future trends

Why Apple Is Not Building An Autonomous Car (and what it's building instead).

Barring a horrible spate of autopilot accidents the self-driving car movement is in full swing. The technology is improving at pace with Elon Musk declaring that “worldwide regulatory approval will require something on the order of 6 billion miles (10 billion km). Current fleet learning is happening at just over 3 million miles (5 million km) per day.” Every single one of the big technology and automobile players is plowing money and brainpower into being the company that ushers us into this utopian future where there will be zero vehicular accidents caused by human behind the wheel errors. Only Apple keeps denying that they are working on autonomous cars while hiring some of the best minds

But is Apple really building a car? Why would they? Why are we assuming that all that matters in this push is the actual development of the self-driving car? We forget there are a lot of aspects to the technology that is required to make that future happen. I believe Apple is building something else…

I believe Apple is building the autonomous car Operating System (OS) using the IPhone/Apple Watch as a portable telematic device: knowing where a car is, what condition it’s in and recording that information to make better decisions is something that will be required in every autonomous car. We all know our iPhones are already personal telematic devices (I hope you do). The phone tracks your location and your health (see images below).

Becoming the mobile telematic system OS is the most strategically adjacent move Apple can make. Why would a company ignore it’s most sold asset,surpassing 1Bn iPhones sold this past week, to focus on a product that is capital intensive and not it’s core competence? Why would Apple enter a space where the most talked about company in the space is one that has not sold more than 150,000 cars? Yes, the orders for the Tesla Model 3 has broken records for EVs sold but the real work will be in delivering those cars and that will be interesting to watch.

As we move into a future where fewer people will actually own cars but people will continue to buy IPhones I do not expect Apple to move away from what is working. Imagine an OS that enables any brand of autonomous car to work with the telematic system that is on the riders iPhone? Seamlessly. A standard autonomous car OS (ACOS) on your iPhone will improve routing and getting a car to you regardless of the cab/car service you choose to use — the autonomous Uber cab app will most likely only work with Uber cars — and improve customer service since you’ll get the closest available car/cab regardless of the autonomous car service provider.

Yes Apple is hiring the best automotive engineers. But it isn’t to build a car. It’s to learn from the best in the industry so that it can do to the industry exactly what it did to the music industry with iTunes. An ACOS will iTunesthe industry by

  • enabling each one of us with an iPhone to order any car or cab from any provider where you need it from your iPhone. It’s the a la carte model like the 99c single from ITunes.
  • levelling the playing field and accelerate the shared resource model where anyone with an autonomous car can rent out their own car to anyone without an intermediary and get paid through (you guessed it) Apple Pay.
  • combining with Apple HomeKit to provide a seamless convenience experience across the home and vehicle of the Apple customer unmatchable by no one else in the industry with their siloes of service.

If we accept that Apple cares about design and understands the customer then an autonomous car, with all it’s inherent business risks, is the wrong strategy.

Something else I know about Apple is that the company is too smart to continue to cede leadership in the battle for the future as being defined by Amazon (Alexa), Alphabet and Facebook (Oculus)…an ACOS for the autonomous future of the vehicle and the connected home makes too much sense for it not to happen.

It’s the only way Apple can compete in this fast approaching future...

SunEdison Bankruptcy? Nothing To Worry About!

I read the news of the SunEdison bankruptcy and @Jigar Shah’s gracious note to his old team from the offices of a nano-grid development company in Lagos Nigeria (picture below). Like everyone who is working, investing and hoping on the impact that renewable energy can have on our lives I asked the question ‘what happened? How does a company, any company, go from a stock price of $34 to (technically) $0 in about a year and a half? 

So what went wrong? The common understanding, at this point, is that SunEdison fell for three main reasons. The company

  1. spent too much money on acquisitions
  2. placed bets on Yieldcos (special vehicles that were essentially holding companies for renewable investments) but raised about 30% less funding than the $1Bn it intended to raise selling more shares in the Yieldco than it intended to sell.
  3. spent way more money than it was making. Much more. In Nov 2015 the company was $11bn in debt, was generating $2.4Bn in revenue and had net income of $536M.

Summary? Icarus flew too close to the sun (hubris), lost the wax in his wings (money) and fell to his death (bankruptcy).But things are not as bad as it seems.

We have seen this before and things actually turned out great for you and I. It is the story of  WorldCom in the early days of the current telecommunications industry. WorldCom, which started off as a small long-distance telephone company, followed the same strategy of growth through acquisition completing 

  • a mind-boggling 65 acquisitions in 6 years
  • to the tune of $60Bn
  • incurring debt of $41Bn! 

The company bought MFS/UUNet and got into internet service provision to businesses (see where I’m going here?). The acquisitions came with managerial problems for the company and the high flying stock price led to hubris in decision making (more acquisitions and a feeling of invincibility). Like Worldcom SunEdison found accounting issues but unlike WorldCom, which gave loans to executives to load up on company stock, found no fraud.

So what's the lesson from similar paths between two businesses in different industries in different eras but with the same outcome? The similarities are that all the work that WorldCom (better known to you and I as Verizon) did in the 1990’s had a hand in you streaming Netflix and binge-watching Transparent on Amazon this morning. Yes, the wires that were laid, towers that were built and the infrastructure that was put in place during those early days of the telecomms industry as we know it now are critical to the benefits we enjoy close to 20 years later.

And that is the lesson here. The renewable energy sector is in it’s very early days. The bankruptcies and confusion come from the search for business models that will work in a new paradigm of energy provision. We will figure it out. But there will be blood. A lot of money will be spent, made and lost as we wade through the murky waters in the early stages of this industry (the same way it works for the early days of any business). We, as an industry, will figure it out and the world will be better for it.

So whenever you doubt whether the renewable energy will survive just glance at your mobile phone and remember that the companies that laid the foundation for your enjoyment of Beyonce’s visual album mostly no longer exist. SunEdison may be struggling now but hundreds of businesses will take it’s place and ensure the adoption of renewable energy continues.

Here I’ll make a pitch for investing in renewable energy in Africa; The average cost of commercial power in the USA is ~12c/kWh, in Nigeria the average is ~36c/kWh (I’m looking at data from hundreds of commercial locations as I type this) and rises to closer to ~50c/kWh if you factor in diesel generators (which is a big part of the mix). With ~8 sun hours/day solar generation, at 12.2c/kWh, makes so much sense that it’s surprising there aren’t more investors diving into what is a ripe market. Reach out if you are interested...the adoption of renewable energy across the world is inevitable. SunEdison has been a big part of that revolution.

Seyi Fabode is an author and Partner at Asha Labs consulting with power industry executives to develop and implement strategic plans for technological change. Seyi writes about energy (future utility), technology (smart cities) and people (systems thinking) at www.asha-labs.com/blog. Follow@Seyi_Fab.

Tech Trends That Will Impact The Utility Sector in 2016

Working at the intersection of technology and the utility industry for over a decade has taught me two things

  1. Few industries are as glacial as the utility industry in adopting innovative technology.
  2. Despite all the resistance the industry inevitably adopts the technology it resists especially if shareholder value can be created.

For an industry that is critical to our day to day functioning (you are reading this from a device powered by the grid) I stay amazed at how little attention is paid to the industry. Regardless, it is on the cusp of a world of change (otherwise known as 'hurt') in the three broad sectors of the i) grid (the wires and lines that get power to your home), ii) operations (the people and equipment that keeps your lights on) and iii) consumers services (billing/payments and customer services).

In futurecasting for this industry one does not need to take too much of a leap in imagination to determine technological advancements because the industry borrows from other asset heavy (but technology friendly) industries. A key one being telecommunications. Investors and professionals interested in this space will do well to watch for the following 

  1. Portfolio management software for distributed energy resources (DER)As solar panel prices continue to drop, as installations of Tesla Powerwalls start in markets where the kWh/price make the battery pack competitive and car manufacturers promise electric cars for the masses, the utility has to manage the variability in source and demand for power. The utility will require software to manage these microsecond decisions on where your electricity should or is coming from.  A corollary is the high frequency trading (HFT) software used in flash trading; enable traders buy and trade stock in microseconds. Similar software, that enables the management of the grid to ensure quick responses and optimal grid performance, will be required and start to make its way into the utilities arsenal for delivering electricity to you and I.
  2. Virtual Reality for Workforce efficiency: VR and AR for training and simulations will enable knowledge transfer and retention to curb the problem of an aging workforce (55% of the utility workforce will be eligible to retire in the next 5 years) before it becomes a catastrophic issue for the industry. A few months ago I attended a conference on the Future of Work and experienced the demo of an Augmented Reality product. The product wasn't for the utility industry but I quickly shared with them how perfect of a use case they have in the utility industry and how well suited their product is to the utility industry.
  3. Self Driving Cars and plummeting LiDAR costs: Unbeknownst to most, a big problem for utilities is outages caused by fallen trees/vegetation. Yes, vegetation. A single tree limb coming in contact with a power line causes circuit breakers to shut off your power. Not ideal as it inconveniences you and costs the utility money. Those self-driving cars you see roaming your streets (for those of us in Austin and San Francisco that is) and the plummeting cost of LIDAR* equipment (from tens of thousands of Dollars to $250) will enable utilities capture 3D data of vegetation close to wires and lines and plan ahead and make decisions about what to trim, when and how before unexpected outages occur. This will cut cost and improve the linesman efficiency who now have a plan to work with instead of driving around all day in search of stray tree limbs. 
  4. Customer service, billing and payment user experience improvements:  I met with a passionate entrepreneur here in Austin a few weeks ago who's applying an experience ubiquitous to digital natives who do use Venmo and do everything with a few clicks on their mobile phone; share payments. George Koutitas through his company Gridmates is enabling any consumer to share energy with people in need in the same way we transfer money to friends/family through mobile phone banking apps.  It's a simple premise but one that is truly disruptive to the current payment and billing technology stack of the power industry (which I've spoken about before).

As is obvious from the list above, these technologies aren't new. But they are new to the utility industry. These technologies are mature in their applications in other industries and, for those in the utility industry, this is an indication of their reliability. The utility requires robust, tried and tested products that will enable secure and stable delivery of power to you and I. That's always been the case and, regardless of how cool or trendy an applicable technology is, the utility is not about to change its criteria...

Any other trends or products you expect to make its way into the industry in 2016?

* LIDAR: is a portmanteau of 'light' and 'radar' which explains the means by which the equipment captures data and converts into 3D imagery.

Your Quick Guide to Smart Cities.

We are in the early days of a transformation of our cities from dumb to smart.  Whether we know or like it our cities are being kitted up with sensors, cameras and all forms of data gathering devices. The technology that is used to collect, transmit, communicate, analyze and take action on data is what will make our cities smart. The data collection and analysis should enable city officials/citizens to better (or attempt to better) run cities.

So what exactly will be changing? I can think of 4 buckets of change 

  1. Leadership/Regulation: I won’t get into politics but simply acknowledge that we’ll need ‘different’ types of leaders.
    • Moores law will always move faster than regulation and so our leaders will have to change their mindsets and put in place regulation/laws that recognize this fast changing landscape. This is necessary because data capture will challenge the very nature of privacy at a level that is scarier than Edward Snowden saw when he was at the NSA. Do people want that much data about them to be collected? Will the government or the individual own the data about that individual as s/he navigates a city that is wired up to capture everything s/he does? All questions that have to be answered as we speed forward ever faster into the future.
    • Cities will need City management software systems that are adaptable (artificially intelligent), nodal (so there is no one point of failure in the systems) and highly secure. Cities are not software development companies so they'll have to partner with the best companies to achieve this.
  2. New and upgraded Infrastructure: the walls and roads around us will become data collection nodes.
    • Commercial and residential building construction will have to factor in data collection and communication technology requirements while still in architectural design stage. For old buildings we already have beacons and sensors that enable us retrofit buildings for data collection.
    • Building materials will get smart. No longer will cement and concrete be ‘all’ you need to put up a wall or a road. We’ll have smart concrete,self healing coatings and shape shifting metals that can farm & store energy from building vibrations while capturing & transmitting status to a building management system which also communicates with the city management system (mentioned above).
    • We'll have smart lights that dim when the sun is shining and brighten gradually as it day darkens into night. Even the shades will do something similar.
    • Transportation infrastructure upgrades at a scale we are not prepared for will be required (even though $416Bn was spent in the last few years). Semi-Autonomous or self driving cars, currently testing inAustin after success in Mountain view, will be standard. Buildings and traffic signals will communicate with these vehicles as the vehicles communicate with themselves. Side noteSelf driving cars have been the stuff of science fiction fantasy since the 1880’s! 
  3. Personnel and training: Along with the changes in regulation and infrastructure there will be a need to train our current workforce to deal with these upgrades to their capability. Some examples:
    • Policemen will be able to get visual and text based information on events in seconds to within a square inch of where it happens and they need to be able to respond to that at the speed of receiving that information.
    • Sticking with safety: firemen will be able to tell, before they leave the fire station, what device in a home caused the fire seconds after the fire starts. That’s powerful but will require that firemen be trained on quickly drawing insights from data or be augmented by cognitive systems.
    • For more basic needs, your plumber will be able to know what pipe or fitting needs to be changed out before he comes to your home so he'll come ready to serve.
  4. The Utility: We can’t have smart cities without smart grids.
    • Cities will increase renewable energy use and upgrade energy usage data capture technology in buildings. Long way to go here but I’ve read of sensors (the size of a coin!) capturing energy usage data. The data is then transmitted to your computer/mobile device which will also pull information from the city energy management system to ensure the smart grid is balanced. Sidenote: Yes, this’ll mean that your smart meter (if you have one) will soon be obsoleteApart from being faster than regulation, Moore’s law also moves faster than any 10 year smart meter rollout plan by your utility!
    • Our homes will be a honeypot of data that the utility will need to better run it’s business. That battle for our homes and the data is already on the way. Nest is already on the way here… watch for Nest (and their competitors who will spring up to serve the average consumer who cannot afford a Nest product) to play a bigger role as your Future Utility

Ok maybe 5. You and I will also have to change how we view and interact with our cities...it won't all be smart concrete and sensors. We'll have things like theLowline...

Fundamentally, regardless of all the technological advancement that we are seeing/about to see, what we'll want from our cities won’t change; to provide us the chance to fulfill our highest aspirations and live secure, happy and healthy lives with our loved ones. That won’t change...

What else do you think will change?