Io t, smart home & wearables – how disruptive innovation is changing our lifes; prof. dr. rudolf aunkofer @ year of the rooster

GfK Verein
IoT, Smart Home & Wearables –
how disruptive innovation changes our lives
The development of humanity has always been
characterized by disruptive innovations.
Digital transformation gives this process an
exponential growth momentum!
Prof. Dr. Rudolf Aunkofer
Director Institute for Information & Supply Chain Management
Global Director Business Development, GfK

© GfK Verein /// IoT, Smart Home & Wearables – how disruptive innovation changes our lives /// May 17 2
1. Human history – a history of disruptiveness
2. The exponential momentum
3. IoT, Smart Home & Wearables
4. Entrepreneurial success in the 21st century
THINK!

The difference between the almost right
word and the right word is really a large
matter - 'tis the difference between the
lightning-bug and the lightning!
Mark Twain

Index of Social Development
Going back to the end of the last ice age to the origin of the first complex societies
Human history – a history of disruptiveness since 14,000 years
Source: Ian Morris, The Measure of Civilization & Why the West rules – for now; y-axis: index points
14000 BCE 400 BCE 200 BCE 1 BCE/CE 200 CE 400 CE 600 CE 800 CE 1000 CE 1200 CE 1400 CE 1600 CE 1800 CE 2000 CE
West East

Industrial revolution effects are getting boosted by the digital revolution of the 21st century
Disruptiveness is causing change & growth –
basis for any pioneering innovation & groundbreaking technology
New scientific principles in Mathematics, Physics, Chemistry, Biology are resulting in the Scientific Revolution
Source: Ian Morris, iSCM; y-axis: index points
West East
11.000 BCE: Agricultural Revolution
8.000 BCE: Farming was spreading
5.000 BCE: Domestication was starting
2000 CE: Digital Revolution
1700 CE: Scientific Revolution
1600 CE: Atlantic Triangular Trade
0 BCE/CE: Roman Empire
500 BCE: Exploiting the Mediterranean 1900 CE: Industrial Revolution

Example: analog vs. digital photo cameras
The nature of picture making was changing & boosting market volumes by the factor five
A “painting style” behavior was transforming into a kind of “fun style” photo taking behavior
Source: GfK POS, WEU, Sales Unites 1990 – 2014; photo cameras; y-axis: sales units
1991 2011
The next disruptive factor: SmartPhones & Phablets!
1990 1995 2000 2005 2010
70.5 Mio
13.2 Mio
70.5 Mio
13.2 Mio
analog photo cameras
digital photo cameras
2014

Kodak’s Moment
Disruption is destroying decades of technology advantage within a few years only
Source: http://www.kevinuhrmacher.com/wp-content/uploads/2011/11/Infographics_Uhrmacher.pdf
In 1975,
a Kodak engineer
invented the
world’s first digital
camera
Sony first
introduced the
digital camera in
1981
Kodak focused
with digital
technology on
high-end, niche
markets
The Kodak
Moment:
a rare,
one-time
moment that is
captured by a
picture, or
should have
been captured
by a picture

Disruption
Basis for innovation & growth since more than 14,000 years
Disruption with the right timing is creating a “convincing” momentum …
Source: iSCM, GfK
• … more often
• … faster
• … with bigger (exponential) effects
• … across industries
• … but not always sustainable
consequence
highly volatile and therefore challenging markets
combined with “hockey-stick” like opportunity
scenarios

Innovation distinguishes between
a leader and a follower!
Steve Jobs

The digital revolution is changing the way how we’re innovating –
for the first time in history “everything” seems really to be possible!
The world is moving into an exponential momentum
Four traits are used for devising the index for social development
West East
2000 CE: Digital Revolution
Information Technology
“… the sophistication & extend of use of technologies available …”
Organization
“… the size of the largest settlements & organization complexity ..:”
Energy capture
“… the full range of energy captured by humans in any form …”
War-making capacity
“… the destructive power available to societies …”

The world is moving into an exponential momentum
The hockey stick like development is correlating
with the increasing number of disruptive innovations
Organizational aspects & Information technology are the two game-changing factors
1100 CE 1400 CE 1700 CE 2000CE
Energy Capture
Organization
War-making Capacity
Total East
1100 CE 1400 CE 1700 CE 2000CE
Energy Capture
Organization
War-making Capacity
Total West
EastWest

The exponential momentum
There have never been so many innovations in history than in the 20th & 21st century
A new startup scene is benefiting from a marginal cost level of zero
& software defined business models
The innovation rate will increase further on due to cloud eco-systems & digital transformation
Source: www.eine-frage-der-technik.de/meilensteine-der-technik, http://www.geo.de/GEO/heftreihen/geokompakt/die-chronologie-der-100-wichtigsten-erfindungen-pdf-60034.html, iSCM
21th
Century
20th
Century
Airplane
Electric
Typewriter
Bild
Bild
Computer
Bild
Sloppy
Disk
Bild
Photo-
voltaics
Bild
Digital
Camera
Bild
CD
Bild
Mobile
Internet
Bild
USB
Bild
Drones
Bild
Apps
Bild
Smart-
phone
Bild
3D Printing
Bild
4G/
LTE
Bild
Internet of
Things
Bild
Wearables
Bild
Augmented
Reality
Bild
Television
Transistor
Bild
Bild
Nuclear Power
Plant
Bild
Camera
Bild
Robot
Bild
Laptop
Bild
Industrial
Robot
Bild
World
Wide Web
Bild
Mp3-Player
Bild
Flatscreen
TV
Bild
NFC
Bild
Connected
Car
Bild
Virtual Reality
Bild
Cloud
Computing
Bild
Electric Car
Bild
Smart Home
Bild

Moore‘s Law from 1965 is still valid …
Doubling the number of transistors/power of a microprocessor every 1.5 to 2 years
Source: Intel, http://www.spiegel.de/netzwelt; https://ourworldindata.org/technological-progress; https://b2bstorytelling.wordpress.com/; https://miovision.com/blog
Accelerating
tech growth!
(condensed)
Successful
& disruptive
tech-innovations
are (nearly all)
following an
exponential
path

Basis for the current global start-up scene
The “magic” principles for entrepreneurial success in the 21st century
Source: iSCM, GfK, Brand 1
• disruption is creating new digital business
models, information, supply & value chains
(german: Schumpeters Modell der schöpferischen Zerstörung)
• digital platforms are scalable with stable or
declining marginal costs across countries,
industries & application areas
• network effects are helping to increase the
number of users/customers exponentially &
within a short period of time
consequence
(1) „long-tail-markets“ are turning into oligopoly
or monopoly like markets
(2) innovative startups are challenging traditional
business models & complete eco-systems

It ain’t what you don’t know that gets you in
trouble. It’s what you know for sure that just
ain’t so!
Mark Twain

Marketing life cycle
Some tech-topics are simply (extremely) hyped due to digital media
A marketing hype is not necessarily creating a real, sustainable business model
Source: iSCM; schematic diagram; y-axis: visibility, expectations, media presence; x-axis: time
virtual reality
augmented reality
smart clothing
industry IoT
artificial intelligence
robotics
connected cars
cloud
3d printing
technology trigger peak of expectations return to reality mainstream adoption
smart home
consumer IoT
smart watches
app business models
fitness tracker
big/smart data
drones
smart cities

Product life cycle
Business reality is sometimes different from marketing
Timing is key for innovation & a sustainable business models
Source: iSCM; schematic diagram; y-axis: visibility, expectations, media presence, sales; x-axis: time
technology trigger peak of expectations return to reality mainstream adoption
visionaries pragmatics scepticsconservatives
chasm
enthusiasts
„shark-fin“ markets
„real“ markets

Wearables
Demand is neither following nor keeping pace with the media hype/high expectations
Source: Estimated Total market based on GfK POS data Jan 16 – Dec 16; numbers are ranking the countries by market size in the respective region
Convincing design, branding & functions across price bands are needed to grow the market
Smartwatches Fitness trackers
Wrist Sport Watches Others (e.g. Connected Watches, Locators, Smart Glasses)
1
2
3
4
5
32%
53%
13%
2%
13mn
units
17%
55%
24%
4%
42mn
units
1 23
4
5
Europe
Asia

Smart Home
Simplicity, ease-of-use & seamless experience are creating demand
Source: GfK Consumer Life 2015, US, 1,000 consumers 18+, asked online
To keep my home
safe and secure
To save money by
reducing my utility costs
Because it helps maintain
a healthy environment at home
To allow people to come
and go when I'm not there
To be more environmentally
responsible
by using resources efficiently
Because I like keeping my home
updated with the latest tech
Because it's cool
and transetting
Younger
Millennials
Older
Millennials
Gen
X-ers Boomers
42 46 52 34
42 44 49 61
[%]
33 36 23 7
27 32 21 4
26 38 26 23
22 38 23 19
13 39 20 10
Reasons for monitoring or controlling a smart device differ between age group strongly
Enhancements
of consumer lives
need to address
the right target
group
10%
13%
8%
2%
Younger Millennials
Older Millennials
Gen X
Boomers
Owner of
Smart
Devices

Virtual Reality
Significant increase in sales after a long “trigger-period”
Source: Estimated total market based on GfK POS data for 10 European Countries, Dec 15 – Dec 16; demand/unit trend is in grey
11 9
11
76
41
63
-
200
400
600
800
1.000
1.200
1.400
0
10
20
30
40
50
60
70
80
90
Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16
Virtual Reality becomes a 180 million € market in Q4/2017 in Europe
VR Total
2016
249mn €
2.2mn
units
VR Drones
360 Degree Cams
Head Mounted Displays
VR Head mounts

Smart TV
Enormous increase in sales is indicating the transition to “mainstream adoption”
Source: GfK Point of Sales Tracking 2016, estimated total market
17,38
4,48
2,78
5,61
1,04
0,35
EuropeLatin AmericaMiddle East and Africa
2011
2016
Smart TV
sales in million
Smart TVs –
an entry point
for smart home
enthusiasts

Hardware portfolio
Baseline for disruptiveness
Source: GfK global volume estimate 2016 based on POS data
A high installed base & an extensive device usage is key for any data-driven business model
1,400 mn
Smartphones
122 mn
Wearables
14 mn
VR glasses
10 mn
Drones
10 mn
Action
Cams
rec
0.3 mn
360°
Cams

Media hype or sustainable business model
The entrepreneurial opportunity
Everything seems to be possible in a cloud & software driven market environment
Source: iSCM
• trigger periods are usually much longer than
expected
• shark-fin shaped markets are either
challenged by crossing the chasm or by the
next shark-fin shaped market
• IoT opportunities today are often more
challenging than media is suggesting, but
market potentials are bigger than ever
consequence
customer centricity, leadership & entrepreneurial
spirit is needed, to compete successfully against
tough competition in a volatile market
environment

Don’t follow the headlines,
follow the trend lines!
Bill Gates

Entrepreneurial success in the 21st century
Making the difference
Source: iSCM
ENTREPRENEURIAL SPIRIT NEEDS AN INFORMATION BASED VISION!
change – disruption is starting a transformation process
opportunity – transformation is creating new markets
exponential growth – digital business models are platform based
sustainable success – timing & leadership is essential
information – key driver for competitiveness

Many thanks for your kind attention!
Prof. Dr. Rudolf Aunkofer
rudi.aunkofer@gfk.com
M +49 171 30 47 468

Io t, smart home & wearables – how disruptive innovation is changing our lifes; prof. dr. rudolf aunkofer @ year of the rooster

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