Distribution of Pervasive Internet / M2M players in terms of product / services mix and scope of solution, circa March 2004. This diagram is not intended to portray every active player, nor is it etched in stone. Company position is constantly evolving. (Click the image for a larger on-screen view.) Source: Harbor Research, Inc.

Download a printable PDF file of the diagram above (125 KB).

The ubiquitous computing paradigm shift
The major chipmakers offer a good example of the business-model challenges posed by the era of ubiquitous computing. Today, those companies drive tens of billions of dollars in annual sales with IC products costing US$50.00-US$200.00 and intended for a one person/few computers marketplace. But we already live in a world that contains more sensors than people. And we’re about to be catapulted into an era of networked embedded intelligence that will mean hundreds, even thousands, of connected computing devices per person—the often invisible ones in your car, your home, your office building, and nearly every electronic product you buy. The key IC products for this era will be much less expensive than the current cash-cow chips (about US$5.00 in the short term, falling to as little as US$0.50 by the end of this decade), though they will be produced in staggering volumes.

Companies like Intel are now attempting to prepare themselves for this new reality. To state the obvious, they will need to change the way they do business. And they won't be alone. All the players in this new landscape—from small, privately held technology innovators to large OEMs and system integrators—must develop an understanding of the new ubiquitous-computing value chain, and make some crucial decisions about where they want to live on it, and with whom.

The movement away from the physical
Cheap, self-organizing wireless sensors (often called “motes” or “dust”) have nearly infinite potential installations and applications. Their widespread adoption is inevitable. But that doesn't mean that every participant will automatically be shaking a money tree.

Value and profitability are playing a new game of hide-and-seek. They're still there, but not where they used to be. If you keep looking in the old places...well, you know what's going to happen.

We think that profitable vendor activity in wireless sensor nets will recapitulate the tendency we've seen for decades in digital technology generally, and more recently in other kinds of product businesses—less and less physical value (products), more and more metaphysical value (services).

Buckminster Fuller saw this general phenomenon decades ago and called it "ephemeralization"—the tendency of evolving technology to become less and less material. More brains, less brawn. At one point in human history, you have the Egyptian pyramids. Perpetuity via lots of mass. Many years later, you have the Eiffel tower. Less brawn (mass), more brains (laws of physics). In electronic technology, the exponential miniaturization of integrated circuits and data storage are obvious examples of “emphemeralization.”

Short-term revenue and long-term revenue
In our modeling of the Pervasive Internet / M2M opportunity for clients, we have found that with only a few “mission critical” exceptions, enablement and developer tools tend to be declining profit activities—even though literal growth can be enormous. Sustainable profits, on the other hand, can be achieved in data management and the analytic activities that flow from the data themselves.

In the short term (say, the years 2004 to 2006), networking products and gateways can be profitable if suppliers play their cards right. They may also be able to differentiate themselves and make money with toolsets for deployment and development, analogous to the offerings of a company like Redhat in the Linux OS space.

But after that, physical enablement and network-management tools will become mature and decreasingly profitable. So where’s the long-term money? Well, the galaxies of “dust”-borne data generated by networked devices will be worthless unless they can be translated into actionable business intelligence. The high margins in roughly 2007-2008 and beyond will not be in products at all, but in data management and related services. The products will continue to exist, of course, but only as "portals" into the valuable services offerings, not as ends in themselves.

Our conclusion? If you’re a vendor of wireless sensor networking products with no long-term data services strategy, you’re in the Pervasive Internet booster rocket. You may well have a great short-term lift-off. But when the booster runs out of fuel (product-centric profits), you’ll fall back to Earth.

And that’s going to hurt.

Harbor’s new online platform for research services offers continually updated intelligence and stunning data-visualization.

Static, printed reports can’t track the complex ecosystems and warp-speed pace of high tech. SmartSphere® projects can.

The brains of the Web. The brawn of server databases. The beauty of a CD-ROM.
For nearly ten years, we’ve been waiting for Web media to get good enough to let us do this. It’s finally here. Harbor SmartSphere® re-invents the whole concept of delivering research value. It’s to business research what the Pervasive Internet will be to business itself: a huge injection of dynamic intelligence and sheer voltage. SmartSphere® is online, interactive, dynamic, and visualized. There’s nothing static, rigid, or dead about it. Eventually, we at Harbor will do everything in SmartSphere® that we used to do on paper, and we’ll do it better. And you can, too. in a custom-configured project of your own, SmartSphere® can be anything you want it to be.

And yes, you can get printed reports. We’ve re-invented those, too. Not fixed, one-size-fits-all printed reports, but custom printed reports that you configure and SmartSphere® creates for you on the fly in PDF format.

See SmartSphere® and find out more right now:

1. Visit our free, live SmartSphere® demonstrations. They say pictures are worth a thousand words. What are they worth if they’re pictures of your whole world, and you can fly around inside the pictures with your mouse?
2. Download a brochure on the SmartSphere® research platform and services (PDF, 970 KB).
3. Download a brochure about our SmartSphere® “living research” projects on the M2M/Pervasive Internet phenomenon (PDF, 240 KB).

A small portion of an interactive Harbor SphereMap™. This one portrays a company’s world. You “fly around” the map by dragging it with your mouse, bringing into focus any area you want to explore. You see a company’s peers, investors, products, and alliance-structure at a glance. Clicking nodes fetches additional information from the database. Shift-clicking nodes creates new maps of other companies—and maps of markets, too.

Projects, projects, projects. Ours, and yours.
SmartSphere® is an online platform that Harbor uses to deliver Web-based services. You don’t buy SmartSphere® the way you buy a program for your computer. You buy access to one or more SmartSphere® projects. We define projects of our own on important high-tech subjects, and clients can subscribe to those projects. Clients can also define their own custom (and completely private) projects.

SmartSphere® projects are laser-focused on their subjects. No waste, no fluff, no irrelevance. A SmartSphere® project delivers continually updated information on whatever the project has been defined to track. Some of that information is created in the good old-fashioned way, by experienced researchers and analysts. And some of it is created with 21^st century tools like automated news feeds and Web-based info services. Every time you log in to a project, there’s new information—freshly tracked events, new company alliances, new company and market comparisons, enhanced company, market, and technology profiles, and insightful Harbor commentary and analysis.

When you visit our SmartSphere® demonstrations, you’ll see limited versions of our own projects. Currently, they include Pervasive Internet Suppliers, Smart Buildings, Smart Power, Wireless Sensor Networks, and Cluster Computing. Bear in mind that the full versions of these projects include vastly more information than the limited demonstration versions. The “Pervasive Internet Suppliers” project, for example, was created to replace and improve our own earlier online publication, Pervasive Internet Report.

The “Cluster Computing” demo is a brand-new project, featuring content developed in association with Barrington Partners. We’re very excited about our new alliance with Barrington. Together, we plan to develop SmartSphere®-based research on several important new technology growth areas, in both multi-client and single-client formats. (If the “Cluster Computing” project in particular interests you, send us mail or call us.)

Custom SmartSphere® projects. Your secret weapon has arrived.
You’ve heard about some of our SmartSphere® projects. Now let’s talk about yours. Does your company have business development, M&A, R&D, or sales and marketing goals? We hope the answer is yes. How would you like “living business intelligence”™ on the companies that interest or worry you? Or on the markets and technologies that are defining your future? A custom SmartSphere® project is the perfect way to do that. “Living business intelligence”™ means research that is laser-focused on your targets, and continually updated for as long as you need it.

Any collection of companies, markets, or technologies can become the backbone of a SmartSphere® project. You define who or what they are. You define what you want to track about them, and how you’d like to rank or score or weight them. You define the types of cross-company or cross-market comparisons you’d like to see.

Take action and take control.
If you’ve read this much about SmartSphere® without clicking something, it’s time to click. Here are those links once again.

1. Visit our free, live SmartSphere® demonstrations.
2. Download a brochure on the SmartSphere® research platform and services (PDF, 970 KB).
3. Download a brochure about our SmartSphere® “living research” projects on the M2M/Pervasive Internet phenomenon (PDF, 240 KB).

What do your colleagues and customers think about key Pervasive issues? Find out, fast and free.
Harbor’s site visitors are technologists and business leaders with the same thing on their minds: Internet-enabled device networking, smart services, and enterprise automation.

Our Polling Booth lets you can tap into this unique community in a very real and valuable way. Cast your own vote on a key Pervasive question and see all votes charted in real time. (Click “Vote!” in the site’s navigation to get there.) You can vote only once on each question, but you can come back any time to see the latest results. You can even cite the polling data in your own site pages or publications—providing you credit Harbor Research as the source.

We’ve started with a handful of questions about core Pervasive issues, and we’ll add more regularly. Do you want community opinion on something we haven’t asked about? We welcome suggestions for the Polling Booth at feedback@harborresearch.com.

Visit our site and try out the polls and charts. Click “Vote!” in the main navigation.