Cognitive computing: Moving From Hype to Deployment

Cognitive computing: Moving From Hype to Deployment

Cognitive computing Although cognitive computing, which is many a times referred to as AI or Artificial Intelligence, is not a new concept, the hype surrounding it and the level of interest pertaining to it is definitely new. The combination of hype surrounding robot overlords, vendor
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Industrial IoT will reshape network requirements

Industrial IoT The hype around IoT may have been surpassed this year by breathless coverage of topics such as artificial intelligence and cryptocurrencies, but there continue to be interesting developments in IoT related technology and services. The possibilities for efficiency gains and the creation of

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Blockchain info

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John Pientka

Tesla is Worth More Than Ford or GM. Is this the Automakers iPhone Moment?

The Automakers iPhone Moment

Remember Blackberry? How about Nokia or Motorola? Vaguely you say. Will we one day state the same about Ford, GM, and the others? Seems hard to believe but the parallels have got to keep their execs up at night. Funny, how these things always look inevitable in hindsight. Maybe we are at a pivot point where we can explore with some foresight. After all the market seems to be issuing its own judgments.

This spring Tesla hit more that $56 Billion in market capitalization. More than Ford or GM despite the fact it makes a measly number of cars per year compared to these behemoths. Something’s up because heads are rolling. Ford’s CEO Mark Fields was pretty unceremoniously shown the door. Volkswagen has its dieselgate mess with executives bailing out or arrested (so much for the acceptability of that fuel technology). Seven countries are talking about banning gas or diesel autos.

We have seen this before and not that long ago. The iPhone, progenitor of all smartphones, is only ten years old. But look what it did with its arrival. I used to be a “crackberry” but then I switched. The best summary of why is the book: Loosing the Signal by Jacquie McNish and Sean Silcof. The take away lessons were that everything the cell phone industry had assumed about what was needed in a device was flipped on its head. An entire business model was turned upside down.

Buyers wanted just a phone and email. The Jesus phone, as the iPhone was sometimes called back then, gave you those and your music, and the Internet. Consumers demanded keys to punch – the IPhone gave them a smooth glass touch screen. Users wanted long battery life. You got a couple of hours of talk time from Apple before you had to recharge. Carriers insisted that the phones consume as little of their precious network bandwidth as possible. Tough! Cingular/AT&T’s network almost melted down from bandwidth demand as the first carrier to exclusively host the iPhone. Applications? Consumers only want a few. There’s really no money in it. Tell that to the Apple’s App store.

Now look at Tesla. Let’s start with buying it. The whole customer journey is different. There are no dealers or inventory on the lot – just Apple Store-like show rooms where you preorder your car. It will be custom built for you and you secure it with a deposit. Financially, what a plus – no inventory to contend with, no dealers who are the gateway to your customers and best of all: cash up front before you build. Tesla offers no incentives – no Memorial or Labor Day sales – and when was the last time you saw a TV ad for a Tesla.

Consider the product concept of the “platform” approach. A Tesla is not a car but a smartcar, just like the iPhone was not a phone but a smartphone. Slide behind the wheel of a Tesla. Elon Musk saw that we have all been trained by Steve Jobs to demand the functions and feel of a well-designed device and there it is. You cannot miss the gigantic center console at 17 inches across. Check out the rest of today’s autos – not even close.

You are now the proud owner but say Tesla discovers a glitch with your car. If it were a traditional automobile you would get a recall notice and head for a dealer’s service bay to get it resolved. Not with Tesla, the fix is downloaded over-the-air. Want some new functions and features now available? Just give them your charge card number and they will be downloaded, too.

Your car is in a two-way dialogue with Tesla. You and all those other Tesla drivers are providing an enormous and growing database on how, when and where they drive. If you’re an automaker trying to improve your product with things like autonomous driving software (aren’t they all?), this is a gold mine. Teslas currently on the road add 5 million miles of data per day.

Then there is the sheer economics. Yes, the Tesla S is a luxury car and not for the masses (remember the first iPhone was pretty pricey, too). But remember we are trying to look forward. Fact: close to 500,000 people put down $1,000 each to hold their place for the mid market Model 3. Now couple that with the fact that a Tesla is less expensive to operate and lasts longer. The first part is simple: there are fewer moving parts to wear out: 7000 on a Tesla vs. 30,000 on a conventional internal combustion engine (ICE). As a result an ICE is good for perhaps 150,000 miles while an electric vehicle (EV) like Tesla is good for at least 500,000 miles.

Fuel” is less expensive, too. Say you drive your ICE 15,000 miles a year and gas is $2.35 a gallon. You are spending $1,400 per year. Now let’s say you switch to an EV. Your bill is $540 in electricity. Let’s sum up. No hassle buying, fewer (or no) repairs, cheaper to operate – and even the government doesn’t want you to buy ICE’s anymore – seems like a pretty compelling case that a shift is underway.

I know, I know what you are going to say: the big boys have been building and selling cars for a long time – in many cases over a century – they will master this new “wrinkle”, too. But will they? Their business models have been in place for a long time. Whole economic ecosystems have grown up around them. People have spent a lifetime in the industry. Remember Kodak’s engineers invented the first digital camera in 1975.

(Image Source: PetaPixel)

Sometimes with a digital transformation it’s only the guy with the blank slate that can imagine the new. So, is an EV like Tesla just a car with an electric motor or is it something different? What do you think? What do you think the auto execs think?

By John Pientka

John Pientka

John is currently the principal of Pientka and Associates which specializes in IT and Cloud Computing.

Over the years John has been vice president at CGI Federal, where he lead their cloud computing division. He founded and served as CEO of GigEpath, which provided communication solutions to major corporations. He has also served as president of British Telecom’s outsourcing arm Syncordia, vice president and general manager of a division at Motorola.

John has earned his M.B.A. from Harvard University as well as a bachelor’s degree from the State University in Buffalo, New York.

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