Strategic Insights for Competitive Advantage through Connected Products by Kaushik Eshwar Sriraman

Strategic Insights for Competitive Advantage through

Kaushik Eshwar Sriraman Industrial and Strategic Design, Department of Design School of Art, Design and Architecture, Aalto University Supervised by Tiina Karhu and Peter McGrory

Strategic Insights for Competitive Advantage through Connected Products

Kaushik Eshwar Sriraman Industrial and Strategic Design, Department of Design School of Art, Design and Architecture Aalto University Supervised by Tiina Karhu and Peter McGrory

Abstract

Today we see more connected products than we have ever seen before. Smart washing machines, self-learning thermostats, connected light bulbs and internet enabled coffee makers, equipped with sensing and communication technology, have become common place in a number of homes across the world. This study begins with the hypothesis that widespread connectivity of physical products within the home can bring new opportunities to how products and services are designed. This thesis explores how companies monetize capabilities of connected products in order to establish competitive advantage. A review of literature was undertaken to validate the need for such a study and to define a framework for further research. Discussions around the â&#x20AC;&#x2DC;Internet of Thingsâ&#x20AC;&#x2122; (IoT) helped in identifying an opportunity for investigative research around connected products. A number of companies currently leverage product connectivity in order to design services for their users and build successful businesses. Four such companies and their

products were reviewed and have been presented as case studies in this thesis. The case studies include the Nest Thermostat, Philips Hue Lamps, Withings Body Analyzer and the August Smart Lock. Based on the review of the case studies, inferences were drawn and structured into a set of strategic insights namely 1) Design for Convenience, 2) Design for Positive Behavior Change, 3) Design for New Business Models, 4) Design for Service Platforms and 5) Design for Transparency. Together, the strategic insights have been presented as a framework that can help companies establish competitive advantage through connected products. Based on the framework, a set of design improvements have been explored for each case study. This exploration helped in testing the applicability of the framework in designing services around connected products. Based on an understanding of each case study, the potential impact of the designs in establishing competitive advantage has been highlighted.

Acknowledgements

This project has only been possible due to the support of my friends, family, professors and colleagues. Firstly, a big thank you to Tiina Karhu and Prof. Peter McGrory from Aalto University for their guidance and support through the various stages of the project. A huge shout out to Ella Kaila from Ericsson for her guidance and for the moral support she provided me with from start to finish. I extend my sincere gratitude to Raul Soderstorm, Kenneth Manner and Aulis Koivisto who gave me the opportunity to work at Ericsson in the first place. Thanks to my colleagues and friends, Juan and Arjun for their timely feedback whenever it was required. A special thanks to my friends - Disha Roy for her assistance in putting this document together and Sarang Ganoo for inspiration through his own thesis work and for the numerous invaluable conversations that have helped me shape my thesis all along the way.

And last but not least, I would like to thank you, the reader. The real value of this work lies within your interest in it, your interpretation of it and the discussions you raise. I look forward to hearing your thoughts about the same.

CONTENTS

1 Thesis Outline

Chapter 1: Background

1.1 Introduction

1.2 Connected Products

1.3 Competitive Advantage

1.4 Scope

1.5 Methodology and Objectives

Chapter 2: Cases

2.1 Overview

2.2 Nest Thermostat

2.3 Philips Hue Lamps

2.4 Withings Smart Body Analyzer

2.5 August Smart Lock

2.6 Analysis of Case Studies

3. Strategic Insights

3.1 Convenience

3.2 Positive Behavior Change

3.3 Service Platforms

3.4 New Business Models

3.5 Transparency

Chapter 3: Exploration

3.1 Exploration

3.2 Convenience Through WiThings Body Analyzer

3.3 Positive Behavior Change through Philips Hue Lamps

3.4 New Business Models through WiThings Body Analyzer

3.4 Service Platforms Through August Smart Locks

102

3.5 Transparency Through Nest Thermostats

106

4 Conclusion

112

5 Discussion

114

Works Cited

116

Appendix 1

118

1 Thesis Outline

The book has been structured into three chapters – Background, Cases and Exploration. It must be kept in mind that the three chapters although presented in a linear fashion for easy reading, do not represent the otherwise organic process of design that was undertaken. The first chapter in this document is Background. This chapter begins with an introduction to connected products. It highlights the influence of connected products in experiencing services and in building successful businesses. The chapter also sheds light on ‘services’ and it’s relevance within the context of connected products. Finally, the objective and the overall scope of the thesis study have been outlined and presented as research questions. Cases features an analysis of four companies, their products and their products’ overarching service. The overall objective of this chapter was to understand and map the aspects of services provided by companies which have been made possible due to internet connectivity of their products. The analysis of the case studies resulted in defining a set of design insights. In the final Exploration chapter, the insights were applied towards making small design improvements to the reviewed cases studies. The ideas explored in this chapter have been presented as a reference to validate the generated insights instead of a market-ready solution.

BACKGROUND

CASES

Nest Thermostat

Philips Hue Lamps

WiThings Body Analyzer

August Door Lock

Strategic Insights for Competitive Advantage through Connected Products

EXPLORATION

Figure 1: Thesis Outline

BACKGROUND Chapter 1

1.2 Introduction

Physical products are undergoing a dramatic change due to Information technology. Products that were once composed of mechanical parts are now complex systems embedded with sensors, microprocessors and numerous connectivity options. These connected products, made possible by more efficient microprocessors, shrinking hardware components, advance software algorithms and cheaper manufacturing of parts, are becoming common place within a number of homes across the world. As a result, Internet connectivity is becoming a vital part of products that we interact with on an everyday basis. Studies show that the Internet connects between 10-15 billion physical products today and that number is constantly on the rise. ‘Ever since the development of the Internet, as networked computers and until today there has been a desire to connect more things to the Internet’ (Cisco IBSG, 2012). This conncetivity now extends itself beyond desktop computers, laptops and smartphones to otherwise seemingly un-connected products within the home. A number of electrical home appliances such as washing machines, refrigerators, air conditioners and coffee machines now benefit from internet connectivity. Samsung’s smart washing machines take advantage of internet connectivity to let their users adjust wash settings through a smart phone. Likewise, Quirky’s internet enabled air-conditioners allow users to control their room temperatures through a smart phone application (refer to Figure 2). Internet connectivity has also made it possible for products to network

Figure 2: Quirky air conditioner functions controlled via a smartphone application

with one another to benefit users. For example, connected thermostats begin to heat or cool a home based on information from a user’s connected car thus ensuring that their home is always comfortable to step into without wasting too much energy. Interconnectivity of products is also rapidly changing the way we experience day to day activities. The Nike Free sensor-enabled shoes, paired with a smart phone, allow runners to monitor and track their progress with real time statistics thus changing the way they experience a casual run in the park. Internet enabled wristbands allow parents to monitor and track the vitals of their children and attend to them if anything is wrong thus giving parents the freedom and peace of mind to carry on with daily chores. Within the home, thermostats combine weather information and user activity information to efficiently heat or cool a house thus optimizing on energy usage and cutting down on energy bills. With products constantly networking with one another for exchange of information, the experience of using products is no longer limited to a user’s interaction with a single product alone. ‘It is the services that we design on top of physical objects and the behavior they promote that matter’ (Shenton, 2013). The experience of living amongst connected objects is largely affected by an ecosystem of related products and services. Nike’s Nike+ Running application sources information from sensors embedded in shoes, heart-rate monitors, location services and weather services to provide users with comprehensive information about a run. Connectivity of products, thus, opens up new opportunities for the design of services around physical products. However, it also brings about its own set of challenges. ‘As more objects get “smartified” deep challenges to social conventions will emerge’ (Shenton, 2013). For example, will information exchange between personal health tracking devices, doctors and insurance companies, cross the limits of a user’s

privacy? Will a large number of connected products waiting to be monitored and responded to, bring about a digital fatigue amongst users? These are challenges that companies will need to address before the services built around connected products reach mass market. It is however important to better understand what â&#x20AC;&#x2DC;Connected Productsâ&#x20AC;&#x2122; are and what they can do before we can attempt to answer these questions.

Figure 3: Samsungâ&#x20AC;&#x2122;s Smart Washing Machine

Figure 4: Nike Plus shoe sensor

1.3 Connected Products

Connectivity of products is not a new phenomenon. A myriad of technologies including infra-red readers, Radio Frequency Identification(RFID), Bluetooth beacons and Wi-Fi networks have enabled products to communicate with one another in order to exchange information. However, it is only recently that connectivity has extended itself beyond multipurpose computers to everyday objects such as light bulbs, coffee machines, shoes etc. A network of such Connected Products is usually referred to as the ‘Internet of Things’ (IoT). Discussions around the ‘Internet of Things’ has now brought about significant interest among scholars from various fields to study and explore Connected Products in more detail.

What are Connected Products? Connected Products can be seen as products that are made up of three core elements: Physical components, Connectivity Components and Software Components (refer to Figure 5). The Physical Components of a Connected Product refer to the product’s electrical and mechanical parts. In refrigerators, for example, that may include the doors, light bulbs, compressors and a number of temperature sensors. The Connectivity Components refer to ports, antennae and protocols enabling wired or wireless connections with the product. These connections can be between two products, between a product and its user or between multiple products and users – depending on the product in discussion. In Connected Products, the primary function of a product’s

Connectivity Components is to enable exchange of information between the product and its operating environment, its maker, its user, other products and systems. While information exchanges maybe the main function of connectivity in Connected Products, it also enables some of the Software Components to exist outside of the physical product itself. The third, Software Components of a Connected Product refers to embedded operating systems, a product’s digital user interface, controls and, typically, the data from a product’s usage that is generated and stored remotely. Connectivity enables an entirely new set of product functions and capabilities that can be grouped into four areas : Monitoring, Control, Optimization and Autonomy’ (Harvard Business Review, 2014). A Connected Product is usually capable of incorporating all four functions.

PHYSICAL

CONNECTIVITY

SOFTWARE

COMPONENTS

CONNECTED

CONNECTED PRODUCTS ARE MADE UP OF THREE CORE ELEMENTS Figure 5: Components of Connected Products

Monitoring Monitoring Capabilities refer to a Connected Product’s ability to enable comprehensive tracking and observation of all aspects associated with the use of a product such as that of a user’s interaction patters, a product’s environment, its operational efficiency, operating environment, etc. Monitoring a product’s usage patterns and operating characteristics can inform companies and service providers as to how the product is actually used. Data gathered about products also has important implications for design (to avoid over engineering), for maintenance (through predictive servicing of products before they actually break down) and market segmentation (analysis of usage patterns by customer type). In some cases such as health tracking devices, Monitoring Capabilities are the core aspect of value creation. For example, Nike Plus shoe sensors combined with the mobile application allow runners to track their runs thus revealing insights into their running patterns like pace, distance, etc. Monitoring of products can also be of specific value when done remotely over long distances. Dropcam, a home monitoring camera allows users to watch over their home while away working at offices or when on a vacation. Monitoring, therefore, is an important and foundational aspect of other capabilities of Connected Products.

Control Control Capabilities of refers to the ability of controlling a products functions remotely, through software algorithms built into the physical product itself or that is present in the product cloud. Remote control of products through software algorithms allows optimization of product performance to a degree that was once not cost effective or even possible. This also allows users to personalize their interaction with a product in several new ways. For example, connected lighting systems such as that of the Philips Hue allow users to change the color of light bulbs within

AUTONOMY

PRODUCTIVITY

CONTROL

MONITORING

Figure 6: Capabilities of Connected Products

CONNECTED PRODUCTS ENABLE AN ENTIRELY NEW SET OF FUNCTIONS AND CAPABILITIES. EACH FUNCTION OF A CONNECTED PRODUCT SETS THE STAGE FOR THE NEXT LEVEL. FOR EXAMPLE MONITORING CAPABILITIES ENABLES CONTROL, OPTIMIZATION AND AUTONOMY.

their home with the touch of a button on a mobile application. It also allows users to remotely turn ON and turn OFF light bulbs in case they forgot to on the way out of home or for security (to make people feel like the home is occupied) when away from home. In examples such as that of connected lighting systems, Control Capabilities are instrumental for companies to provide value to their users.

Optimization Optimization Capabilities refers to the ability of Connected Products to enable companies to optimize the performance of their products and its functions. A constant flow of data from Connected Products coupled with the capacity to control the operation of a products allow companies to dramatically improve the utilization, output and efficiency of their products. Connected thermostats, for example, can heat or cool a home more efficiently based on information specific to a particular house in a given locality. Real-time information about a products performance can also aid in optimizing after-sales service of products. For example, usage information from an individual product can allows to companies to predict wear and tear of products before a major failure. Companies can also provide such services remotely without the need to send a personnel to the physical location of a product thus saving costs and reducing the overall product downtime. For example, Tesla Motors is able to improve the efficiency and speed of their cars by remotely sending software updates. Monitoring, Control and Optimization of product functions, combined, gives way to new levels of autonomy of products that were once not possible.

Autonomy Autonomy Capabilities refers to the ability to automate repetitive and predictive tasks that users may have to perform while using

a product. At its most basic level Autonomy refers to products like that of the iRobot Zumba, a vacuum cleaner that utilizes sensors coupled with software algorithms that allow it to scan and clean floors in rooms with different layouts while also avoiding obstacles within the home. At a more sophisticated level, Autonomy refers to the ability of products to learn about its environment, self-diagnose for problems and adapt to user needs. The efficiency with which products automate tasks grows exponentially when a product has more time to learn about its usage and when more products are connected to help each other learn. These capabilities of Connected Products have huge implications for how users experience using products, for how products and services may be designed in the future and for how companies may establish competitive advantage. To limit the scope of this thesis, I have chosen to look at the ways by which companies can and have established competitive advantage through connected products.

1.4 Competitive Advantage

‘Connected products raise a new set of strategic choices related to how value is created and captured, how the prodigious amount of new (and sensitive) data they generate is utilized and managed, how relationships with traditional business partners such as channels are redefined, and what role companies should play as industry boundaries are expanded.’ (Harvard Business Review, 2014).

At the outset, ‘Competitive Advantage’ comes across simply as a business terminology to imply monopoly that a company may have in the market it chooses to address. But on deeper scrutiny of the term it can reveal insights into the philosophy behind the products that a company develops and why companies are the way they are. Companies employ a number of strategies to gain competitive advantage within their industry domains. ‘Connected products affect product design, service, marketing, human resources, and security, and often bear directly on strategy choices.’ (Harvard Business Review, 2014). This thesis chooses to study the strategies employed by companies through the lens of the services they may provide to their customers. The value of a company’s offering is not limited to the interaction

that their customers have with a single product alone but instead lies in the collective experience of a range of products tied together by an overarching service. Hence the study of services enabled by connected products is vital in understanding how companies establish competitive advantage.

Services While there is a wealth of information on the technology that has enabled this interconnectivity of products, there is very little literature on the experiential aspects of connected products and the services they enable. There is even lesser literature on the significance of services enabled by connected products for companies. This thesis tries to identify, if and how the services built around connected products can be strategically significant

1.5 Scope

This thesis primarily focuses on connected products, the services that they enable and the implications of those services in establishing competitive advantage for businesses. The scope of understanding the implications of connected products on all aspects of a business is too wide. Hence to limit the scope of this thesis, the physical product design aspects, user interface aspects as well as the marketing/sales aspects of establishing competitive advantage have been left out of this study. The thesis takes into account services provided by companies that have become increasingly popular and that have been adopted by several users around the world. The study looks into the digital service layer and its functions which are of strategic significance to companies in building successful businesses.

WHAT ARE THE MAIN OBJECTIVES OF A COMPANY? WHAT ASPECTS OF A SERVICE ARE ENABLED BY CONNECTED PRODUCTS? HOW DO COMPANIES ESTABLISH COMPETITIVE ADVANTAGE THROUGH CONNECTED PRODUCTS?

1.6 Methods and Objectives

The study began with an assumption that connected products were being studied from a technical point of view alone and that there was very little research that looked at how day to day life may be improved using connected products. Based on preliminary background research, it was understood that a number of different companies provide services that are enabled by connected products and have been successful in improving everyday life especially within the home. This thesis analyzes four such companies, their products and the aspects of their service that internet connectivity enables. The products include: Nest Thermostat Philips Hue Light Bulbs August Smart Lock WiThings Body Analyzer In order to maintain some level of consistency in the analysis of these products and services, a set of questions were framed. To understand the strategic significance of services enabled by connected products, it is important to: 1) Understand main objectives of the company, its vision and mission through the products they manufacture. 2) Map the aspects of the service that have been enabled by connected products.

3) Map the influence of those aspects of the service on the ability for companies to establish competitive advantage for their businesses. Based on the study of these key points, a set of strategic insights were generated. The applicability of these insigts were tested by exploring design improvements for the case companies.

Business Model Canvas Through initial literature review and study of company websites, the service offering of each company was analyzed by mapping information onto a Business Model Canvas. â&#x20AC;&#x2DC;A business Model Canvas is a useful tool for describing, analyzing and designing business modelsâ&#x20AC;&#x2122; (Jakob Scheider, 2013). The tool was the most appropriate one since the overall objective of this thesis is to understand the strategic significance of the services enabled by connected products. The tool was used to map the various aspects of the service and to bring clarity to the organizationâ&#x20AC;&#x2122;s core aims and priorities. Overall, the tool was valuable in structuring an assortment of information at various stages of analyzing each case study and the services they represent.

Images of the Business Model Canvas for each company have been added to the appendix of this thesis Refer to pages 120-127

CASES Chapter 2

2 Overview

This chapter deals with the analysis of four companies and the services they provide through connected products. The companies chosen for the analysis were those that manufactured connected products for the home environment including the Nest Thermostat, the Philips Hue lighting system, the WiThings Body Analyzer and the August Smart Door Lock. The companies have all established a recognized brand and have become leaders in their respective service sectors. The list of selected companies and the products they manuacture represent different services for the home including health, fitess, energy, lighting and security. Moreover, the case studies also represent companies in various stages of business and product development rangnig from startups with single products to enterprises with a range of products. The insights gathered from analysis of the services were formulated into a framework of strategic insights. This framework brings clarity to the factors that allow companies to establish strategic advantage through connected products and related services.

Nest Thermostat

Auto

AWAY

Philips Hue Lamps

PHILIPS

WiThings Body Analyzer

WiThings

August Door Lock

CASE STUDIES Figure 7: Thesis Case Studies

Images of the Business Model Canvas for each company have been added to the appendix of this thesis Refer to page#

2.1 Nest Thermostat

The Nest Thermostat is a product of Nest Labs, a home automation company headquartered in Palo Alto, California (Wikipedia, 2014). The company was co-founded in 2010 by Tony Fadell and Matt Rogers, two former Apple executives. In 2011, Nest Labs introduced their first product - the Nest Thermostat, realizing their vision of ‘a more conscious and intelligent home’ (Forbes, 2014). Since then, the company has also developed a smoke detector, acquired the home security company Dropcam and partnered with a number of home appliance manufacturers. A network of connected products, applications and partner services that constantly sense user behavior and share information with one another, enables the overarching service offered by the company. This thesis looks at the Nest Thermostat as a focal point to gain an understanding of the Nest service. The Nest Thermostat, often referred to as the ‘Learning Thermostat’, was developed to help users optimize the amount of energy consumed in heating and cooling their homes. The product is equipped with an array of proximity sensors, motion sensors, humidity sensors and light sensors that can learn from user habits and improve the efficiency with which temperatures within homes are controlled. The key aspects of the service, however, are enabled by the thermostat’s ability to network with a number of internet enabled devices through a standard home network. This service is central to the overall experience of using the Nest Thermostat.

Figure 8: Nest Thermostat

The service begins with a Nest Account that is made available to users on purchase of the product. While the Nest Account is not essential for the functioning of the thermostat itself, it plays an important role in integrating a number of different services made available by the company and their partners. The Nest account allows users to monitor and control various features of the product through a mobile phone application and through a web portal. The mobile application is essentially a central control interface that allows users to manage the various features of the thermostat. Through the mobile application, owners of the NEST thermostat can, set temperature levels of their homes from anywhere and at any time. This eliminates the need for users to walk up to their wall mounted thermostats several times a day in order to control their home temperatures. Users can also schedule ‘sleep’, ‘awake’ and ‘away’ times along with associated temperatures letting the thermostat know when to turn up the heat and when to turn the AC on.

Figure 9: Nest Account Mobile

Users can also create various temperature zones within the home, for example if all the members of the house are around the kitchen for lunch on a cold day, the bedroom temperature can be lowered and the kitchen temperature increased, thus reducing energy consumption and saving on energy bills. The ability to remotely control the functioning of the thermostat is brought about by the built in connectivity of the thermostat and makes for one of the core functions of the service offered by the company. While the Nest Thermostat can be controlled manually, it also automates some aspects of the product’s functions through what the company calls the Nest Auto-away feature. The Autoaway feature works through an array of sensors built in to the device as well as through the information pushed to the devices from supporting internet enabled devices within the home. Based on the activity within the home, the Thermostat adjusts the temperature, keeping users comfortable while at home and saving energy while away from home. Automation of one of the core features of the product makes the Nest service convenient to use. “With all this information being collected about your home, it was always important to provide users with information through a mobile application”. Heating and cooling systems control about 50% of the energy bills within North American homes. Through Nest’s mobile and web application, users get detailed information on their consumption of energy associated to heating and cooling of the home. Nest’s Energy History provides users with ‘insights needed to understand and control’ their energy bill (Nest Labs Inc., 2012). It shows users when the heating or cooling was on in the past ten days and if the weather or the user’s adjustments significantly affected energy use. Additionally, a green leaf icon on the display of the thermostat notifies users of saving energy. This information through an energy history within the mobile

application, allows users connect with their homes and remain more conscious of their energy usage patterns. The Nest thermostat has been built into the home and well integrated into the ecosystem of Internet enabled devices within the home. Through the Nest account and with an extended Nest Developer Program, cars, lighting systems and security cameras can now send and receive information to and from Nest Thermostats. This widespread interconnectivity of devices within the home, linked together through the Nest products makes the Nest service an ecosystem of products that make the home more conscious and aware of user behavior and habits. With so much information about the user being pushed to the Nest thermostat from multiple Internet enabled devices within the home, a concern about privacy is usually underway. The biggest concern of manufacturers in the space of networked devices is privacy and security of user related information that is exchanged between products. The convenience of that comes with automation through connected products usually comes with the risk of losing a usersâ&#x20AC;&#x2122; trust. When connected products share information back and forth between one another, it is important for companies to make the flow of information transparent and its intent clear to users.

Figure 10: Nest Energy History

Some Key Insights :

The Nest account allows users to monitor and control various features of the product through a mobile phone application.

The Nest Thermostat automates some aspects of the productâ&#x20AC;&#x2122;s functions.

Nestâ&#x20AC;&#x2122;s Energy History provides users with insights needed to understand and take control of their energy bill.

Widespread interconnectivity of devices within the home, linked together through Nest products makes the Nest service an ecosystem of products that make the home more conscious and aware of user behavior and habits.

2.2 Philips Hue Lamps

â&#x20AC;&#x2DC;Koninklijke Philips N.V. (Royal Philips, commonly known as Philips) is a Dutch technology company headquartered in Amsterdam with primary divisions focused in the areas of Healthcare, Consumer Lifestyle and Lighting (Wikipedia, 2014). Philips Hue is a lighting system conceived in 2012 as a reaction to the growing trend of connected objects. Along with Lifx, Lumen, Insteon and others, the Hue lighting system makes

Figure 11: Philips Hue Range

Figure 12: Philips Hue Lamp

up for a subset of the â&#x20AC;&#x2DC;Internet of Thingsâ&#x20AC;&#x2122; often referred to as Connected Lighting. The Philips Hue lighting system however was one the first to bring connected lighting to homes and still remains strategically significant. This makes the Hue lighting system an important case to study for this thesis. The lighting system is broadly made up of a range of light bulbs, a bridge to connect the light bulbs to a home network, a remote control switch called Hue Tap and a mobile application that allows users to control the light bulbs from anywhere (Fiure 11)

Connectivity of the light bulbs plays a crucial role in the Hue lighting system since it enables a number of functions for lighting within the home beyond that of standard light bulbs. This thesis explores the influence of connectivity on lighting systems within the home through the lens of a set of connected Hue bulbs and the Hue mobile application. The mobile application can be seen as a central aspect of the service offered as a part of the Hue lighting system. One of the key values provided through the mobile application is the ability for users to control and monitor individual light bulbs placed within a home for a number of different uses envisioned by the company (refer to Figure 14). Through the mobile application users can turn on or turn off lights from anywhere in order to keep their homes secure. ‘If you’re not at home, turning on the lights can make it seem like you’re still there… thus keeping your home more secure’.

Figure 13: Philips Hue Mobile Application

Figure 14: Philips Hue Mobile Application

Users can also set timers and alarms so that the connected light bulbs turn on or turn off at predefined times of the day. Additionally, through the mobile application users can customize the look and feel of their homes that are appropriate to activities within the home, while reading or sleeping for example. The Hue lighting system enables users to utilize partner application to further take advantage of their connected light bulbs. Through the web-service IFTTT, the Hue lighting system can be used to notify and alert users of events through their day – when dinner’s finished cooking in the oven for example. Advanced control of light bulbs within the home through the Hue mobile application remains the core functionality of the Hue lighting system. However, an open API that allows developers to build custom applications for the lighting system, has been instrumental in helping the company establish strategic advantage over competing connected lighting systems. With applications being developed over Hue’s API, users can enjoy an enhanced television experience using the Ambilight+Hue mobile application or even convert a their room into a dance floor using Hue Disco.

Some Key Insights :

One of the key values provided through the mobile application is the ability for users to control and monitor individual light bulbs placed within a home for a number of different uses envisioned by the company.

An open API that allows developers to build custom applications for the lighting system, has been instrumental in helping the company establish strategic advantage over competing connected lighting systems.

2.3 WiThings Body Analyzer

WiThings is a French consumer electronics company founded by Cedric Hutchings and Eric Carreel in 2009. Initially, the company became popular for the launch of their first product – a connected weighing scale that measures body weight and body mass index (BMI). The wireless scale is one amongst a range of products designed to help users track and monitor their everyday health. Other products by the company include fitness trackers, baby monitoring cameras, blood pressure monitors and home monitoring systems. With a mission to provide a ‘360 Wellbeing Experience’ the company enables monitoring of weight, fitness activity, heartrate and sleep through their products. This thesis, however, uses the ‘Smart Body Analyzer’ weighing scale as a focal point to study the overall service offered by the company. The Smart Body Analyzer is the company’s second generation of weighing scales that allows users to track their body weight, Body Mass Index (BMI), heart rate and indoor air quality. The company believes that, ‘by extended the capabilities of a common weighing scale through network resources, they can make the product more useful’. The weighing scale is equipped with a number of sensors that gather relevant health information while users stand on top of it. This information is consolidated into a mobile application called Health Mate that allows users to view a history of their health. In this thesis the Health Mate application is seen as one of the primary functions of the service offered by the company which is only made possible by the weighing scale being a connected product.

Figure 15: WiThings Body Analyzer and Mobile Appication

While a lot of the weighing scaleâ&#x20AC;&#x2122;s functions are independent of the mobile application, Health Mate is a central aspect of the overall service offered by the company. The main function of the connected weighing scale is to record and display information about usersâ&#x20AC;&#x2122; body weight. The Health Mate application presents this information in the form of a weight history chart. The chart provides users with information about their weight in relation to their past weight recordings from the connected weighing scale thus allowing them to better gauge their progress. Similarly, the mobile application also enables users to monitor other information obtained by the connected weighing scale such as heart rate, body mass index and indoor air quality measurements.

Figure 16: WiThings core focus areas within health and fitness

Figure 17: WiThings Mobile Application

The weighing scale also interacts with a number of partner health and fitness services through their mobile application. The mobile application can be seen as a central hub of the overarching service offered by the company. As a health and fitness portal for users, the HealthMate application consolidates data from multiple products offered by the company as well as from partner mobile applications. This aggregation of information from multiple sources allows users to conveniently track their health and fitness progress within one single application. User can also challenge one another through the mobile application to help themselves stay motivated to attain their overall health and fitness goals. To limit the scope of this thesis the physical product attributes, details of technology and marketing channels have been left out from this study. However, it is important to note that those aspects also play an important role in helping the company establish strategic advantage through connected products. Figure 18: WiThings partner applications

Some Key Insights :

As a health and fitness portal for users, the HealthMate application consolidates data from multiple products offered by the company as well as from partner mobile applications.

User can also challenge one another through the mobile application to help themselves stay motivated to attain their overall health and fitness goals.

2.4 August Smart Lock

August is a consumer technology company founded by designer and entrepreneur Yves Behar and technology veteran Jason Johnson. The San Francisco based company aims to make life simpler by allowing physical environments to seamlessly interact with user behavior. The company does this through their flagship product, the August Smart Lock. ‘The premise of the thing is simple: It uses a smartphone to unlock your door.’ (Wired, 2014). This is made possible through a product service ecosystem that involves 1) the August Smart Lock that is fixed onto the door, 2) a smart phone application and 3) the August Connect that allows users to remotely lock and unlock the door. ‘August retrofits to an existing deadbolt. It relies on the same secure communications technology used by financial institutions for online banking, giving only desired individual’s access to property for set amounts of time. As the homeowner or a guest arrives at the door, August auto-unlocks and welcomes users into the home handsfree.’ (August, 2013). Through a Bluetooth low energy (BLE) enabled locking system and an intuitive smart phone application, users can lock and unlock their August-equipped doors with the push of a button. The smart phone application is the primary channel for interacting with the service. Through the application users can provide a virtual key to the people they want to permit to enter their homes. This gives users with a clear and easy way

Figure 19: August Smart Lock and Mobile Application

of providing access to their home. The extended control and seamlessness with which users can lock and unlock their doors constitutes for primary function of the August service. Through the mobile applicationâ&#x20AC;&#x2122;s Guest Book function, August provides users with a secure and private social networking tool to help home owners and their guest feel more comfortable. These service offerings of the company are primarily made possible by the connectivity technology built into August products. Bringing advanced technology to automate part of home living brings with a set of discrepancies - between convenience and security. Hence it is important for the company to provide users with a service that is just as complete and secure (if not more) as a simple metal key.

Figure 20: August Mobile Application as a key to multiple Augustenabled doors

Some Key Insights :

The extended control and seamlessness with which users can lock and unlock their doors constitutes for primary function of the August service-

2.5 Analysis Of Case Studies

Based on the background research and the review of the case studies, a set of insights were drawn. Each insight was identified during the process of studying the case companies. The insights signify an aspect of the services enabled by connected products and how they help companies establish competitive advantage. The individual insights were further analyzed through the process of Affinity Mapping.

Afinity Mapping Affinity Mapping, or Affinity Diagrams as it is often referred to as, is the â&#x20AC;&#x2DC;process used for gathering and organizing large amounts of data, ideas and insights by evidencing their natural correlations.â&#x20AC;&#x2122; (Tassi, 2015). The diagram helped in synthesizing and structuring raw data and scattered insights into meaningful groups. These groups were the foundation of the strategic insights described in the following chapter.

Figure 21: Affinity diagram for developing strategic insights

Figure 22: Affinity Mapping Diagram 69

3 Strategic Insights

3.1 Convenience

Convenience by design broadly refers to the need for products to function as tools that help carry out everyday tasks with ease and comfort. With the introduction of sensing technology and communication technology into everyday products, our expectations from these products are constantly changing. Convenience is no longer limited to mechanisation of tasks. Convenience through connected products now extends itself to automation of tasks through self learning. Sensing technology combined with complex software algorithms allow products to learn from user behavior and reduce the burden of repetitive tasks such as making coffee every morning, starting the heater after entering home or turning off lights just before stepping out of home. The convenience of using a product also largely depends on the ability of users to control products from anywhere and at any time.

Automation through self learning algorithms and anytime anywhere control of products can help eliminate the the need for any unnecessary physical effort in operating products and thus make performing everyday tasks more convenient.

Auto

AWAY

PHILIPS

Through a number of built-in sensors, the Nest Thermostats can recognize users when at home. This helps in automating the repetitive task of setting temperature levels when entering home. A mobile application also enables users to remotely monitor and control the devices in case they are out of physical reach or in the case of unusual situations (such as coming back home early from work).

The Philips Hue lighting system allows users to control their light bulbs from anywhere using a proprietary mobile application. Users of the philips Hue system can turn on or turn off the connected light bulbs from anywhere with the click of a few buttons.

August smart locks, allow users to lock and and unlock their homes for guests and service/ maintenance people while away from their home. This helps in eliminating the need for users to commute back home to do the same.

3.2 Positive Behavior Change

Through products and services, design often acts as a catalyst in bringing about positive behavioral change. Through constant sensing of user activity, services associated with connected devices are now able to inform users about their habits in great detail and help in inflicting positive change - for personal health, for social responsibility or to lower harmful impact on our environment.

Connected products and associated services are making us more aware of our habits. Quantification of such information and presenting users with detailed insights into daily activities can help in bringing about positive behavioral change.

Auto

AWAY

WiThings

Users of Nest thermostats receive daily, weekly and monthly updates on their home energy consumption through the Nest mobile application. This information presented in the form of an ‘Energy History’ helps users to consciously reduce their energy usage at home when it remains unoccupied.

A mobile health and fitness application called ‘Health Mate’ by WiThings allows users to track their health and fitness goals - based on information from their own health devices as well as from partner health and fitness services.

3.3 Service Platforms

Designing seamless experiences through service platforms largely refers to the need for designing products and services as a part of a larger system. Through connected products, services provided by multiple companies can now be tied together by digital platforms. Digital service platforms allow users to collect all relevant information (about healthcare for example) within one space allowing for a more seamless experience of using products.

In a connected world companies will need to move away from creating independent siloed products and move towards designing products and services that integrate into a larger ecosystem of connected things. Integrating physical products and digital services into a single service platform can help in providing a seamless experience for users.

Auto

AWAY

WiThings

With the launch of the Nest developer program, the Nest service acts as a central hub for monitoring and controlling products within the home that are manufactured by partner companies. Through the Nest service washing machines can be triggered to start wash cycles when cost of electricity is low at night and homes can be set to desired temperatures as users drive towards home.

The WiThings Health Mate mobile application aggregates health and fitness information from multiple products and partner services. The mobile application hence functions as a complete digital health and fitness portal for users of WiThings products and helps users keep track of their overall health and fitness goals.

3.4 New Business Models

Connectivity of products opens out new possibilities for companies to monetize and provide value to multiple stakeholders within the system. Communication and sensing technology within products allow companies to constantly monitor the use of their products and engage with users more frequently than before. As news ways of interaction between companies and users emerge, so will collaborative business models.

Through connected products, companies have more ways of creating value for their users and capturing value through collaborative business models.

Auto

AWAY

Nest Labs Inc, through their thermostats and a through a collaboration with electricity suppliers in Texas - provide rush hour rewards to its users. Users are given an option to reduce their energy consumption during peak hours (when energy demand is high, during summer for example) in exchange for a small sum of money.

3.5 Transparency

While automation can relieve users of the effort in performing everyday tasks, it brings along with it a set of challenges in communicating and clarifying to users as to how information about their usage patterns is utilized. User often lose trust in companies due to a lack of understanding of how personal information is used.

Companies and service providers must avoid the â&#x20AC;&#x2DC;creep-factorâ&#x20AC;&#x2122; usually as a result of automation, by clarifying to users the reasoning behind certain actions. This helps users retain their trust in products and in avoiding the feeling of privacy infringement.

Auto

AWAY

A number of nest thermostat users have, in the recent past, complained about not understanding why the thermostat performs certain actions without user initiation.

IFTTT (If This Then That) is a service that helps users create connections between connected products and services. This helps in clarifying the automated functionality within products.

EXPLORATION Chapter 3

4 Exploration

This chapter deals with the application of the Strategic Insights that were highlighted in the previous chapter. Ideally, the applicability of the insights should be tested when applied in the context of the real world and observed over a period of time. However, due to time constraints the scope of this chapter has been limited to designing concepts that may serve as improvements to the case studies. The ideas that have been generated in this chapter have been showcased as reference designs instead of full proof solutions that are ready for market release. Each strategy within the framework has been independently applied to a case company that has shown potential for improvement. These ideas discussed in the following sections are strategic in nature as they attempt to bring distinctive and desirable benefits to customers and in turn improve business. To begin applying the insights it is first important to understand where there might be potential for design intervention within each case study.

Analysis of Case Studies The analysis of the case studies was done to understand the potential areas for design intervention within each case study. The analysis was done based on:

1) An in-depth understanding of each case company 2) Insights into the capabilities of connected products 3) The strategic insights discussed in the previous chapter The potential areas for design intervention are aspects of the comapny’s connected product service ecosytem that did not fully showcase the potential of a strategy within the framework. For example, the WiThings Body Analyzer, although a good example of instilling ‘Positive Behavior Change’ through connected products, fails to fully embrace the potential of automation and in providing extended control to users. Similarly, ideas within ‘Positive Behavior Change have been applied to Philips Hue, ‘New Business Models’ applied to WiThings, Service Platforms applied to August and Transparency applied to Nest.

Exploration Structure In order to maintain some consistency through the exploration process , it has been structured as follows : 1. Observation : of possible areas of design intervention within each case study 2. Insight : from case studies and understanding of the capabilities of Connected Products 3. Exploration : of ideas that represent and showcase the strategic insights 4. Potential Implication : of the strategic ideas on the competitive advantage of the company

Convenience through WiThings Body Analyzer The WiThings Body Analyzer is a great example of how companies can instill Positive Behavior Change through Connected Products. However the products do not feature automation of tasks and does not provide extended control to its users. This presents an opportunity tfor the company o provide added value to WiThinsg customers through automation.

Positive Behavior Change through Philips Hue Lamps The Philips Hue Lamps provide users with the ability to remotely monitor and control lighting within their homes while also serveing as a service platform that allows developers to build additional mobile applications. With a large volume of usage information being collected, the Philips Hue service has the potential to act as a catalyst for Positive Behavior Change.

New Business Models through WiThings Body Analyzer The ability for WiThings to be a central platform for gathering an individualâ&#x20AC;&#x2122;s health and fitness information, presents the company with an ooportunity to explore new partnerships with the health and fitness industry and in turn implement New Business Models.

Service Platforms through August Smart Lock The August door brings convenience to its users by automating the act of opening the door and thus eliminating the need for keys. However, the companyâ&#x20AC;&#x2122;s offerings are still limited to individual products. With a number of conencted security device available today, it provides August to reposition itself as a Service Platform for home security devices.

Transparency through Nest Thermostat Convenience through the Nest Thermostats is brought about by collecting a large volume of data about an individualâ&#x20AC;&#x2122;s usage patterns. This also open new challenges to security and privacy. Large volume of data requires a certain level of Transparency between the company and its customers.

4.1 Convenience through WiThings Body Analyzer

Connectivity enables extended control of certain functions of a product thereby bringing about a sense of convenience among its users. Convenience through connected products also enables automation of repetitive tasks such as turning ON and turning OFF of devices within the home.

Observation The WiThings Body analyzer is great example of how connected products enable remote monitoring and of its various functions like body weight measurements, heart-rate tracking, sleeping quality measurements and indoor air quality. The connected weighing scale also automatically checks for indoor air quality which is displayed as an air quality graph within the mobile application.

Insights Automation of certain functions of the product such as air quality measurements opens new opportunities for reactive and preventive purification of indoor air. When paired with an indoor air purifier, the WiThings Body Analyzer could send automatic updates and in turn improve indoor air of a room before it becomes unhealthy to live in. This could help avoid air pollution related diseases.

Figure 23: Pairing of the WitThings Body Analyzer and the Philips Air Purifier.

Exploration In this section, automation of tasks related to maintaining healthy indoor air conditions is explored. The idea involves pairing of the Healthmate mobile application, a WiThings Body analyzer and a connected air purifier such as that of the Philips Smart Air Purifier. The working of the idea can be explained in three steps. 1) The WiThings Body Analyzer measures indoor air quality and relays that information to the Heathmate application as well as the Philips Air Purifier. 2) Based on the information provided by the WiThings Body Analyzer, the Philips Air Purifier remove particles, sterilizes harmful germs and de-odorizes the room. 3) Once the roomâ&#x20AC;&#x2122;s air has been purified the user is notified through the Healthmate application.

Implication Automation of repetitive tasks through connected products can help companies engage with users in way that were not possible before. Automation of tasks requires a certain level of intelligence to be built into products. This can help companies provide more value to their users and establish competitive advantage within their market areas.

Healthmate By WiThings

Figure 24: Pairing of the WitThings Body Analyzer and the Philips Air Purifier.

4.2 Positive Behavior Change through Philips Hue Lamps

Connected products enable companies to quantify information based on the usage of their products. This can help provide companies and their users with detailed insight into product usage patterns. This can in turn help in instilling positive behavior change, be it towards better health and fitness, towards more sustainable practices for the environment or towards social impact.

Observation The Philips Hue lamps, currently equipped with technology that enables it to connect to a home network, poses an opportunity for bringing about positive behavior change among its users. While each light bulb within the home may not consume much energy by itself, collectively lighting within homes in a single city can demand large energy volumes. Through communities the information collected about the status of each Hue lamp could help the company provide vital energy consumption information to its users and thus reduce the overall demand for electrical energy.

Insights With the Hue web portal as the primary interface, information about usage patterns of Hue lamps can be monitored and presented as daily, monthly or yearly information for their users. Since large amounts of data needs to be visualized, larger screen

sizes are more appropriate for showcasing this idea. However, a simplified version of the same information could be viewed through the Hue mobile application as well. This gives Philips a unique position to instill positive behavior change through the data they accumulate of their users.

Exploration The idea explored in this section can be seen as one made up of two parts that could help trigger positive behavior change among Philips Hue users. The first part tackles quantification of already existing data in order to provide users with insights into usage patterns. Within the interface of the Philips Hue web portal, information about daily, monthly, weekly and yearly usage of light bulbs is the first trigger for users to reflect on the energy consumed through their light bulbs. The second part involves presenting information about each home in relation to the community that it is a part of. This helps Philips users collectively reduce the energy consumed through their Hue lamps. The idea could be further explored by gamifying the experience of reducing the energy consumed by each home. A simple point system can help in gamification of reducing energy usage. For example the communities that save the most energy every quarter of the year could be rewarded discounts or rebates from electricity suppliers for reducing the load on their grids.

Implication Influencing positive behavior change can be built into the DNA of connected products. Saving energy through light bulbs is an added incentive to already existing Philips Hue customers but

could also provide a unique value proposition for new buyers. This could help the company establish a unique position as a lamp manufacturer and service provider.

Hello Alice! Energy Usage

2014

This Month

YouN

ear You

Energy Monitor by Philips Hue

Weekly | Monthly | Yearly

This Month

KW-hrs

150 hrs

Figure 25: View of the Phillips Hue web portal showing infromation about an individualâ&#x20AC;&#x2122;s energy usage.

4.3 New Business Models through WiThings Body Analyzer

As mentioned in the previous chapter, connected products open up new opportunities for how companies can establish strategic partnerships and explore new business models in order to provide greater value to their customers. Observation

Observation The WiThings Body Analyzer exemplifies how connected products can act as effective service platforms by consolidating an individual’s health data within a mobile application called Heathmate. The mobile application not only consolidates health information but also provides deeper insights into a user’s health and fitness progress. This gives the WiThings a unique position within the health and fitness industry and opens up new opportunities for exploring new partnerships and business models through their connected products. These observations have been made while studying the company, their products and their services while also gaining perspective on connected products and their capabilities.

Insights Two key insights were identified : 1) The WiThings Body Analyzer produces a large amount of data about an individual’s health and fitness progress. This data

is present within the Healthmate application as information about an individual’s weight, heart rate, sleep and activity. Such information can be used to provide more value to users of connected products. 2) The WiThings network of partners includes health-and-fitness tracking applications such as Endomondo and Runkeeper. While these applications provide insight into an individual’s daily activity, they do not cater to wider health-and-fitness needs of individuals which may involve hospitals, insurance companies, gym instructors and nutritionists.

Figure 26: WiThings Clinique network of partners

Clinique by Withings

HEALTH AND FITNESS

RETAIL THROUGH

TRACKING DEVICES

PHARMASEUTICAL

/ WEARABLE DEVICES

COMPANIES OPEN APIs FOR

NETWORK OF HEALTH CENTERS

DEVELOPERS

HEALTH AND

AND FITNESS CENTERS

HARDWARE /

FITNESS APPS

HOSPITALS, CLINICS, GYMS

SOFTWARE

Figure 27: Exploration of New Business Models for WiThings Clinique through the Business Model Canvas.

Exploration The exploration was done using the Business Model Canvas. The exercise helped in identifying the potential for WiThings to establish partnerships with hospitals, nutritionists and fitness centers. The idea is presented as an alternate mobile application concept called: Clinique. The mobile application takes advantage of strategic partnerships and the possibility of information exchange between stakeholders within the WiThings Clinique network. The WiThings Clinique application provides a number of benefits for the stakeholders within the system. 1) It provides hospitals, clinics, fitness centers and personal trainers with a way of efficiently managing and maintaining patient records and databases - thus helping health establishments save money on managing the logistics of patient data. 2) Aggregation of vital health information from a number of different sources opens up the possibility of extracting detailed insights into an individualâ&#x20AC;&#x2122;s health/fitness progress and in turn in making smart choices with nutrition, medication, exercise and sleep. 3) It provides a personal yet private platform for health experts and patients/individuals to discuss the health/fitness progress. Such private platforms could also help establish a larger community of health workers and patients in the future. 4) Individuals benefit from having a single place for consolidated health information. Such a flexible solution can cater to the entire range of healthcare needs of individuals weather they are trying to reduce weight or they are getting treating at a hospital for illness. This further incentivizes individuals to stay healthy.

100

Clinique

Comprehensive user data

By WiThings

Overview of

gathered within

John Aguilar

health and fitness activity

Age 38 years

Height 180cm

the application

Weight 80Kgs

Health Card Activity

Aggregation A platform for

of data from

doctors and

a number of

patients to

connected

interact

products. Appointments

Appointments Connected Devices

23rd Sep 2015 at 16 :00 Central Hospital, AlĂ¨s Manage linked Health and Fitness Applications

Loose weight quickly, Join the X-treme Workout gym.

One single portal for all health Personalized

and fitness

advertisements

applications

for each individual Figure 28 : Withings Clinique Mobile Application User Profile Page

101

5) It works as an advertisement platform so that companies can provide offers specific to each customer.

Implication The WiThings Clinique application could provide the company with a unique and strategic position in the health and fitness industry. Collaborations and partnerships made possible by connected products could help companies like WiThings to broaden their reach and scale their businesses.

102

103

4.4 Service Platforms through August Smart Lock

Connected products are more than just physical products. They are also service platforms. This means that certain aspects of connected products are open for developers to build applications and new service upon.

Observation The August smart lock is security device that allows users to control their door lock using their smart phones thus removing the need for physical keys. Connectivity of security devices opens up possibilities for the company August to build a platform for services within home security. The August Smart Lock coupled with the August Connect, can act as an important platform for multiple security devices and thus become an integral part of the home.

Insights With security being a primary concern around connected products, a new opportunity arises. The August Smart Lock can act as central platform upon which other companies can build their own security services. Through this platform, product manufacturers can take advantage of Augustâ&#x20AC;&#x2122;s devices and partner devices in order to provide highly secure services for home dwellers. Exploration

104

Exploration This section explores how the August Smart Lock and the August mobile application can act as primary platform that integrates multiple security devices within the home. The idea has been presented as extension of August mobile application and named as August Connect(+). The mobile application provides users with a way of easily linking a number of pre-approved security devices to the August Connect(+) platform. Such a security platform provides users with the convenience of overlooking the security of their home from a single mobile application. Information to a security platform is sourced from, not just one source (such as the door lock) but from multiple sources (such as security cameras, lights, motion sensors, etc.). This provides users with a greater level of security of their homes. A number of security applications can be built on top of such platforms to ensure users of the safety of their homes while away at work or on vacation.

August Door lock

August Connect

August Connect(+)

Implication Through service platforms companies can establish the role of a prime integrator and service provider within their respective industries. August smart locks can hence be repositioned from being a single connected product to a service platform associated with multiple security devices within the home. This opens up opportunity for the company to explore and establish new partnerships and new business models around their products.

105

August Connect

Pair your Security devices with August Connect(+) in three easy steps.

Figure 29: August Connect (+) mobile application and service platform for home security

106

Make sure your security device is powered on.

Your August Connect will discover this device automatically.

Pair the device.

August Connect

Viewing ‘Alex’s Dropcam’:

You August Connect has detected a device : Alex’s DropCam

Pair No activity detected since 08:00 Hrs, 15th Jan 2015

107

4.5 Transparency through Nest Thermostat

Connected Products generate a large volume of data that can reveal personal information about the individuals who use those products. This data in the hands of companies raises concerns about the privacy and security of an individualâ&#x20AC;&#x2122;s information.

Observation Connected products such as the Nest Thermostat enable companies to build new services for their users and generate large volumes of usage data. Data gathered through connected products raises important privacy concerns. While privacy is a serious concern when it comes to data gathered by connected products, it presents the company with an opportunity to provide additional value to its customers through transparency. Since the recent acquisition of Nest by Google, Nest thermostats have become a platform and hub for connected products within the home to integrate with one another. This means a lot of information is exchanged between connected devices through the Nest platform and it poses the need for clear communication of how and with whom information is exchanged. This level of transparency is vital in assuring users of their privacy and security and in turn helps to establish trust between the company and their customers.

108

Insights There is opportunity for clear communication of certain background processes of the Nest Thermostat in real time and as they occur across a number of touch points of the Nest service. Some of these have been highlighted as examples in the following section. Smartphones and displays on Nest devices could act as a platform for communicating the logic behind certain functions of the thermostat.

Figure 30: Notifications on the Nest Thermostat display, describing reasons for automated processes

Nest set to 70째F due to outside temperature

109

Exploration Bringing more transparency to the functions of automated products can help in communicating the logic behind the actions performed by the product. With the Nest thermostat, this level of transparency can be brought about by identifying some key touch points that can act as design drivers. One such touchpoint is the display system on the Nest Thermostat. The thermostat’s display is mostly used for interacting with the product (for example to increase the temperature or to change the thermostat’s settings such as date and time). This display however could also be used to communicate the logic behind the thermostat automatically heating or cooling a room (due to outside weather, for example). This puts vital information about the functioning of the product back into the hands of the user. Based on this information, users can choose to manually adjust the temperature again via the thermostat’s interface or the mobile application. A solution as simple as this can help in establishing stronger relationships with users through connected products. The thermostat’s display may also be used to notify users when the device switches to automatic processing modes such as the Nest Thermostat’s ‘Auto-Away’ mode. While the display could be used to communicate such information to users, users are not always standing in front of the Nest thermostat in their homes. This makes Nest’s smartphone application an important touch point within the service that can help in bringing about more transparency. The Nest thermostat has now become a platform for a number of different connected product manufacturers, through which they provide their services. This means that a lot of personal and private information is exchanged among Nest approved products. Due to this it is often unclear as to what information about users is being passed on between products. An information page

110

DEVICES LINKED TO YOUR NEST ACCOUNT Samsung Smart Washer/Dryer

De-link

Livingroom DropCam

Samâ&#x20AC;&#x2122;s Mercedes

Figure 40:

JawBone Up24

August Connect (+) mobile application and service platform for home security

111

within the mobile application could help users understand these exchanges and manage permissions of these products. Through self-learning algorithms, the Nest Thermostat develops automatic schedules of an individual’s day based on usage of the product and presence within the home during the day. This automated scheduling informs the thermostat about how much to heat or cool a home. A visualization of automated schedules and associated temperatures could help users understand the logic behind the thermostat’s functions and could also set suitable temperatures for themselves.

SAM’S AUTO 12th Thu 2015

8AM, 85˚F Turning off A/C.

Figure 50:

13th Feb 2015

August Connect (+) mobile application and service platform for home security

112

14th Feb 2015

Implication §Ensuring transparency with users about how their information is handled plays a key role in gaining their trust. Companies that generate large amounts of data about their users have to make sure they communicate how it is handled. This transparency can help companies establish deeper bonds with their users and in turn establish a unique position within their industry.

O SCHEDULE

4PM, 75˚F Cooling Home

10PM, 70˚F Sleep Temperature

113

5 Conclusion

The conclusion of this thesis begins with a brief overview of the objective of this study. Additionally, a review of the methodologies employed during the study, have been included. Finally the study is concluded with a summary of the results and highlights some topics for further discussion.

Overview Of Thesis Objective The primary objective of this thesis was to understand if and how companies can establish competitive advantage through connected products. The objective was pursued by analyzing four companies that seem to have established successful businesses with their own market areas.

Review Of Methodologies A study of literature on topic related to connected products, including â&#x20AC;&#x2DC;the Internet of Thingsâ&#x20AC;&#x2122;(IoT), helped in validating the need for the study and in defining the focus of the research. The background study also helped in constantly re-iterating the research questions and in identifying the companies and products that were reviewed. The background research was done to understand what connected products are and what kinds of businesses they enable. Each case study in this thesis was approached in order to understand : 1) The companyâ&#x20AC;&#x2122;s products, vision and mission.

114

2) What aspects of the companyâ&#x20AC;&#x2122;s offering was enabled by connected products. 3) How those aspects help in establishing competitive advantage. The analysis of the case studies helped in highlighting the capabilities of connected products and in validating that connectivity of products do indeed play an important role in building successful businesses. Based on the analysis of the case studies, a set of insights were drawn. The insights identified were as follows : 1) Design for Convenience: highlights the importance of providing users with extended control of various functions of a product while also automating certain repetitive tasks. 2) Design for Positive Behavior Change: emphasizes the need for quantification of user habits that can help reveal product usage patterns and in turn help companies deliver more appropriate services to their customers. 3) Design for New Business Models: shows how connectivity in products can lead to new possibilities for partnerships which can thus help companies provide more value to their customers. 4) Design for Service Platforms: showcases how connected products are not just physical products but also digital service platforms. 5) Design for Transparency: stresses the need for companies to clearly communicate the flow of information within their network of partner services. The applicability of the insights were then showcased through a design exercise. Each strategy was applied to a case study which showcased an opportunity for design intervention. Finally, the potential impact of each of these explorations have been discussed at the end of each section.

115

6 Discussion

Through this thesis it can be understood that connected products do indeed contribute to new services and in turn help companies establish competitive advantage. However, the strategic insights developed in this thesis have strengths, weaknesses, opportunities and threats.

Strength The strategic insights defined within this thesis have been presented more like insights and less like a toolkit that needs to be followed one step at a time. This open structure of the insights gives room for further interpretation and modification of the insights described within it. This open nature of the insights also helps in developing new ideas for businesses around connected products.

Weakness Application of the insights requires background knowledge and a certain understanding of the capabilities of connected products. This makes the insights difficult to apply without sufficient background knowledge of the topic.

Opportunity While the strategic insights can be used to explore the ways by which a company may establish competitive advantage, it is not

116

a fully functional framework for design exploration. There is a need for further investigation and testing in order to develop a toolkit out of the strategic insights.

Threat Strategic insights defined in this thesis can easily be seen as a set of instructions that companies and service providers need to follow. The insights have been intentionally structured to give room for further interpretation and exploration. Finally, in the exploration chapter, the insights have been applied in order to design improvements to the case companies. While this validates the applicability of the insights it does not prove that the ideas explored will in fact help establish competitive advantage. Hence, further research, development and testing of the strategic insights in real world examples is essential to understanding the true applicability of the same.

117

Works Cited

Cisco IBSG, 2012. The Internet of Everything. [Online] Available at: http://www.cisco.com/web/about/ac79/docs/ innov/IoE.pdf [Accessed November 2013]. Forbes, 2014. Googleâ&#x20AC;&#x2122;s Nest Moves To Become Master Of The Smart Home By Talking To Other Devices. [Online] Available at: http://www.forbes.com/sites/ parmyolson/2014/06/24/google-nest-smart-home-internet-ofthings/ [Accessed 2014]. Harvard Business Review, 2014. How Smart Connected Products are Transforming Competition. [Online] Available at: https://hbr.org/2014/11/how-smart-connectedproducts-are-transforming-competition [Accessed Jan 2015]. Jakob Scheider, M. S., 2013. Business Model Canvas. In: This Is Service Design Thinking. Amsterdam: BIS Publishers, pp. 212, 213, 214, 215. Nest Labs, 2014. About Us. [Online] Available at: https://nest.com/about/ [Accessed December 2014]. Nest Labs, 2014. Inside Nest. [Online] Available at: https://nest.com/blog/2014/06/23/the-nest-

118

developer-program-is-here/ [Accessed 2014]. Shenton, K., 2013. Fjord Annual Trends Report. [Online] Available at: https://www.fjordnet.com/conversations/fjord2014-trends-2/ [Accessed 15 October 2014]. Tassi, R., 2015. Service Design Tools. [Online] Available at: http://www.servicedesigntools.org/ [Accessed Jan 2015]. Wikipedia, 2014. Nest Labs. [Online] Available at: http://en.wikipedia.org/wiki/Nest_Labs [Accessed 2014]. Wikipedia, 2014. Philips. [Online] Available at: http://en.wikipedia.org/wiki/Philips [Accessed 2014].

119

Appendix 1

1. Business Model Canvas The business model canvas was an important tool during the process of this thesis. It helped in getting an overall understanding of the services offered by each company reviewed in the cases chapter of this thesis. Pictures of the business model canvas for each company have been attached to the following pages. Refer to Figures (51-54).

2. Image Credits Figure 2: Wired, This App-Controlled Air Conditioner Automatically Adjusts to Your Habits http://www.wired.com/images_blogs/gadgetlab/2014/03/ quirky_aros_4.jpg Figure 3: Samsung Connected Devices http://www.samsung.com/us/connected-devices/ Figure 4: Instructables http://www.instructables.com/id/Put-an-iPod-Nike%2B-sensorin-any-running--shoe-in-o/ Figure 8-10: Nest Press Kit https://nest.com/press/#more Figure 11-14: Philips Hue Press Kit http://www.newscenter.philips.com/main/standard/news/

120

press/2012/20121029-introducing-philips-hue.wpd#.VOUPU_ mUeSp Figure 15-18: WiThings Press Kit http://www.withings.com/us/media-kits.html Figure 19-20: August Media Kit http://august.com/press.html

3. Font Credits Multicolore Font by Ivan Filipov

121

Figure 51: Nest Thermostat Business Model Canvas

122

123

Figure 52: Philips Hue Lamps Business Model Canvas

124

125

Figure 53: WiThings Body Analyzer Business Model Canvas

126

127

Figure 54: August Smart Lock Analyzer Business Model Canvas

128

129

132