Silos changing: Business demand for smart products

This week, Mike Evans, research director at Cabashi, discusses demand for smart products and devices from businesses as well as consumers.

Experts at industry analyst and market consulting firm Cambashi contribute a regular blog for TM titled Silos Changing. This blog explores how new software applications enable manufacturers to implement business initiatives for the new economy.

You’ve probably all seen IBM’s advertising campaign ‘Smarter Products for a Smarter Planet’.  This is not just technology push.  There is a rapid change in demand, both from consumers and businesses. 

Many manufacturers are caught off balance by this.  They understand the trend towards products with more functionality, usability and flexibility.  They realise that this is provided by more embedded software in products. 

However, the swiftness of the change is a surprise.  An example is Nokia, the mobile handset market leader.  In 2008, Nokia sold 38% of world wide handset units, now its share is 22%.  Nokia’s product plan could not adapt to the rapid switch in demand to Smartphones.

There is no clear definition of a smart product or device.  However, the common factor is that they accomplish their tasks with general purpose micro-processors and micro-controllers loaded with software.

Today’s luxury cars have as many as 100 micro-processors running up to 100 million lines of embedded software code that enable functions like anti-skid braking and automatic parallel parking.  Not all this code is written from scratch for each vehicle, there is a vibrant market in software components.

But Cambashi thinks that business demand for smart products and devices will have more impact than consumer demand on manufacturers. 

Take industrial machinery as an example. 

A few years ago, most production machines used electro-mechanical control.  Electrical and electronic systems were custom designed.  There were a limited number of sensors and actuators, not just because of expense, but also because the operating controls could only cope with limited information.

Each machine stood alone; communication was via a different human to machine interface.  Production was organised in as big batches as possible because of the high cost and time taken to set up each batch, which relied on highly skilled human operators.  Even minor machine function upgrades were expensive involving considerable refurbishment.

Today, a machine with the latest technology will use a combination of mechatronic and software control enabled by embedded software.  Most of the electronics will be industry standard rather than custom.

There will be many more sensors and actuators giving more granular control over production.  Machines communicate via industry standard networking, both with each other, and with software applications in engineering and the enterprise.  Set up for each type of operation can be stored and when the material to be processed self-identifies, perhaps with RFID, can be automatic. The machines can be upgraded in the field by changing the embedded software.  These machines need fewer but even more highly skilled human operators who have to understand the system rather than the machine.

IBM does not make these microprocessors nor does it sell applications software any more.  So why the ‘Smarter’ slogan? 

Well first of all, its Rational business line provides systems engineering and application development tools for embedded software.  But perhaps more important to IBM is the ability of smart products and devices in businesses to communicate with each other.  This will enable many IT projects with novel business applications.  That in turn, will drive growth in IBM’s enterprise IT business lines from systems integration through systems software to outsourcing.

For industrial machinery, just one example of a novel application would be monitoring operations remotely.  From analysis of soft faults the machine maker could establish when parts were wearing and schedule maintenance to maximise the time the machine is available for production.  Manufacturers would enjoy much more efficient and effective operations.  All that embedded code provides more value to customers and cuts out waste in production.

In future blogs, we will discuss the business initiatives that respond to consumer and business demand for smart products and devices.

Cabashi’s, Managing Director, Peter Thorne will chaire TM’s Business Intelligence Connect event on July 17.

Industry presentations will come from NSK Europe, Megger and Rolls-Royce among others.

More details here.