iot, smart home & wearables how disruptive innovation ...how disruptive innovation changes our...

GfK Verein

IoT, Smart Home & Wearables –

how disruptive innovation changes our lives

The development of humanity has always been

characterized by disruptive innovations.

Digital transformation gives this process an

exponential growth momentum! Prof. Dr. Rudolf Aunkofer

Director Institute for Information & Supply Chain Management

Global Director Business Development, GfK

© GfK Verein /// IoT, Smart Home & Wearables – how disruptive innovation changes our lives /// May 17 2

1. Human history – a history of disruptiveness

2. The exponential momentum

3. IoT, Smart Home & Wearables

4. Entrepreneurial success in the 21st century

THINK!


The difference between the almost right

word and the right word is really a large

matter - 'tis the difference between the

lightning-bug and the lightning!

Mark Twain


Index of Social Development

Going back to the end of the last ice age to the origin of the first complex societies

Human history – a history of disruptiveness since 14,000 years

Source: Ian Morris, The Measure of Civilization & Why the West rules – for now; y-axis: index points

14000 BCE 400 BCE 200 BCE 1 BCE/CE 200 CE 400 CE 600 CE 800 CE 1000 CE 1200 CE 1400 CE 1600 CE 1800 CE 2000 CE

West East



Industrial revolution effects are getting boosted by the digital revolution of the 21st century

Disruptiveness is causing change & growth –

basis for any pioneering innovation & groundbreaking technology

New scientific principles in Mathematics, Physics, Chemistry, Biology are resulting in the Scientific Revolution

Source: Ian Morris, iSCM; y-axis: index points


West East

11.000 BCE: Agricultural Revolution

8.000 BCE: Farming was spreading

5.000 BCE: Domestication was starting

2000 CE: Digital Revolution

1700 CE: Scientific Revolution

1600 CE: Atlantic Triangular Trade

0 BCE/CE: Roman Empire

500 BCE: Exploiting the Mediterranean 1900 CE: Industrial Revolution


Example: analog vs. digital photo cameras

The nature of picture making was changing & boosting market volumes by the factor five

A “painting style” behavior was transforming into a kind of “fun style” photo taking behavior

Source: GfK POS, WEU, Sales Unites 1990 – 2014; photo cameras; y-axis: sales units

1991 2011

The next disruptive factor: SmartPhones & Phablets!

1990 1995 2000 2005 2010

70.5 Mio

13.2 Mio

70.5 Mio

13.2 Mio

analog photo cameras

digital photo cameras

2014


Kodak’s Moment

Disruption is destroying decades of technology advantage within a few years only

Source: http://www.kevinuhrmacher.com/wp-content/uploads/2011/11/Infographics_Uhrmacher.pdf

In 1975,

a Kodak engineer

invented the

world’s first digital

camera

Sony first

introduced the

digital camera in

1981

Kodak focused

with digital

technology on

high-end, niche

markets

The Kodak

Moment:

a rare,

one-time

moment that is

captured by a

picture, or

should have

been captured

by a picture


Disruption

Basis for innovation & growth since more than 14,000 years

Disruption with the right timing is creating a “convincing” momentum …

Source: iSCM, GfK

• … more often

• … faster

• … with bigger (exponential) effects

• … across industries

• … but not always sustainable

consequence

highly volatile and therefore challenging markets

combined with “hockey-stick” like opportunity

scenarios


Innovation distinguishes between

a leader and a follower!

Steve Jobs


The digital revolution is changing the way how we’re innovating –

for the first time in history “everything” seems really to be possible!


The world is moving into an exponential momentum

Four traits are used for devising the index for social development



West East

2000 CE: Digital Revolution

Information Technology

“… the sophistication & extend of use of technologies available …”

Organization

“… the size of the largest settlements & organization complexity ..:”

Energy capture

“… the full range of energy captured by humans in any form …”

War-making capacity

“… the destructive power available to societies …”



The world is moving into an exponential momentum

The hockey stick like development is correlating

with the increasing number of disruptive innovations

Organizational aspects & Information technology are the two game-changing factors


1100 CE 1400 CE 1700 CE 2000CE

Energy Capture

Organization

War-making Capacity


Total East

1100 CE 1400 CE 1700 CE 2000CE

Energy Capture

Organization

War-making Capacity


Total West

EastWest


The exponential momentum

There have never been so many innovations in history than in the 20th & 21st century

A new startup scene is benefiting from a marginal cost level of zero

& software defined business models

The innovation rate will increase further on due to cloud eco-systems & digital transformation

Source: www.eine-frage-der-technik.de/meilensteine-der-technik, http://www.geo.de/GEO/heftreihen/geokompakt/die-chronologie-der-100-wichtigsten-erfindungen-pdf-60034.html, iSCM

21th

Century

20th

Century

Airplane

Electric

Typewriter

Bild

Bild

Computer

Bild

Sloppy

Disk

Bild

Photo-

voltaics

Bild

Digital

Camera

Bild

CD

Bild

Mobile

Internet

Bild

USB

Bild

Drones

Bild

Apps

Bild

Smart-

phone

Bild

3D Printing

Bild

4G/

LTE

Bild

Internet of

Things

Bild

Wearables

Bild

Augmented

Reality

Bild

Television

Transistor

Bild

Bild

Nuclear Power

Plant

Bild

Camera

Bild

Robot

Bild

Laptop

Bild

Industrial

Robot

Bild

World

Wide Web

Bild

Mp3-Player

Bild

Flatscreen

TV

Bild

NFC

Bild

Connected

Car

Bild

Virtual Reality

Bild

Cloud

Computing

Bild

Electric Car

Bild

Smart Home

Bild



Moore‘s Law from 1965 is still valid …

Doubling the number of transistors/power of a microprocessor every 1.5 to 2 years

Source: Intel, http://www.spiegel.de/netzwelt; https://ourworldindata.org/technological-progress; https://b2bstorytelling.wordpress.com/; https://miovision.com/blog

Accelerating

tech growth!

(condensed)

Successful & disruptive

tech-innovations are (nearly all) following an exponential

path



Basis for the current global start-up scene

The “magic” principles for entrepreneurial success in the 21st century

Source: iSCM, GfK, Brand 1

• disruption is creating new digital business

models, information, supply & value chains (german: Schumpeters Modell der schöpferischen Zerstörung)

• digital platforms are scalable with stable or

declining marginal costs across countries,

industries & application areas

• network effects are helping to increase the

number of users/customers exponentially &

within a short period of time

consequence

(1) „long-tail-markets“ are turning into oligopoly

or monopoly like markets

(2) innovative startups are challenging traditional

business models & complete eco-systems


It ain’t what you don’t know that gets you in

trouble. It’s what you know for sure that just

ain’t so!

Mark Twain


Marketing life cycle

Some tech-topics are simply (extremely) hyped due to digital media

A marketing hype is not necessarily creating a real, sustainable business model

Source: iSCM; schematic diagram; y-axis: visibility, expectations, media presence; x-axis: time

virtual reality

augmented reality

smart clothing

industry IoT

artificial intelligence

robotics

connected cars

cloud

3d printing

technology trigger peak of expectations return to reality mainstream adoption

smart home

consumer IoT

smart watches

app business models

fitness tracker

big/smart data

drones

smart cities


Product life cycle

Business reality is sometimes different from marketing

Timing is key for innovation & a sustainable business models

Source: iSCM; schematic diagram; y-axis: visibility, expectations, media presence, sales; x-axis: time

technology trigger peak of expectations return to reality mainstream adoption

visionaries pragmatics scepticsconservatives

chasm

enthusiasts

„shark-fin“ markets

„real“ markets


Wearables

Demand is neither following nor keeping pace with the media hype/high expectations

Source: Estimated Total market based on GfK POS data Jan 16 – Dec 16; numbers are ranking the countries by market size in the respective region

Convincing design, branding & functions across price bands are needed to grow the market

Smartwatches Fitness trackers

Wrist Sport Watches Others (e.g. Connected Watches, Locators, Smart Glasses)

12

3

4

5

32%

53%

13%2%

13mn

units

17%

55%

24%

4%

42mn

units

1 23

4

5

Euro

pe

Asia


Smart Home

Simplicity, ease-of-use & seamless experience are creating demand

Source: GfK Consumer Life 2015, US, 1,000 consumers 18+, asked online

To keep my home

safe and secure

To save money by

reducing my utility costs

Because it helps maintain

a healthy environment at home

To allow people to come

and go when I'm not there

To be more environmentally

responsible

by using resources efficiently

Because I like keeping my home

updated with the latest tech

Because it's cool

and transetting

Younger

Millennials

Older

Millennials

Gen

X-ers Boomers

42 46 52 34

42 44 49 61

[%]

33 36 23 7

27 32 21 4

26 38 26 23

22 38 23 19

13 39 20 10

Reasons for monitoring or controlling a smart device differ between age group strongly

Enhancements

of consumer lives

need to address

the right target

group

10%

13%

8%

2%

Younger Millennials

Older Millennials

Gen X

Boomers

Owner of

Smart

Devices


Virtual Reality

Significant increase in sales after a long “trigger-period”

Source: Estimated total market based on GfK POS data for 10 European Countries, Dec 15 – Dec 16; demand/unit trend is in grey

11 9 11

76

41

63

-

200

400

600

800

1.000

1.200

1.400

0

10

20

30

40

50

60

70

80

90

Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16

Virtual Reality becomes a 180 million € market in Q4/2017 in Europe

VR Total 2016

249mn €2.2mnunits

VR Drones

360 Degree Cams

Head Mounted Displays

VR Head mounts


Smart TV

Enormous increase in sales is indicating the transition to “mainstream adoption”

Source: GfK Point of Sales Tracking 2016, estimated total market

17,38

4,48

2,78

5,61

1,040,35

EuropeLatin AmericaMiddle East and Africa

2011

2016Smart TV sales in million

Smart TVs –

an entry point

for smart home

enthusiasts


Hardware portfolio

Baseline for disruptiveness

Source: GfK global volume estimate 2016 based on POS data

A high installed base & an extensive device usage is key for any data-driven business model

1,400 mnSmartphones

122 mnWearables

14 mnVR glasses

10 mnDrones

10 mnAction

Cams

rec

0.3 mn

360°

Cams


Media hype or sustainable business model

The entrepreneurial opportunity

Everything seems to be possible in a cloud & software driven market environment

Source: iSCM

• trigger periods are usually much longer than

expected

• shark-fin shaped markets are either

challenged by crossing the chasm or by the

next shark-fin shaped market

• IoT opportunities today are often more

challenging than media is suggesting, but

market potentials are bigger than ever

consequence

customer centricity, leadership & entrepreneurial

spirit is needed, to compete successfully against

tough competition in a volatile market

environment


Don’t follow the headlines,

follow the trend lines!

Bill Gates


Entrepreneurial success in the 21st century

Making the difference

Source: iSCM

ENTREPRENEURIAL SPIRIT NEEDS AN INFORMATION BASED VISION!

change – disruption is starting a transformation process

opportunity – transformation is creating new markets

exponential growth – digital business models are platform based

sustainable success – timing & leadership is essential

information – key driver for competitiveness


Many thanks for your kind attention!

Prof. Dr. Rudolf Aunkofer

[email protected]

M +49 171 30 47 468

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