Tag Archives: Internet of Things

Asia and the Internet of Things

The Chinese Internet economy has grown to staggering proportions, but it is still hard to see from within Europe. Yes, our phones, tablets and computers are stuffed full with Chinese (and other Asian countries’) components, but the services we use still seem to be dominated by Silicon Valley. In the US, although consumers now enjoy the option of buying from Alibaba, it remains to be seen whether the company will be able to make a dent in the sales of Walmart and Amazon.

My guess is that Chinese companies will need to await a paradigm change to get a real foothold. The Internet of Things is, I suspect, that opportunity.

At the recommendation of a friend, Ray, I have recently started listening to the excellent Exponent podcast about the technology industry. I’ve be working through the back catalogue and was listening this week to the programme about Xiaomi. This young Beijing-based, smartphone company has attracted a lot attention for the rapidity with which it has amassed a devoted following, somewhat akin to Apple.

XiaomiThe presenters, Ben and James, discussed at length Xiaomi’s business model which starts with beautiful devices (like Apple) but sold at rock-bottom prices, meaning that services will be vital to achieving real revenue (like Google). And that service layer could well constitute a smartphone-based unification of connected consumer devices.  Although Xiaomi today only makes phones, the presenters thoughtfully speculate that Xiaomi is well placed to extend its brand rapidly into connected consumer electronics, as millions of young Chinese fans move out from their parents’ houses to set up their own homes. By contrast, Apple only knows computers, and Google doesn’t have a compelling device strategy, so Xiaomi also has the potential to conquer new markets with what it learns in China. More on the original Stratechery blog.

Not all of the evidence is yet on the table, but we in Europe need to plan for Asia being a far greater force in the technology world. And the Internet of Things is a more than big enough change to open the door for new giants. Of course best of all would be to create an innovation climate that permits European players to scale up rapidly in a truly single market.

(The Xiaomi podcast then goes on to discuss patents, including the powerful observation that in tech / ‘winner-takes-all’ markets there is already often enough incentive to innovate fast, and patents don’t play a societally useful additional role. Definitely worth a listen!)

A ‘Digital’ narrative for ‘structural reforms’

Gutenberg’s printing press took over a century before its true impact began to be felt. At a hearing yesterday organised by the Industry Committee of the European Parliament, my message was that, despite upheaval in the entertainment and news industries, the true contours of the ‘Digital Economy’ are still to emerge. And, as we think about future policy my advice to policy makers was: “think less about digital, and more about the economy”.

The Internet of Things will be a real game-change, as it takes ‘communication’ beyond the realm of humans into a vast array of items and sensors. That said, we can speculate about its impact, but we’ll probably be wrong.

A more immediate example of the scale of transformation technology enables can be seen in the “sharing economy”, and that is where I focused my contribution. There are many definitions of the sharing economy, but for me it means the aggregation (through technology) of micro-supplies to deliver a service seen as comparable to those provided by the firm-centric, industrial model.

This covers pure sharing services, but also includes commercial couchsurfing (AirBnB) and ride sharing (Uber), and characterises the shifts underway in Germany in the name of Energiewende. All are changing the competitive landscape for sectors that may never have imagined they would be affected by ‘digital’ and creating new choices for consumers.

The conclusion from such an analysis is that while sharing economy services are affected by the traditional elements of digital policy, such as privacy, net neutrality and copyright, the key breaks on potential European champions lie in other parts of our regulatory framework. This can mean sectoral rules (e.g. of taxis), but also more general regulation of small businesses and freelance workers.

There is no silver bullet for unleashing growth, but there is a political opportunity for Brussels policy makers. ‘Structural reforms’, which have hitherto been perceived by citizens as painful austerity, can genuinely be presented as preparing the continent for the digital era.

If Europe is play host to the next generation of global internet champions, we need policy to let out start ups grow quickly in whatever sector they choose to disrupt. You can find signs of this, for example, in the way Portugal has opened up its tourism industry. But the structural reforms agenda does not just apply to ‘programme member states’ alone, and the ongoing reluctance of other member states to open markets (such as the unenthusiastic implementation of the Services Directive) is now the real digital agenda.