest

in this technology before this is the case, which again

means that this penetration will never occur.

The classical approach for the introduction of new

consumer technologies, to rely on early adopters to

refinance development costs, or – as usually done in

the automotive industries – to introduce a new

technology top down, first in upper class vehicles and

then generation by generation in lower classed

vehicles, is consequently unsuitable for C2X

communication equipment. The general idea to solve

this dilemma is stated in [7]. C2X communication shall

be introduced with help from car-to-fixpoint

communication (C2FC) applications, which cover also

the use case category infotainment and others. The

communication with fixpoints has the advantage that

the fixpoints can be installed independently from the

equipment rate of vehicles. Discussed fixpoint

communication counterparts are traffic infrastructure

(car-to-infrastructure), enterprises (car-to-enterprise),

public hotspots, personal equipment and alike.

This proposed annihilation of the network effects by

focusing on C2FC applications is a step forward to

introducing the technology. Still, to envision the

introduction of car-to-car communication, necessary

for most of the safety and traffic efficiency

applications, with optional C2FC applications is also

naive. In consequence, car-to-car communication can

only be introduced as standard equipment. In order to

answer the question, how the serial production would

pay off for the manufacturers, the authors of [7]

propose a model with two major parts. Firstly, every

vehicle is equipped with a basic car-to-car

communication unit that can generate and forward C2X

messages. It does not need to include the capability to

also interpret the messages for the use inside the

vehicle it is installed in, because the motivation for this

unit is solely to achieve as quickly as possible a

sufficiently large penetration rate. Secondly, a variety

of C2FC applications is offered to the customers. The

sale of these options finances the cost of the respective

C2FC application, as well as parts of the basic car-to-

car communication units.

Motivated by this economic background, we will

have a look at several business applications in the

following section, whereas applications that are not

depending on a very high market penetration of the

C2X communication system will particularly awaken

our interests.


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5. Business applications

In section 3, we have already seen several use cases

of the categories safety and traffic efficiency. Now, we

introduce some use cases of the third category called

infotainment and others. As mentioned before, these

use cases have a particular importance regarding the

successful market introduction of C2X communication

systems. Taking the point of view of different

stakeholders, we split the section into a customer, a car

manufacturer and a part looking at interests of

government agencies and insurance companies. Note

that we distinguish again between C2CC applications,

that need a car-to-car communication, and C2FC

applications, where a car-to-fixpoint communication

takes place, and therefore a single equipped vehicle is

enough for the use case.

5.1. The Customer

When discussing C2FC applications, and especially

their suitability as introductory applications, three

criteria are of importance: The required coverage, i.e.

distribution of fixpoint communication counterparts.

Variations exist from “any limited are imaginable” (e.g.

personal equipment, company parking lot) to

“nationwide coverage, large” (e.g. SOS request, vehicle

location). As second, there is the required networking

behind the fixpoint communication counterparts. The

range goes from “the units are not connected to any

other information source, none” to “the units need to be

connected to the internet” (e.g. at hot spots). The third

criterion is the attractiveness of the application with

respect to the price obtainable. The value highly

depends on the user group (private driver, business

driver, manager of fleet operation business). Naturally,

those applications are specifically suitable as

introductory applications that require little or no

Figure 3 Categorization of C2FC applications [7]

networking, that are applicable in any limited area and

that are very attractive to the user. Figure 3 categorizes

a selected number of applications.

The applications found in the lower left corner are

those especially suited for the early C2FC market. We

include also the car-to-hotspot and MP3 download

applications into our discussion, as with their not

unlikely market success they will move into the lower

left corner of the diagram. Three of these promising

applications are for transport companies: electronic

transport documents, electronic tachograph and

delivery control in production plants. All three are

issues today. Hence, technical solutions exist or are

sought after. The introduction of the electronic

tachograph is even supported by legislation. This

means that the earlier the C2CC communication

interface is included in the concepts the better.

Also car rental companies are today looking into the

optimization of their processes. The use of wireless

connectivity is already tested e.g. at the car rental

return station at the Munich airport. Therefore also

their needs bear a potential for introductory scenarios.

Next to the car-to-hotspot and MP3 download

application, of interest for the private user are car-to-

personal equipment (address book and calendar

synchronization, music download into the vehicle from

mobile devices, etc.), car-to-home (comfortable

download of route planning information, music transfer

from the home PC into the car) and the use of

information points. The latter could provide local

information about e.g. parking space or tourist sites.

Decisive for the acceptance of these applications are

that they are very affordable, easy to use and that they

do not cause an information overflow.

For companies, drive through payment is a related

application, although not suitable for the introductory

scenario. C2FC based drive through payment can, in

fact, be installed in isolated set-ups (e.g. petrol stations,

drive-through restaurants), but it cannot be expected

that anyone will do so before a certain penetration with

C2CC units is in the market.

5.2. The Car Manufacturer

The direct business for the car manufacturer is to

sell vehicles. As we have seen in section 4, the C2CC

components cannot be marketed as a standard option to

choose in order to reach a large market penetration.

Therefore, car manufacturers should look for

applications that allow them to counter finance the

installation of the C2CC units by profiting from the

wireless interface themselves, outside the direct line of


70

business. In the context of vehicular telematics the use

of such a wireless connection for the car manufacturer

has already been investigated. The respective keywords

are customer and vehicle relationship management

(CRM and VRM) [7].

A first advantage in the context of VRM is the

capability for remote diagnostics that allow for more

efficient new product development and more effective

utilization of safety margins. They furthermore help

with the choice of suppliers and the proof of reliability.

The possibility to remotely fix vehicle failures reduces

customer irritation and helps to avoid costly dealer

interventions. Secondly, warranty and liability

management can be improved, as problems can be

noticed earlier and alternative ways to contact the

customers exist.

Looking at the CRM context, it is obvious that

owing to detailed customer understanding and

vehicle monitoring, suggestions for upcoming vehicle

replacements with specifically tailored models are

possible. On top of this, the customer contact can be

occasionalized. Instead of mass mailings just those

with likely interest can be informed about useful

equipment, software upgrades and alike. Thus

enhancing the customer’s seamless ownership

experience is brand building.

5.3. Other Parties

It has already been mentioned that government

authorities must have an interest in C2X

communication, because of its potential to significantly

reduce the number of accidents as well as to improve

the traffic flow. Apart from road safety and traffic flow,

there are other areas in which government agencies

might profit from the C2X communication. The

optimization of tolling is an urgent case all over

Europe and it would be desirable to have a compatible,

cross border, single contract, wireless solution for

tolling. C2X communication systems could provide the

necessary infrastructure. Law enforcement is a second

field for governmental application. Where e.g. theft

tracking would be generally accepted, the possibility of

tracking speed and alike with help of C2X would

jeopardize completely the acceptance of C2X

communication systems. A strong interest of

government entities is also in collecting statistical

data for their purposes. Nevertheless, the same applies

as for the car manufacturer; a not insignificant

infrastructure is required. The only difference is that

government entities have it in their hands to decide on

the reuse of e.g. tolling infrastructure.

Beside government agencies, also insurance

companies have an interest in C2X communication

systems. When looking at the statistics it can be seen

that depending on where and how much you drive, the

probability to be involved in an accident varies

considerably. E.g. if you drive only on motorways, the

probability to be injured decreases by about factor four.

Based on similar arithmetic some insurance companies

adjust their fees according to the use of the car. This

concept is called Pay-As-You-Drive (PAYD) and is

described in more detail by [8].

6. Summary

Vehicular communication systems are an emerging

type of networks and many innovative applications,

which we categorized into safety, traffic efficiency and

infotainment and others, become feasible. Although

today, such C2X communication systems hardly exist,

C2C-CC has defined the technological architecture

around IEEE 802.11 and on top of this has reached a

milestone when the EU commission has allocated a

protected frequency band for safety and efficiency

related C2X communications applications. Prominent

applications in these areas are collision warning,

hazardous location notification, and enhanced route

guidance. When we looked at the economic

background, we realized that innovative business

applications are necessary to drive the emergence of

C2X communication systems. The discussion in the

corresponding section showed that there will not be one

groundbreaking C2FC application suitable for the

introduction of C2CC. Nevertheless, there are a

number of applications from which vehicle customers

might like to profit. The C2CC technology should thus

be seen as a platform on which numerous applications

requiring wireless connectivity to the vehicle can be

realized. Finally, we had a look at some of these

applications from the viewpoint of different parties

such as private and business customers, car

manufacturers, government agencies, and insurance

companies.

Having now a broad overview of the field of C2X

communication and of the results produced so far by

projects as the “Network on Wheels” [9], we expect

some interesting outcomes delivered by the running

project “PRE-DRIVE C2X” [10] that started 2008 and

will end in June 2010, as they are not only developing a

detailed specification for such a system and a

functionally verified prototype, but also will describe

sustainable business cases from safety- to infotainment-

applications.


71

References [1] Festag, A., Noecker, G., Strassberger, M., Lübke, A.,

Bochow, B., Torrent-Moreno, M., Schnaufer, S., Eigner, R.,

Catrinescu, C., and Kunisch, J. (2008). NoW - Network on

Wheels: Project Objectives, Technology and Achievements,

Proceedings of 6th International Workshop on Intelligent

Transportation, Hamburg, Germany.

[2] CAR 2 CAR Communication Consortium:

http://www.car-2-car.org/

[3] Official IEEE 802.11 working group project timelines

http://grouper.ieee.org/groups/802/11/Reports/802.11_Timeli

nes.htm

[4] EU reserves frequencies for Car-to-x communications,

EE Times

http://www.eetimes.com/news/latest/showArticle.jhtml?articl

eID=209903568

[5] CAR 2 CAR Communication Consortium: CAR 2 CAR

Communication Consortium Manifesto, project report, 2007.

[6] Martin Goralczyk, Jens Pontow, Florian Häusler, Ilja

Radusch (2008). The Automatic Green Light Project –

Vehicular Traffic Optimization via Velocity Advice, Adjunct

Proceedings of the First International Conference on The

Internet of Things.

[7] Kirsten Matheus, Rolf Morich, Andreas Lübke (2005).

Economic Background of Car-to-Car Communication, Audi,

Volkswagen, Germany.

[8] Yuanshan Lee (2008). Applications of Sensing

Technologies for the Insurance Industry, Seminar on

Business Aspects of the Internet of Things, Zürich.

[9] NoW - Network on Wheels:

http://www.network-on-wheels.de

[10] PRE-DRIVE C2X:

http://www.pre-drive-c2x.eu


72

Things and Services

Sanjin Goglia Management, Technology and Economics ETH Zurich, CH-8092 Zurich, Switzerland

[email protected]

Abstract

Last few years saw the emergence of new

business models and improvements to the existing ones based on services directly tied to the network connected devices. The new trend has been adopted in large variety of industries from medical devices and power plants manufacturers to consumer electronics producers. The provided services range from monitoring and improving maintenance, reducing inefficiency to bringing new and fun ways of using the everyday electronic devices and they all have one thing in common: they fuel the new streams of revenue for the companies offering them. In this paper the impact on various industries will be analyzed as well as different business models, which are currently found in real world. 1. Introduction

The business world has seen a large shift towards providing additional services with the product sold in the past few years. This shift has occurred mainly due to the increased competition and larger number of similar products all competing on the price field. Some companies have introduced the services wrapped around their products, providing the added value to their customers. A small number of companies has moved even one step further and are offering the “smart services”. The term smart services describe the services, which go beyond the usual product updates and create an added value for your customers on one side and provide the company the cost effectiveness on the other side [1]. In this paper we will analyze some of the successful business models based on this approach in several different industries.

In the power industry we will assess the ABB products and services and in the medical industry we will look at Siemens medical equipment. The application for small and medium business will be seen through the application of fleet tracking and management service. As the smart services are not only found in the expensive industrial products or B2B market but also in the consumer market we will additionally assess the approach of Nokia with their new push in the services market with the product called Ovi, the already well-established iTunes

approach from Apple and a newcomer to this market Amazon’s Kindle. 2. Industrial Equipment

As a world-leading supplier of power plant automation and electrical solutions, ABB offers an unmatched portfolio of systems, products and services to meet the needs of almost any type of plant. With their advanced and cost-effective services and solutions they can preserve and increase the value of customers facilities. Their service spectrum covers the entire energy supply path from the power plant through the substation up to the end-user outlet. At the same time ABB manages to lower their operational costs. The key to this success has been the use of remote monitoring and self-diagnostic systems which are now days a de-facto standard in this industry. The ability to gauge maintenance frequency, coupled with enhanced life cycle costs, offers a golden opportunity to improve reliability of supply and minimize unscheduled disruptions.

For example generating electricity is seen as a fundamentally inefficient process. The efficiency of existing European generating capacity averages at about 35%. On a global scale, this drops to 30%. In essence, 65-70% of the potential energy in all fossil fuels is wasted. With fuel accounting for around 75% of the operating cost of a coal-fired power station, the need to ensure optimum energy efficiency is critical. The power generation process is at its most efficient when the plant is in constant operation. If a plant is well maintained and runs smoothly, it will achieve better combustion efficiency. By measuring and monitoring not just the boiler chemistry, but also other areas around a power plant, ABB is able to have a better overview of current conditions. When incorporated into a planned preventative maintenance programme, this information can help to substantially reduce the risk of unplanned outages [2]. The improvement in efficiency is another benefit of a well-designed and applied monitoring system. For example most of the power plants have 300 to 1,500 electric motors, pumps and other equipment running, and in many cases they aren’t anywhere near as efficient as they could be. Energy monitoring and control systems in a plant can range from several


73

meters to a comprehensive software setup and thousands of measuring points. Most advanced systems provide scalability, real-time data, and third-party device compatibility via protocols such as Ethernet, Modbus, Profibus, DeviceNet, LonWorks, BACnet and OPC.

Most systems use the Internet for remote access to multiple locations within a plant or between multiple locations using Web browsers on a PC or wireless devices such as a PDA or laptop. Applications include alerts and alarming, load analysis, cost allocation, bill verification, asset management, trend analysis, equipment monitoring and control, and preventive maintenance.

Other companies in this industry have similar solutions to the problem. The energy1st monitoring and control system from Stonewater Control Systems uses intelligent gateways installed at customer sites to collect information and push, rather than pull, information from the local devices over the Internet to Stonewater’s network operation center. Toyota Motor Sales, U.S.A., Inc. used such a system to reduce its energy consumption within its corporate and regional offices and distribution facilities. Toyota exceeded its goals of reducing energy consumption by 5% by the end of its fiscal year 2003, and by 15% by the end of fiscal year 2005 [3]. Many other examples can be found in an article by T. Houc “Put power under control” [3].

Somehow similar examples can be found in a completely different industry – the medical devices industry. Siemens Medical Solutions of Siemens AG is one of the world’s largest suppliers to the healthcare industry. The company is known for bringing together innovative medical technologies, healthcare information systems, management consulting, and support services, to help customers achieve tangible, sustainable, clinical and financial outcomes. The product Symbia E is one of the Symbia family of SPECT and SPECT•CT (computed tomography) imaging systems. It provides users with a high-quality SPECT imager that can lead to improved clinical confidence, reliability and versatility.

Maximizing workflow plays a critical role in providing efficient, cost- effective, high-quality patient care, as validated in a recent industry survey [4] that found workflow to be one of this year's top business priorities for imaging and IT professionals, whether they were from imaging centers, or large or small hospitals. Siemens answers this need by delivering workflow solutions that are role-based, context sensitive and knowledge-driven, providing access to tools that support quick and intelligent access to information, enabling more precise diagnosis, treatment and care.

To ensure the highest customer satisfaction and system uptime, the Symbia E is equipped with Siemens’ Remote Services capabilities. The Siemens

Remote Services program enables Siemens to check the system status through full remote access and remote diagnostics. This level of proactive monitoring and trending of key performance indicators will allow Siemens to service and update the system before small problems turn into big downtime. The end result is that Symbia E users will experience interruption-free imaging while having the support of a network of nearly 1,000 trained field engineers. 3. Logistics

As fleet operating costs continue to rise and the Transport & Logistics market place becomes increasingly competitive, the need for operations to get the most out of their vehicles and drivers whilst meeting customer service level expectations is paramount to the overall success of any transport or distribution business.

Several companies are now offering solutions to address this issue. One of such companies is Safefreight (http://www.safefreight.com). A company specialized in helping their customers improve the efficiency and effectiveness of their organizations through the innovative application. Their offering covers an extensive range of skill sets to evaluate, design, implement and support complex technological solutions which seamlessly integrate into their clients’ line of business applications. Their SmartFleet 360° Professional Services solution helps to answer strategic and tactical questions like which orders should be combined in a route (on a daily or even real-time basis), what is the best sequence to deliver (and pickup) orders in a certain route, which resources and equipment should be utilized, what are the most efficient driver start times, etc. By integrating the real-time communication of manifest to vehicles and real-time dispatching & scheduling functions, the solution provides an accurate and flexible decision making platform, which continuously optimizes the schedule based on real time information from the fleet. The system allows their customers to reduce fuel and fleet costs through accurate planning of routes and schedules reduce empty mileage, improve customer service through accurate arrival time planning, proactively re-plan in real-time based on exception management, reduce fleet operating and maintenance costs, etc.

By moving away from the traditional and very expensive model for such applications where the customer had to purchase the complete system, Safefreight managed to make the online system and offer this service under subscription. A previous investment, which was in a range of 5’000 USD per vehicle, can now be obtained for as little as 40 USD/month including the hardware. By serving the maps are served from Safefreight’s secure web server, they enabled their customers to locate and


74

view fleet and other mobile assets, review historical fleet reports and monitor asset location, condition and security status in real time.

By using this solution their customers have reported many benefits from it like: cutting fuel bills, increased productivity and increased motivation and less stress among their workers.

Similar businesses exist now days in various countries. 4. Consumer Market

Just like in the industry many companies have introduced various services bundled with their devices, which provide additional streams of revenue for these companies as well as offering their customer an added value and long lasting commitment to their products.

One of such companies is also Nokia. It is easy to see why Nokia wants to move into services. The handset market is maturing. In many rich countries there are more mobile subscriptions than people. Rapid growth is limited to emerging markets. Handsets are becoming a commodity with shrinking margins. Nokia could focus on increasing its market share, which stands at nearly 40% worldwide. The more promising bet, however, is mobile services, a market that is finally taking off [5]. This kind of business is not new to Nokia. A few years ago Nokia introduced the Club Nokia, a mobile store for ring tones and mobile applications. The Club Nokia has been labeled as a failure mainly due to complaints from the mobile operators who saw this new offering as a threat to their customer relationship. The second attempt by Nokia has been a launch of Ovi in August 2007, which attempted to provide a global one-stop shop for mobile services. Now Nokia wants Ovi to become even more - a hub that integrates mobile services between handsets and personal computers, by providing the digital maps, photo sharing services, a music store and a synchronization tool between the mobile phones and the PCs. By learning on previous mistakes, this time Nokia managed to convince mobile operators to provide support for Ovi and offer it’s services together with their own. The new streams of revenue Nokia sees in advertising, e-commerce and subscriptions to premium services.

Another example is Apple with it’s iTunes store. Now already recognized as one of the largest service business in the world of consumable electronics. As it is widely known iTunes store provides a possibility for the users of Apple products to download music, video and games to their devices. In August 2007 Apple announced that iTunes has sold over 3 billion songs in the last 4 years, since it’s launch, and that it recently surpassed Amazon and Target to become the third largest music retailer in the US [6]. Previous attempts to sell music on the Internet were primarily based on a subscription service model and

used proprietary formats. The record industry went overboard on copy protection schemes, and the public wouldn't buy it. One of the commercial music services not only prevented consumers from burning CD's of music they downloaded, but it also required consumers to pay a monthly fee in order to keep listening to music they had already downloaded. This essentially made it impossible for consumers to collect their own copies of music. It only allowed them to rent it.

Apple was the first major business to understand that consumers want music purchased on the Internet to have the same properties as music they bought at a CD store. These days that means portability. Consumers want to be able to make MP3 files, CD's or even cassettes of the music they buy. Apples success provides valuable lessons for all marketing on the Internet. As expected, Apple provided a seamlessly integrated system that required very little effort for the consumer to use. More importantly, however, Apple provided a product with terms familiar to consumers. Apple sold music instead of renting it. Apple didn't try the use the situation to force consumers to give up rights they were used to having, and consumers appreciated it [7].

Amazon has taken a similar approach like Apple by launching their mobile book, newspaper and magazine reader - Kindle. Amazon Kindle is a software and hardware platform for reading electronic books (eBooks), developed by Amazon.com. The Kindle hardware devices use an electronic paper display and download content over Amazon Whispernet using the Sprint EVDO network. Kindle hardware devices can be used without a computer, and Whispernet is accessible without any fee. These devices also provide free Internet access to Wikipedia [8]. Upon the initial launch of the Kindle, Amazon's Kindle Store had more than 88,000 digital titles available for download, with the number of titles steadily increasing. Amazon's first offering of Kindle sold out in five and a half hours and the device remained out of stock until late April 2008.

With Kindle, Amazon tries to reinvent the book and newspaper publishing just like Apple reinvented the music sales. According to the estimations done by Citi analyst Mark Mahaney, the Kindle could contribute 3% of Amazon's overall revenue in two years. By combining device and book sales in an iPod/iTuneslike model, Mark says, the Kindle could add $750 million to Amazon's top line in 2010 [9]. By offering different models from purchasing books to automatic delivery of newspapers to the device based on the subscriptions Amazon has managed to cover a whole range or “reading users”. Whether this approach is going to be successful or not is still to be seen.


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5. Conclusion

The pressure from the market and competitors, in form of lower margins on the devices and saturation of the market with similar products, has forced companies to look at combing their products with services to achieve differentiation from the competition. By intelligently combining the new services with existing products the analyzed companies have created a new value for the customers, improved customer relationship and retention as well as protected themselves from competition with proprietary protocols and technologies. It has been clear from the past experiences by large companies that survival of the company’s business nowadays largely depends on the offering not only top products but also binding these products with a verity of services which improve the customer experience and add value to the product itself.

As we have seen from various examples, many companies have managed to move their business to higher earning levels by introducing the services for the connected devices in the market of industrial equipment. In addition to that these companies have managed to differentiate themselves from their competitors and create a long lasting relationships with their customer. The introduction of services not only adds to the revenue streams by direct sales of these services but also allows the companies to closely monitor their customer’s behaviors and changes in trends. By doing this it allows these companies to respond faster to the changes, build better new products and even more improve their customer’s satisfaction.

On the other hand we have seen completely new business ideas in the fleet management and tracking for small and medium businesses where initial costs have been dramatically cut down and therefore allowed the providers of these services to access various new market segments. By doing this they have also provided an additional benefits for their customers who have seen cost cuts and better overview of their workers. Such an approach would not be possible without advances in the technology and the possibility to interconnect the devices in a larger, intelligent network.

In the end application of services in the consumer market has been seen on the examples of established business like Apple’s iTunes, which managed to become the largest on-line music store by smartly combining the services with their products. On the other side the reinvention of the one stop shop for the mobile phone applications and downloadable products coming in a form of Nokia’s Ovi is still to prove it’s business model. On the same side as Ovi stands the new product from Amazon – Kindle. By trying to replicate the success Apple had with iTunes and applying the same approach to books,

newspapers and magazines it is still to be seen whether Amazon will manage to repeat the success of iTunes.

Providing the services in the today’s market has not only become an advantage but an essential addition to the devices sold. The companies who did not recognize this new trend on time have observed decline in sales and loss of customers, which switched to other suppliers and became locked in to the competition by the newly acquired technology. Based on these findings it can be concluded that each company in the future will not only have to think how to make their product better but also what kind of additional services they could and should provide to their customers. 6. References [1] G. Allmendinger, R. Lombreglia, “Four Strategies for the Age of Smart Services”, Harvard Business Review, October 2005 [2] J. Plumley, “Improving power plant efficiency using analytical instrumentation”, http://www.abb.co.uk/cawp/seitp202/f95b7920b6f64682 c1256f8d0055b672.aspx, January 2005 [3] T. Houc, “Put power under control”, http://www.plantservices.com/articles/2005/539.html? page=1, 2005 [4] Top Trends Survey, Health Imaging & IT Magazine, October 2007 [5] “Ovi go again”, The Economist, December 2008 [6] J. Heller, “iTunes Success Impact on Digital Marketing”, http://thedigitalblur.com/2007/08/01/itunes‐successimpact‐ on‐digital‐marketing/, August 2007 [7] G. E. Morris, “The Apple iTunes Music Store: How Apple Got it Right”, http://thedigitalblur.com/200 7/08/01/itunes‐successimpact‐ on‐digital‐marketing/, 2007 [8] “Amazon Kindle”, http://en.wikipedia.org/wiki/Amazon_Kindle, Wikipedia [9] H. Blodget, “Amazon Kindle a $750 Million iPodLike Business By 2010”, The Business Insider, May 2008


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