My good friend and colleague Miles Everson is one of the smartest strategic thinkers I’ve ever met. The other day he said to me: “An unconnected asset is a dead asset.” I think he meant that in a digital world any asset which is not enabled with information and intelligence will become worthless. I agree.
There’s a wonderful startup, beomni.com, whose goal is to put anything – and I do mean any-thing – in the cloud. Say you have a bike which is crowding up your condo. Take a picture, register with beomni, and they will come pick it up, store it for you for a low price, and bring it back when you want. Can’t bear to throw out that chocolate fountain but it’s clogging up your counter top? Send it to beomni. Once your stuff is in the cloud, if you want, you can rent it out and make money on it! You need to rent something from the cloud? As of today, for a mere $35 you can get a first-class digital camera for a day. This is what Miles was talking about: when all assets “live” you can make them more efficient, and if you want access to live assets, renting will be cheaper than buying.
What are the implications of this? Profound, especially when it comes to changes in asset prices. Think of the iconic Yellow Cab in Manhattan. In 2013 a NYC Taxi medallion sold for $1,300,000. In April of 2017, one sold for $243,000, less than one fifth of the 2017 price. Why? Because a medallion is a dead asset. It has no location information, no history, no quality, no linkage. It’s just a contract and a badge which allows the owner to pick people up on the streets of NYC. But along came cell phones, GPS, and Uber/Lyft, the last of which made all the assets on their networks “live” – with identity, location, pricing, ratings, and the rest.
Where will this trend take us? Everything will be in the cloud, and more and more businesses will look like subscription businesses. Take the example of GE’s jet engines which are so fully covered in sensors that GE’s analytic center knows more than the pilot in the plane about how well the engine is doing. Think about that next time you’re at 35,000 feet. GE uses this intelligence capability to simultaneously use the asset more efficiently, and to radically change the relationship with the customer. Because they can predict with great accuracy the engine’s need for maintenance, etc., they don’t have to have so many spare engines spread around the world, which makes asset utilization much better. Also, GE moved from selling whole engines to selling “power by the hour,” which is to jet engines what AWS is to Amazon. With GE, you only need to pay for the engine hours you use. It is a “cloud” offering (pun intended). They just didn’t call it that.
As the virtual value chain (e.g. the information description of all reality) becomes more robust, we will see this type of competition everywhere, and for everything. So ask yourself: are your assets live or dead?