eSIM-Born Connected – The Next Generation of OEM’s

Nicolas Waern "The Building Whisperer" https://www.linkedin.com/in/nicolaswaern/ https://twitter.com/BuildWhisperer Contributing Editor

There were a couple of reasons I wanted to write about this topic right now. We are soon at the 2020 AHR expo in Orlando where the HVAC OEMs are everywhere. Also, I listened to this great podcast the other day, which got me interested in eSIMs and the connectivity play for OEMs. Having an eSIM allows OEM’s to get their products connected separately from that of the cloud, which could be a great strategy to have for future business.

In last month’s issue of Automated Buildings we could read about the Call Home Strategy from Scott Cochrane. It tells the tale about products already being connected and that the “phone-home” way of working is here to stay. He also discusses the risks inherent to the IoT/IT/OT/IP convergence with stuff getting to the cloud, and the classic Mexican standoff between IT departments and the surge in getting stuff connected.

Add to the facts that a lot of the products are being removed from action, even though their lifespan still has another decade because of lack of interoperability, connectivity. And, that the lock-in effects are still severe and are stifling growth, where owners want more control of their data and information.

• But what if there’s a way to get products connected from the OEM-side without the security risks mentioned?
• And that OEMs have an extremely valuable position in moving closer to the end customers, whilst creating better products and upselling in a sustainable way?
• Could this also lead to added value for the products and lowering the threshold of innovation for the total value chain?

How much of this is being done today?

“Phone-home” has never been this easy when entering the world of eSIMs.

It’s a fact that products today, as well as people, are born connected. Having products connected from the get-go will not only benefit the OEMs, but done right, everyone else that takes part in the value chain. It will lead to better products being built over time, as well as rapid feedback loops between the R&D departments and the users, extending the product life cycle, which in turn has the potential to minimize waste, impacting the world in a positive way through products that will last longer, and work better than the predecessors based on data-driven decision-making.

Three kinds of products

For simplicity’s sake, let’s think of products in three different ways.

1. Products with little to no connectivity
2. Products with added connectivity in place
3. Products that are born connected

The products with little to no connectivity are most of the products that are out there today. And when I say products, I mean the field controllers and edge gateways, but even more so the “traditional” equipment that haven’t been connected at all.

These aren’t connected in the slightest and they aren’t built for that purpose either. Feedback is taken in via the classic way of focus groups, re-actionary approach if something is broken and quite long feedback loops between the OEMs and the customers as well as the users. Market intelligence shows that most of the value is lost and there’s a lack of standardized feedback-loops between the OEMs and everyone else in the value chain.

The products with added connectivity are products that are made “smarter” by someone else than the OEMs further down the value chain. Could be a typical IoT-play where someone else wants to get the data out, make better decisions, and possibly also sell the usage-data back to the OEMs (Digital Twin play). The added connectivity allows for an extended product life-cycle due to continuous feedback based on accurate data in conversations with OEMs/technical support functions. It also adds potential for new markets requiring connectivity, and decision-making of how the product is being used in real time. This could be at an aggregated level, edge controller, or supervisory controller most likely, but also sensors and actuators.

However, the added connectivity play is still a challenge due to existing vendor lock-in and the challenges that comes with metadata-tagging being inconsistent across vendors and industries. The whole “pull-out-the-phone’s SIM, that’s a 90s- to now technology that’s not future proof in the slightest. And the Wi-Fi, direct to cloud- phone home is risky due to security concerns all around.

The products which are born connected have the possibility to solve a lot of the challenges prior to even becoming problems in the first place. Adding the possibilities for connectivity enables OEMs to get to a “Born connected” strategy which has many benefits. This is not only for the OEMs but also for the customers and other stakeholders in the total value chain. The benefits are the ones described above, but it’s also a paradigm shift on how things are done and will be done in the future.

I would argue that almost all products can, should, and will be born connected.

Utilizing eSIMs from the get-go enables OEMs and others to choose and change the connectivity providers in a much easier way than today. OEMs can offer more services out of the box to customers, either by themselves or through an ecosystem approach. They will have the possibility to get more information about the product, extend the product lifetime value, minimize complexity for the OEMs as well as the customers, get more value out of the value chain, innovate on top of the products in a standardized way leading to faster time to value creation for all.

Improving the continuous product-market fit and product life span

The “traditional products” that are mostly out there today have little to no connectivity options in place.

Figure 1. Illustration showing the relationship between connectivity and life-span, product market fit, automated ways of working and time to value creation

Figure 2. Illustration showing the relationship between connectivity and strategic decision making, control, increased lock-in effects and control.

The thoughts, the tech and the bullet points

Born connected products and strategies can lead to:

• A higher degree of transparent continuous product-market fit.
• Possibility to extend the product life-span as well as manufacture better products based on near to real-time data-driven decision making.
  
• Faster time to value creation, reducing cost and manual labour for data-gathering. Both for OEMs as well as customers further down the value chain, allowing OEMs to radically improve and innovate with business models, partners, cost structures, making more money through the entire product life cycle.
• Getting products connected from the start, with the correct partners, will (can?) lead to more control and strategic decision-making taking place much faster.
  
• This, in turn, leads to fewer lock-in effects and much less complexity where products are connected from the start requiring “only” a strong partner, or different skill-sets inhouse.
  

A better world for everyone?

Getting products to the stage where they are born connected can enable anyone to change the connectivity provider, offer more services out of the box to customers and a lot of other exciting things depicted above. This, in turn, will lead to the rise of MVNO’s, where 5G will become more and more interesting and Network Slicing will come into play for real.  This is an area which I love to talk about more and will be a game-changer for everyone. Network slicing will allow products to cater to demands demanding different kinds of data- and data speeds in an efficient way.

NEXT Generation HVAC Controls revolve around Open Standards, which we will be talking about at next year's AHR Expo in Orlando.

Players need to get acquainted with a much more open mindset where buzzwords will become the de-facto ways of working in the industry, such as:

• Having a data strategy
• An Ecosystems approach
  
• Disruptive business models
• Head of innovation and ecosystems thinking
• Creating new revenue streams such as HVACaaS
• Doing the right things instead of doing things right
• People as well as products that are born connected

And much else, incorporating all that I’ve written before below the surface.

Achieving organizational speed is on the agenda

OEMs and other companies need to look at the organizations they have and if they have the processes, the people, the culture, the hierarchy as well as the IT-infrastructure in place to capitalize on said opportunities. After all, technology is just technology. It’s all that other stuff that is much more important. Technology done wrong can quickly become a source of added complexity instead of the benefits promised by the hype in the industry. OEM’s and everyone else should take a hard look at where they are today, where the market is going and where they want to be as well as need to be in the next five years. There are a lot of things they can do, but perhaps more importantly, a lot of things that they shouldn’t do. This could also lead to added lock-in effects and everyone here need to tread smartly, perhaps even more so today than ever before.

With that said,

Think Big, start small, but above all else, start! And as always, reach out if you have any comments, questions or just want to talk smarter buildings!

Sincerely,

Nicolas Waern,

The building whisperer – making buildings talk to people.

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