Creating)New)Markets)in)the) Digital)Economy! IBM Almaden, 15 Jan 2013
Irene%C%L%Ng%
Professor'of'Marketing'&'Service'Systems,'WMG' Director,'International'Institute'of'Product'&'Service' Innovation'
[email protected]' ' @ireneclng' ' http://uk.linkedin.com/in/ireneclng' ' 'bit.ly/vcssblog' ' www.warwick.ac.uk/go/sswmg' ' www.ireneng.com''
About!me,!and!my!institution!
© Irene Ng 2013, all rights reserved
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The$University$of$Warwick$ Facts&and&.................................& Figures& !
Established$1965$
$
!
League$table$positions$ – – – – – –
!
Times$and$Sunday$Times$(2012)$G$8th$
! !
Guardian$(2012$guide)$–$6th$$ ! Independent$(2012$guide)$G$8th$ ! th RAE$2008$–$7 $overall$$ QS*$World$University$Ranking$(2011)$–$50th$$! We$aimed$to$be$in$the$top$50$by$2015$
!
International$working$ –
!
!
Formal$working$relationships$with$Boston$ ! University,$Monash$University,$IIT$ Kharagpur,$Jawaharlal$Nehru$University$ ! and$Nanyang$Technological$University$
$ $ &
! !
Undergraduates $12,979$ Postgraduates $10,441$ International$students$6,411$ International$students$27%$ Total$staff $4,912$ Academic$staff $687$ International$staff $25%$ Turnover $£419m$ Campus$size $292$hectares$ Academic$departments $28$ Research$centres $48$ Overseas$alumni $44,194$ *$Quacquarelli$Symonds$Ltd$
WMG$Research$and$Development$ Centres$
International$ Manufacturing$Centre$
International$Digital$ Laboratory$(IDL)$
© Irene Ng 2013, all rights reserved
International$Automotive$ Research$Centre$
Engineering$Management$ Building$
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New$Centres$
International$Institute$for$Product$and$Service$Innovation$(IIPSI)$
Global$Partners$
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© Irene Ng 2013, all rights reserved
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International$Digital$Laboratory$ Product$LifeGCycle$Management$$ Robotics$
Digital$ Manufacturing$
Experiential$Engineering$ Product$Evaluation$Technologies$ Embedded$Systems$$ Simulation$and$Modelling$ Cloud$Computing$Security$$
Institute$for$$ eGSecurity$
Privacy$Enhancing$Technologies$ Data$Loss$Monitoring$ Vulnerability$Research$ Trust$Management$ Health$Informatics$
Institute$of$$ Digital$Healthcare$
eGHealth$$ Neural$Engineering$ Biomedical$Engineering$ Virtual$Reality$Medical$Training$
Digital$ Technologies$
Visualisation$ Digital$Media$ eGBusiness$
International)Institute)of)Product) &)Service)Innovation)(IIPSI)! Irene%C%L%Ng%
Professor'of'Marketing'&'Service'Systems,'WMG' Director,'International'Institute'of'Product'&'Service' Innovation'
[email protected]' ' @ireneclng' ' http://uk.linkedin.com/in/ireneclng' ' 'bit.ly/vcssblog' ' www.warwick.ac.uk/go/sswmg' ' www.ireneng.com''
© Irene Ng 2013, all rights reserved
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International!Institute!of!Product!&! Service!Innovation!(IIPSI)!
23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Digital!Software!Innovation!(tech! demonstrators)! Cloud for Business
Mobile for Business
Data to Intelligence
© Irene Ng 2013, all rights reserved
Smarter Social Media
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Polymer!Innovation!(sample!tech! demonstrators)!
Adding Functionality to Plastic Parts Low Volume Production
Polymer Recycling
ExperienceBled!Innovation!(sample! tech!demonstrators)!
User Focussed Product/Service Design
Customer Engagement Visitor Experience Energy Usage Behaviour
23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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IIPSI$Service$Systems$&$Business+$ • Technology'disruptions'cause'challenges'to'existing'business' models'(e.g.'Kodak)' • Adaptability,'transformation'needed'–'both'for'their'business' models'(the'Lirm’s'capability'to'serve'the'market)'and'their' economic'models'(the'way'they'derive'their'revenues'and'the' market'exchanges'they'participate'in)' • Business+'research'into'value'creating'service'systems,' digitisation/virtualisation,'servicePdominant'logic'(e.g.' Bombardier,'Rolls'Royce,'GSK);'also'into'pricing/revenue'models,' methodology'for'new'transactions'&'markets' • Transdisciplinary'team'of'social'science,'technology,'business'&' engineering' • 4'RCUK/EPSRC'DE'projects,'NEMODE'virtual'collaboration'host'
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17 Markets!
Practice) Inform
Scale
corporate! space!
Mkt modularity
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IP Passing Model, demonstrators
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SME! Devt!
Social Science
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IP Passing Model, demonstrators
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Trade! pubs!
Academic! pubs!
Digital! (software)! innovation!
Bootstrap
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© Irene Ng 2013, all rights reserved
Polymer! Innovation!
Education)
funding!
3
independence Research)
Service!Systems,!New!Econ/Biz!models! ExperienceB led! Innovation!
Startup! space!
SME!space!
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IIPSI)Marketspace)
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7 9
2
Lower TRLs
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PreB incubating!
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Student s!
10 Knowledge! Transfer!&! Tools! Projects!
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13 11 primary knowledge flows, 8 secondary flows
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Impact! • created!12!new!high!tech!startBup! businesses,!! • directly!generated!70!new!jobs,!! • trained!over!450!small!business!in!a!range! of!digital!technologies!over!the!last!4!years! • International!publications,!patents,!tools! etc.!
23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Creating)New)Markets)in)the) Digital)Economy!
© Irene Ng 2013, all rights reserved
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Value!was!exchange!(what!I!got!for! what!I!gave)!
23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
But!it!wasn’t!exchange!that!made!us!happy.!It!was! experiencing!what!we!bought!that!gave!us!the! outcomes!we!wanted!
We buy because of the service of the object, even if it was an emotional ‘service’ i.e. things are service avatars* Mike Kuniavsky, 2010 23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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Ownership!was!the!only!way!to!get! the!‘service’!of!an!object! • Previously,!the!only!route!to!service/ outcomes!was!through!ownership!e.g.! music!CDs! • But!outcomes/benefits!come!only!in!the! context'of!use!and!experience!! • If!firms!found!a!way!to!serve!contexts,! individuals!may!not!need!to!own' • Case!study:!Music! 23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
VALUE!&!WORTH! • BUT…!we!needed!to!BUY!before! experiencing!–!so!industry!focus!is!still!on! buy!(WORTH)!even!while!design!focus!is! on!experience!(VALUE)! • Worth!and!Value!is!separated!in!time/space!
23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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Something!is!happening……! • Exchange!used!to!be!in!further!in!advance! • With!digitisation!and!connectivity,!exchange!can!now! be!closer!to!contexts!of!use!e.g.!Music! • i.e.!worth!is!getting!closer!to!value!creation! • For!offerings!that!could!be!digitised,!collapse!of!buy! (potential)!and!use!(kinetic)!into!the!same!time/space! • VALUE!has!become!more!relevant!again!in!determining! WORTH! • With!some!new!business!models,!VALUE!is!increasingly! determining!WORTH!(due!to!collapse!of!buy!and! experience!time/space!
With!digital!connectivity,!markets!are! now!possible!to!be!formed!!in!context!! • Digitisation!results!in!“digital!backwash”!of! the!offering! • Serving!contexts!increases!worth!! • New!business!and!economic!models! emerge! • So!how!should!we!think!about!value!now!in! terms!of!how!it!might!be!related!to!worth! and!markets?!
© Irene Ng 2013, all rights reserved
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Value+!and!ServiceBdominant!logic*! • value'is'the'goodness'we'create'out'of'the' experience'with'something'or'someone'in' context,'and'that'experience/interaction'is' the'enactment'of'our'social'and'cultural' values!!
++ Ng and Smith (2012) *Vargo and Lusch (2004, 2008) 23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Value&is&co+created&for&outcomes/ benefits/value+in+use& ! ! ! ! ! ! ! ! ! ! ! RESOURCES! op Pr
© Irene Ng 2013, all rights reserved
os
e
! ! Peace!of!mind! ! Entertainment! ! Love! ! ! ! ! ! Realise CO-CREATED ! VALUE that cd be ! higher than ! proposed Enhance ! ! ! RESOURCES????!
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VALUE IN CONTEXT
This!camera!is! available!so!it!is! a!resource!in! context!
This! camera!is! not!
Value created is Contextual. Resources are therefore also Contextual. Things become more valuable in context because they enable resources for value creation 23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Two functionally the SAME cameras but not the same value for the user in context. Because one camera is less competent in context, one is a lesser service avatar (or is just simply not around!) COMPETENCY OF OFFERING IN CONTEXT IS KEY TO NEW MARKETS 23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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Serving!Contexts!(the!kinetic)! • Current!market!platforms!B!tablets!and!mobiles! • More!platforms!for!contextBbased!markets!now! need!to!be!created!e.g.!InternetBofBThings!at! home,!in!buildings! • markets!are!now!in!the!same!space!as!creatives,! sociologists,!interactive!designers!B!looking!at! contexts!and!lived!lives! • For!nonBdigital!things,!linking!supply!chains!to! home!market!platforms!essential!for!new! business!models!
Once!upon!a!time,!our!contexts!were! rather!homogenous! • Where/when!we!ate!meal! • Where/when!we!listened!to!music! • Where/when!we!exercised!! • *Technology liberates us from constraints of – – – –
time, when things can be done place, where things can be done actor, who can do what constellation, with whom it can be done
*Reframing Business, Normann, 2001 23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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Why!is!this!important! • Future!digital!connectivity!for!innovation!and!new! markets;!! • Understanding!how!current!things!should!evolve!for! connectivity!(e.g.!biopharmaceauticals)!to!serve!us!better! –!new!business!models,!new!econ!models,!exchange!&! new!ways!to!serve! • Innovating!offerings/service!that!is!scalable!and! replicable!in!creating!value!in!context!
23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
But!to!bring!your!digitised!offering! (content)!into!context,!you!need!a! medium/platform!(widget),! connectivity,!and!a!social!space!! E.g. of ‘service’ in context digitally through your mobile • Dictionary • Calculator • Calendar • Torchlight • Camera
© Irene Ng 2013, all rights reserved
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The!New!Battleground! Content!
Social!
CONTEXT!
Widget!
Connecti vity!
Who!is!digitising!to!serve!use! context!next?!Tea?!;)! • Digitisation!enables!traditional!offerings!to!become!a! resource!in!context,!reducing!time!between!acquiring!a! resource!and!using!a!resource!B!expanding!demand! Digitised!offering!in! context!
In context
Digitisation+Data is the new oil, Context is the new oil-field 23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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Mobile!phone!as!the!medium!to! propose!digitised!offerings!in!context! • Why!is!the!mobile!phone!one!of!the!most! popular!device!for!digitised!offerings! today?!! • because!it!is!often!present!in!MANY!lived! experiences!(contexts)!! • It!may!not!be!the!only!widget!in!the!future! serving!multiple!contexts,!but!it!is!now!
23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Markets!are!forming!at!where! service!creates!most!wealth!–!in! context! Digitisation!allows!new! ! offerings!to!be!
resources!available,! accessible!on!demand,! in!context! The!better!you!are!able! to!serve!context,!the! bigger!your!market!
© Irene Ng 2013, all rights reserved
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Competitive!Dynamics! • Serving!Contexts!changes!the!nature!of! competition! • Land!grab!creates!disruption,!enabled!by! new!technologies.!How?!
23 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Context! Enjoying!music! on!spotify!and! seeing!other! friends!choices! of!music!while! in!a!gym!
© Irene Ng 2013, all rights reserved
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BUSINESS!MODEL!VS!ECONOMIC! MODEL! ECONOMIC MODEL - Where exchanges come from, what exchanges are there, creating worth from value creation
person! Value!capture!
Money fr access e.g. spotify Money fr ownership (e.g. CD) Money fr eyeballs (eg. Google)
BUSINESS MODEL
Value! Creation!
Value! prop!
ENJOYING MUSIC
MUSIC
EMI, Sony BMG
23/01/2013 WMG
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E.G.!MUSIC!B!CONTENT!
Money fr access e.g. last.fm Money fr ownership e.g. iTunes Money fr medium (e.g. CD)
Value!capture!
person! Value! Creation!
Value! prop!
ENJOYING MUSIC
MUSIC
EMI, Sony BMG 23/01/2013 WMG
© Irene Ng 2013, all rights reserved
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E.G.!MUSIC!B!WIDGET!
Money fr ownership
Value!capture!
person! Value! Creation!
Value! prop!
ENJOYING MUSIC
WIDGET
Apple, MP3 player, Computer 23/01/2013
WMG
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E.G.!MUSIC!B!CONNECTIVITY!
Money fr access
Value!capture!
person! Value! Creation!
Value! prop!
ENJOYING MUSIC
WIFI, 3G
O2, Vodafone, Three, Orange 23/01/2013
© Irene Ng 2013, all rights reserved
WMG
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E.G.!MUSIC!B!SOCIAL!
Money fr eyeballs (ads)
Value!capture!
person! Value! Creation!
Value! prop!
ENJOYING MUSIC
Sharing platform
Myspace, facebook, google+, twitter, spotify 23/01/2013
WMG
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E.G.!MUSIC!B!GYM!
Money fr access
Value!capture!
person! Value! Creation!
Value! prop!
ENJOYING MUSIC & SPORT
Sport & fitness environment
GYMS 23/01/2013
© Irene Ng 2013, all rights reserved
WMG
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Industries!propose!value!in! context! SKY, VIRGIN Value! capture!
Value!capture! person!
Value! Creation!
Value! prop! 23/01/2013
Value! prop!
Value! Creation!
Value! Creation!
person!
person!
person!
person!
Value! Creation!
Value! Creation!
Value! prop!
Value! prop!
(CONNECTIVITY)
Value! capture!
APPLE, CREATIVE (WIDGET)
Value! capture!
GYMS
Value! prop!
Value! capture!
FACEBOOK, MYSPACE (SOCIAL)
SONY, EMI (CONTENT)
WMG
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Value!Constellation!of!Music!in!Context! Value! capture!
Value!capture! person!
Value! Creation!
Value! prop! 23/01/2013
© Irene Ng 2013, all rights reserved
Value! Creation!
Value! prop!
Value! Creation!
SKY, VIRGIN (CONNECTIVITY)
person! person! Many!persons!enjoying! Person!enjoying!music! music!in!context! in!context! person! person! Value! Creation!
Value! Creation!
Value! prop!
Value! prop!
WMG
Value! capture!
APPLE, CREATIVE (WIDGET)
Value! capture!
GYMS
Value! prop!
Value! capture!
FACEBOOK, MYSPACE (SOCIAL)
SONY, EMI (CONTENT) 44
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Value!Constellation!of!Music!in! Context! Value! capture!
Value! prop!
Value! prop!
PIE
Value!capture!
SKY, VIRGIN (CONNECTIVITY) Value! capture!
FACEBOOK, MYSPACE (SOCIAL)
Value! prop!
Many!persons!enjoying! Person!enjoying!music! music!in!context! in!context! person!
APPLE, CREATIVE (WIDGET)
Value! prop!
23/01/2013
Value! capture!
Value! capture!
GYMS
Value! prop!
SONY, EMI (CONTENT)
WMG
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Value!Constellation!of!Music!in!Context! Value! prop! Value! capture!
Value! prop!
PIE
Value!capture!
SKY, VIRGIN (CONNECTIVITY) Value!capture!
FACEBOOK, MYSPACE (SOCIAL)
Value! prop!
Many!persons!enjoying! Person!enjoying!music!in! music!in!context! context! person!
Value! prop!
Value! prop!
Value!capture!
APPLE, CREATIVE (WIDGET)
Value!capture!
GYMS
SONY, EMI (CONTENT)
• The!Value! constellation! map! shows! you! which! industry! has! a! stake! in! which! OTHER! industry! to! expand! their! market! penetration,!driving!disruption,!convergence,!land!grab! 23/01/2013
© Irene Ng 2013, all rights reserved
WMG
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Value!Constellation!of!Music!in! Context! Value! capture!
Value! prop!
Value! prop!
PIE
Value!capture!
Value! prop!
Many!persons!enjoying! Person!enjoying!music! music!in!context! in!context! person!
23/01/2013
Value! prop!
I!want!to!play! there!because! more!content!that! I!control!will!drive! my!connectivity! business!! Value! capture!
APPLE, CREATIVE (WIDGET)
Value! capture!
GYMS
SKY, VIRGIN (CONNECTIVITY) Value! capture!
FACEBOOK, MYSPACE (SOCIAL)
Value! prop!
SONY, EMI (CONTENT)
WMG
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Value!Constellation!of!Music!in! Context! Value! capture!
Value! prop!
Value! prop!
PIE
Value!capture!
Value! prop!
Many!persons!enjoying! Person!enjoying!music! I!want!to!play! music!in!context! in!context! there!because! person! widget!that!I! Value! capture!
23/01/2013
© Irene Ng 2013, all rights reserved
Value! prop! WMG
Value! prop!
Value! capture!
control!will!secure! my!connectivity! business!!
GYMS
APPLE, CREATIVE (WIDGET)
SKY, VIRGIN (CONNECTIVITY) Value! capture!
FACEBOOK, MYSPACE (SOCIAL)
SONY, EMI (CONTENT) 48
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Value! prop!
PIE
Value!capture!
SKY, VIRGIN (CONNECTIVITY)
Many!persons!enjoying! Person!enjoying!music! music!in!context! in!context! I!just!want!to!make!sure! person! these!guys!can’t!do!it! without!me!
23/01/2013
Value! prop!
Value! prop!
Value! capture!
APPLE, CREATIVE (WIDGET)
Value! capture!
Value! prop! GYMS
Value! prop!
Value! capture!
Value! capture!
Value!Constellation!of!Music!in! FACEBOOK, MYSPACE (SOCIAL)Context!
WMG
SONY, EMI (CONTENT) 49
Connectivity!&!Digitisation! • TV!was!in!a!room! • Music!was!on!speakers!and!stereo!players! • Digitisation!&!Connectivity!is!changing!contexts! of!use! • Changing!contexts!of!use!is!bringing!different! industries!into!a!context!e.g.!Tesco!has!a!stake!in! your!car!–!will!they!pay!insurance?! • Disruption!&!Convergence!comes!from! understanding!value!constellation!of!the!context! 23/01/2013
© Irene Ng 2013, all rights reserved
WMG
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Changing!Value!Constellations! • With!more!digital!connectivity,!there!are! more!connected!contexts! • more!constellations!with!different!players! will!emerge,!converging!stuff,!creating! new!ways!to!capture!value,!generating! new!business!models,!creating!disruptions! • Move!from!vertical!business!models!to! systemic!(horizontal!&!vertical)!
For!more!information:! Read!the!book!! Value:!Creating!New! Markets!in!the!Digital! Economy! B out!January!2013! !
*
www.valueandmarkets.com * Tentative cover 23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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Making!Value!Creation!in! Context!Digitally!visible! HubBofBallBThings! (H.A.T)!–!a!designed! experiment!for!new! business!models! powered!by!IoT! ! !
New!(market)!platform!to!serve! context!powered!by!IoT! • The!Internet!of!Things!(IoT)!refers!to!uniquely! identifiable!objects!(things)!and!virtual! addressability!that!would!create!an!InternetBlike! structure!for!remote!locating,!sensing,!operating! and/or!actuating!of!such!‘things’.!There!is!a!sense! that!equipping!all!objects!in!the!world!with!the! ability!to!be!animated!and!connected!could! transform!lived!lives.!! • The!home!and!the!building!as!new!platforms!to! serve!contexts!in!the!future! 23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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HubBofBAllBThings!–!tentative!platform! architecture!for!multiBsided!markets! resid
‘Thing 2’ Network
landlord
3D Printing/ Scanning
ent
Building mgr
‘Thing Store’ Type1
Thing 1s
Type1
Standard Data formats and defined protocols
M
‘App in-Store’
Private Info Hub
App
App
TG!
Legacy
Type 1 Thing Interface
Thing 2s
Legacy
‘App out-Store’
= IoT Enabler
Data for developers
Private Info Hub
= IoT Enabled
Public Info Hub
App
‘Thing POD’ Thing Platform for Open-source Design Key = IoT Enhancer
M
App
Applications Developed using opensource API
TG!= Trustgate
External platforms
M
Actuating Legacy
The H.A.T.
App
Use of Virtual Devices
Thank!you!
23 January 2013
© Irene Ng 2013, all rights reserved
Copyright Irene Ng, 2012. All rights reserved.
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