Archive for November, 2017


Kaleido Insights’ Impact Analysis on Aerial Drones

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By Jeremiah Owyang, Jaimy Szymanski, Jessica Groopman, and Rebecca Lieb of Kaleido Insights.

Drone swarm. Image from the Internet of Things Institute.

Drones aren’t just for sci-fi stories anymore. They have practical applications for the military, enterprise businesses, and consumers, and are gaining ever more traction with all segments. But this shift has much broader implications.

Kaleido Insights’ methodology for analyzing emerging technology assesses the impacts on humans, on businesses, and on ecosystems at large. As part of our ongoing coverage, we’ll be analyzing a series of topics using our methodology to help business leaders first understand, and then see beyond the bright and shiny and cut right to what matters.

In each post, all Kaleido Insights analysts conduct a joint analysis session around one topic (e.g. technology, event, announcement, etc.). In this post, we analyze the ecosystem impacts of drones.

Topic: Drones

Examples: Airobotics, DroneDeploy, Skycatch, DJI, Parrot, Zipline

Impact Analysis: Ecosystem

Market Adoption

The three main segments that currently use drones are the government, enterprise businesses, and consumers. Each segment has adopted the technology at different speeds and for different reasons.

With the government, the military is an early government adopter of drone technology, and is primarily associated with two types of drones: unmanned aerial vehicles (UAVs) and swarms. Enterprise businesses have been slow to adopt drones, but there is an uptick in their adoption rates. Companies like Amazon are filing patents on drones, and industries including agriculture, real estate, and health supplies are using drone technology to operate more efficiently. Even Domino’s Pizza generated buzz last year for delivering a pizza by drone. Drones are also becoming increasingly attractive to end-consumers, mainly hobbyists, due to drone prices dropping and their availability in smaller sizes.

While the drone market is growing, it’s difficult to quantify the growth rate for a couple of reasons. One factor is because there isn’t a consensus on how to define a drone. According to research conducted by Gartner, drone unit sales grew an estimated 60 percent to 2.2 million last year, with revenue increasing 36 percent to $4.5 billion. Data put out by the Consumer Technology Association suggests that hobbyist drones doubled in sales in the U.S. from 1.1 million sold in 2015 to 2.4 million in 2016.

Competitive Shifts

Drone technology is displacing current operational models across sectors. In the mail and package delivery industry, companies like UPS and DHL are confronted with the possibility that drones may do the work of their drivers. Taxi cabs and ride-sharing services are being manned by autonomous cars. Google’s Project Loon is delivering Wi-Fi through balloons.

Image sources: Mercedes BenzBusiness Insider.

But the market is responding to these shifts. One example is with Mercedes Benz, which developed a concept of a self-driving van that also acts as a hub and charging station for drones that can deliver goods. Another example is with advertising. Intel used out-of-home (OOH) advertising to spell INTEL with 500 drones at the Super Bowl. Advertising agencies like DroneCast and Hoovy offer “drone-vertising” services. And a Singapore advertising agencyran a test that used drones for hyper-local data collection through public Wi-Fi signals to target customers with contextually relevant, localized ads. Use cases for this type of data collection include surveillance, payload delivery, and military. In addition to advertising, drones are even being used by professional and hobby photographers to capture aerial views.

Supply Chain

Drones have the potential to offer significant advantages for supply chains. They can offer last-mile and same-day deliveries, helping foster a positive customer experience due to speedy deliveries. Drone fleets can also be used to track warehouse inventory using RFID tags, helping to track and reduce the number of lost supplies. The U.S. Army lost track of $5.8 billion of supplies in its warehouses between 2003 and 2011 and in 2015, the U.S. National Retail Federation reported losing track of an average of $45.2 billion of items annually.

Ecosystem Partnerships & Integrations

Image sources: CIO Bulletin.

The practical applications of drones are driving companies to enter industries and create partnerships that may not have been perceived as a natural fit in the pre-drone era. In 2016, Zipline entered the medical arena by partnering with the Rwandan government to deliver medical supplies via drones. An early commercial test cut the amount of time for a medical facility to obtain blood from four hours to 15 minutes. After success in Rwanda, Zipline is now partnering with the Tanzanian government to offer similar, life-saving services beginning in 2018. But the partnership doesn’t end there. Now UPS is working with Zipline and the Gavi-Alliance to provide logistics expertise to help Zipline deliver medical supplies in remote areas.

Drone technology is also being developed by e-commerce giants. Companies like Amazon are developing drones to safely deliver packages to customers in 30 minutes or less. China’s second largest e-commerce company, JD.com, is developing a drone that can deliver loads weighing one ton or more.

In order for this technology to be fully realized, drones will need to be autonomous, moving safely on their own. Companies are already working on this problem. Microsoft, for example, created open source software, available on GitHub, to train drones and self-driving cars on real-world conditions, including shadows and reflections.

Related to safety, Amazon is asking the government to designate special airspace for them to fly their drones at an altitude that separates it from commercial and military flights. Qualcomm is testing drone technology at their FAA-authorized UAS Flight Center. This is a test environment that replicates real time conditions in commercial, residential, rural and FAA controlled airspace. In Denmark, the International Test Center & Clusterincludes dedicated airspace nearing 540 square miles that covers land and sea.

Drones also have the ability to collect information at the ‘big data’ level by capturing images of homes and landscapes, which can then be used in innovative ways. Technology patented by Amazon would allow the company to scan and collect data from the houses their drones pass, which could then be used to let customers know if they have a damaged roof or sick trees. And companies like Skycatch use drones to survey property and turn the data into maps and 3D models.

Aerial drones also have implications for defensive measures. They can monitor the landscape for security and safety in terms of border control, police activity, customs, civilian protection, natural disasters, and environmental protection. Moreover, a counter-drone industry has emerged with about 70 companies working on the goal of disabling or shooting down other drones.

Developer Ecosystem

Open source drone projects are now a major method for developing drones for a number of reasons, including the ability to rapidly develop features and functionality, the cost-effectiveness, and their ability to provide a community where bugs can be resolved quickly. DroneCode Project, owned by the Linux Foundation, is one of the main players in the open source realm. But private companies have their own open source ecosystems, too, like Microsoft(mentioned earlier in this article) and DJI.

One key area that developers and researchers will need to address is in creating autonomous drones, ones that know where they are, what is is in their path, and can then use this information to move safely and correctly. This technology, called Simultaneous Localization and Mapping (SLAM) is being addressed by companies like Exyn Technologies and Parrot. In conjunction with SLAM, drones will need to be able to communicate with one another so they don’t collide. Qualcomm is testing 5G cellular technology for this purpose.

Sustainability and Societal Impacts

While drones offer the potential for a multitude of benefits, they also encompass drawbacks. A large issue revolves around privacy, with concerns that sensitive information or geographic areas may be captured from aerial drones and shared with unwanted parties, or that people may be spied on with facial recognition software. Physical safety is another area to consider when drones are used near airports.

Drones also have an impact on the environment in terms of noise pollution. A preliminary study from NASA indicates that a drone’s buzzing is perceived to be more annoying to people than automobile noises, even when the volume is held constant. This confirms the demand for quieter drones which are now entering the market.

Many drones are currently powered by lithium batteries, which aren’t ideal power sources for a couple of reasons. First, they must be disposed of at special recycling centers due to their negative impact on the environment. Second, they don’t generate enough power for drones to reach their full potential. Some alternative power sources that are being considered are oil-fired engines, a hybrid gasoline/electric solution, and hydrogen-burning fuel cells — not all of the alternatives under consideration are “clean energy.”

Market Funding

There are several corporate funders on the drone scene, with the big ones being Lux Capital, Qualcomm Ventures, Andreessen Horowitz, and Felicis Ventures. As of March of this year, the Wall Street Journal reported that venture capitalists already invested $200 million on the global drone market. Some of this money is being funneled into services that track and deter drones that are being used for negative purposes. Droneshield is an example of a company that provides drone deterring services.

There is also an opportunity for drones to receive funding for sports and entertainment. Amateur drone racing through the Drone Racing League (DRL) raised $20 million in Series B funding from Allianz, Sky, Liberty Media Corporation (owner of Formula 1 racing brand) and Lux Capital. More than 75 million fans watched DRL races, either online or on TV through networks like ESPN.

International Regulatory Regimes

With the rapid pace of drone technology advancements and more end-consumers using the technology, some governments are requiring drone registration and others are partnering with the private sector to use drones effectively. In the U.S., the FAA has the “line of sight rule,” which requires drone operators to keep unmanned aircrafts within their line of sight at all times, along with rules for pilot certification in instances where drones weigh more than .55 pounds. Many states also enacted their own laws to protect privacy and prevent interference with hunting. The Portuguese government is planning to introduce “free zones” where drone technology can be developed and tested more easily through special regulations and investment incentives. And, Amazon is partnering with the UK Civil Aviation Authority to test drones for Prime Air delivery service, which goes beyond line of sight in rural and suburban areas.

Like mobile phones, drones offer a growing ecosystem and are following the smartphone app/developer model. But, before the drone industry can realize its potential, it faces a few barriers it needs to address. First, drone data needs to be able to integrate within a network and drones must be able to coordinate with one another (drone to drone communication). Then, there are the physical limitations: sun/weather/wind/battery. And finally, drones set up many legal and regulatory issues because the technology will move faster than regulators can move, meaning the drone space will continue to be wild west.

Kaleido Insights’ Impact Analysis on Virtual/Augmented/Mixed Reality

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By Jaimy Szymanski, Jeremiah Owyang, Jessica Groopman, and Rebecca Lieb of Kaleido Insights.

Virtual Reality Headsets. Image From Heavy.com

As VR/AR/MR make their way into the corporate ecosystem, positive impacts and operational efficiencies abound. From sales and service; to HR, safety, and training; to engineering and product development, teams feel their wake and harness the power of informational overlay.

Kaleido Insights’ methodology for analyzing emerging technology assesses the impacts on humans, on businesses, and on the ecosystem. As part of our ongoing coverage, we’ll be covering a series of topics using our methodology to help business leaders first understand, and then see beyond the bright and shiny and cut right to what matters.

In each post, all Kaleido Insights analysts conduct a joint analysis session around one topic (e.g. technology, event, announcement, etc.). In this post, we analyze the business and organizational impacts of virtual, augmented, and mixed reality.

Topic: VR/AR/MR

Examples:
Oculus Rift; HTC Vive, Playstation VR, Google Cardboard, Microsoft Hololens, Samsung Gear VR, other plug-and-play smartphone options

Impact Analysis: Organizations & Business

Business Opportunities and Use Cases
As VR/AR/MR have permeated business environments, leaders are recognizing that opportunities reach beyond video gaming and novelty. VR/AR/MR have a place in every industry, with multiple use cases. Many of these use cases require interoperability with other technologies to reach full potential, including artificial intelligence (AI), computer vision, wearables, drones, 3D-printing, facial recognition, and more.

  • Immersive training and education. Organizations have the opportunity to use VR to train employees — either onsite or remotely — in virtual, simulated worksite environments. Consider options in scaling complex equipment, repair, or other training programs to multiple employees at various locations. EON Reality is experimenting with McDonald’s on a training program that immerses potential employees in a restaurant kitchen to train in a virtual environment. VR training is also effective in immersing trainees in high-pressure or otherwise dangerous scenarios. There are AR/MR education opportunities to train employees on-the-job using visual informational overlay via augmented reality glasses or similar technologies. This effectively brings a catalog of contextual product and merchandising data to the forefront of employee access. There are numerous examples of surgeons and doctors using VR and AR for complex surgical training.
  • Skills, Operating, and Repair Guidance. Augmented and mixed reality shine in their facilitation of efficient employee guidance while performing difficult or heavily information-dependent skills, operating machinery, or repairing equipment. Viewed as a visual overlay to the real world via AR glasses or specialty headsets, mobile phones, or tablets, AR expands information about physical equipment that is useful to employees. This may include procedural directions, machine models, serial numbers, repair parts, operating manuals, and more. For example, Caterpillartechnicians are outfitted with Hololens and AR-equipped tablets (see image below) to provide informational overlays to increase repair efficiency and accuracy.

Image Sources: Caterpillar Inc.’s YouTube Video, “Augmented Reality Brings Data to Life at Caterpillar” and the Internet of Things (IoT) Institute

  • Engineering Planning and Product Development. VR gives organizations the opportunity to understand products, parts, and machinery before they hit production. By creating 3D models that can be explored via virtual reality software and hardware, engineers are able to better predict potential design issues, collisions among other parts or equipment, plan for ergonomics of employee operations, and steer clear of potential safety concerns. Using VR, manufacturing design and engineering transforms from reactive to proactive, allowing for entire teams to easily weigh in on the process before any real-world applications are implemented.
  • Sales and Marketing Engagement. Virtual reality can also be used as both a technical sales and consumer sales tool. In industrial capacities, VR offers the ability to view intricacies of machinery, parts, or tooling before a purchase order is signed. This builds bridges between those designing the technologies and equipment with less technical buyers. By creating proofs-of-concept in VR, sales prospects are immersed and influenced in a deeper way during design reviews. Looking toward consumer focused AR, retailers like Uniqlo (see image below) are experimenting with virtual dressing rooms, allowing customers to “try on” clothing without ever disrobing, and Ikea is well-known for its AR app that places furniture into the homes of its customers. Imagine the opportunity for a service like StitchFix to create a virtual stylist environment for customers to access their monthly shipments and try them on (with potential for upselling) before the physical clothing is even sent.

Above image: Uniqlo’s “Magic Mirror” augmented reality experience

  • Immersive Storytelling. From the New York Times, to Charity Water, to Save the Children International, VR has been used to tell more gripping and emotional stories in immersive environments. VR/AR/MR are growing in organizational content marketing strategies as another channel to voice brand promise, promote new products and services, and raise awareness for causes. These technologies are also being used to augment tourist experiences in new ways, as Disney World is readying a Star Wars VR experience to launch next year.

Business Models
We’ll see VR/AR/MR enhancing existing business models via enabling new revenue streams in new channels. There are also significant opportunities to achieve cost savings in maintenance, repair, and design. There may also be business model potential in creating goods in virtual or augmented environments and either a. ordering them for real-world shipment or b. 3D-printing them at home. New communications models are already emerging to meet friends in virtual reality spaces, as is possible in “Rec Room” on the Steam network for HTC Vive. Look for new opportunities to emerge in the travel space as well, when VR users can virtually visit exotic locations for a price.

Organizational Structure and Leadership
VR/AR/MR pushes the internal departmental boundaries at organizations that are not equipped to rapidly innovate and harness the power of disruptive technologies. The lines will continue to blur between digital, marketing, IT, and innovation groups as a greater focus on CX and EX (employee experience) rises from new VR/AR/MR implementations. The rise of the “Innovation Center of Excellence” gives way to quicker VR/AR/MR initiative development when multiple business units are working in synchronicity. The first department to deploy VR/AR/MR will depend on its use case (e.g. if it’s consumer-focused, it will likely be marketing, whereas if it’s training focus it may sprout from a partnership between IT and HR).

Change Management
As with any disruptive technology, expect push-back from older generations or late adopters who have not yet found a valuable use case for VR/AR/MR in their lifestyle or career. These technologies begin to (or, fully, in some cases) replace human-to-human, real-world interactions, as well as require new user skillsets, which can be difficult for employees to embrace. In corporate environments, utilizing training and education programs around on-the-job VR/AR/MR use cases that make work easier, more efficient, or save money can be an effective foray into catalyzing change management and helping ease employees into their use.

Another popular challenge related to change management is that VR/AR/MR technology is initially viewed as a novelty. Companies may receive mixed reception from customers and prospects as to the viability of VR/AR as an engineering/design/sales tool. They’re intrigued by the possibility, but not convinced of its value or capabilities. Only through assigning measurable objectives, regular experimentation, learning, and failing fast, can organizations quickly prove its value.

Data Lifecycle
In the world of relatively nascent VR, the provider with the most content ultimately wins. This reward typically falls to one in the headset monopoly of Oculus Rift, HTC Vive and Playstation VR (of which, Vive sees greatest developer popularity). Consumers choose the headset that offers the content they desire, and companies follow suit in the “what can you do for my use case?” mindset. AR/MR are broader and more accessible across devices, as the associated hardware is most often a mobile phone. Apple’s AR Kit has also democratized development with its accessibility and ease of use.

Process, Governance, Compliance
Internal process and governance around VR/AR/MR initiatives will depend on the use cases established. In terms of compliance, we foresee the biggest hurdle being consent in regard to AR/MR, especially on a global scale where protecting individual privacy and identity can be paramount to a country’s culture. When anyone can use AR/MR facial recognition features, or overlay data on their environment, compliance is difficult to enforce at every level of consumer, employee, and ecosystem interaction.

Measurement
Specific metrics attached to VR/AR/MR are dependent on the business use case established for the technology within an organization. Sample metrics may include:

  • Decrease in accidents on trained scenarios
  • More efficient repairs and installations
  • Reduced maintenance costs and shop-floor collisions
  • Reduced rework on jobs over time
  • Increased profitability on programming tools and fixtures
  • More efficient use of time on redesigns (less total redesigns)
  • More efficient troubleshooting
  • More complete design back-ups
  • Increased sales and more satisfied customers due to involvement in VR process

Challenges & Risk Mitigation
Companies misunderstand technology needs and costs associated with virtual reality. Even if starting small and understanding minimum technology requirements, bringing VR/AR/MR into a facility requires costs in hardware (both computers that can handle the necessary operating load and the actual hardware headsets, glasses, immersive cubes, screen panels, etc.), as well as software. Finally, virtual reality presents new challenges to content marketers who are not accustomed to non-linear storytelling that requires multiple scenarios vs. a start-to-finish script. Machine and deep learning will prove to be continually useful in helping generate infinite scenarios in immersive storytelling.

This is just one of the myriad technologies creating new uses cases for business and consumer adoption and value. And, these are just a few of the many impacts on organizations today. Kaleido Insights’ analysts are tracking these and other technologies closely to help you find clarity amidst the chaos. Interested in discussing the impacts of VR/AR/MR­­ — to your customers, business, or ecosystem? Our industry analyst Jaimy Szymanski is looking for interview participants for an upcoming report on VR/AR/MR enabling the “super employee” experience. Contact her here, or reach out via Twitter.