11436 SSO

The I Love APIs City Tour: Exploit the Connectivity of Everything

Feb 18, 2015

In previous posts we argued that when there’s a change in market context, those who can adapt their organizational context to exploit it become the disrupters. Conversely, those who can’t are disrupted.

We’re well into a major change in market context now. Here, we’ll explain why this change is occurring and why it has major and urgent implications for every enterprise.

The importance of "bits"

Here’s a key point: “bits”—software and digital data—have properties highly relevant to creating (or destroying) value: they can be perfectly replicated, an infinite number of times, at zero marginal cost (for a deeper dive into why and how this matters, read the excellent Harvard Business Review article, “Digital Ubiquity: How Connections, Sensors, and Data are Revolutionizing Business”).

Software companies have enjoyed high margins because, in contrast to physical goods, producing each copy of a program beyond the first could be done at almost zero cost. These properties enabled digital services like Craigslist to disrupt print classified ads, eviscerating them as a source of revenue for the newspaper industry.

The relevance of bits to every business has been limited in the past by the fact that bits need “atoms”—that is, physical objects—in order to “live.” Software needs to run on silicon; data needs sensors to create it; code can only impact the world if it can reach a person or object that’s responsive to instructions.

The pervasiveness of connectivity

“Bit-friendly atoms”—physical devices and objects that can run software, generate sensor data, and transmit data or be remotely manipulated by code—have been, up until recently, rare. Now they’re becoming pervasive. The ascendance of the smartphone was a tipping point: today, just shy of 60% of adults in the U.S. and U.K. are themselves bit-friendly atoms: humans who carry a connected, smart device nearly every waking hour, almost everywhere they go. But a vast range of devices is increasingly becoming “bit-friendly” and connected: thermostats (Nest), cars, and even light bulbs (Philips Hue).

To win market share, satisfy customers, and increase revenue, it’s critical to exploit this new trend. There are three reasons for this: first, the pervasiveness of connected, bit-friendly atoms in the world around us; second, the degree to which people—your customers, employees, and partners—will embrace them; and, third, the business impact that is already occurring.

The feasibility of "bit-friendly" products

We’ll end this post with a focus on the first reason: the relentless, fundamental trend toward more bit-friendly atoms isn’t about the bits, it’s about the atoms. We see powerful, non-linear trends continuing—according to analysis published by Deloitte's Center for the Edge:

  • between 1992 and 2012, the cost of computing power dropped from $222 to $0.06 per million transistors

  • the cost of storing one gigabyte of data fell from $569 to $0.03

  • the cost of connectivity, as measured by the cost of a thousand megabits per second, fell from $1,245 to $23

These underlying trends are turning bit-friendly atoms from the exception into a no-brainer for all sorts of devices and objects: from GE’s engines to in-store beacons to a long list of everyday objects like forks, cups, and tennis rackets (here’s a handy compilation).

In the market today, the constantly increasing feasibility for enterprises in every industry to make their products bit-friendly is meeting up with people’s enthusiasm for bit-friendly devices to powerful effect. You want to be a part of this: We’ll share our perspective on changing consumer behavior and business impact in upcoming posts. Meanwhile, consider joining us at one of the two remaining stops of the I Love APIs City Tour, which lands in Los Angeles on Feb. 19 and Dallas on Feb. 24. We’ll also host I Love APIs Europe in London on March 24.

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