Connected hardware value comes from cloud services, not commodity components
Avidan Ross · 20VC: Why The Engineer Will Replace The MBA As CEO, Why The Peace Dividends From The Autonomous Car Wars Will Generate More Value Outside of Transport & Why Old and Boring Industries Are The Most Exciting To Build In with Avidan Ross, Founding Partner @ R · Nov 5, 2018 · at 10:03
Avidan Ross, Founding Partner at Root Ventures, outlines the firm's thesis on hardware monetization, asserting that commodity hardware should be paired with recurring cloud services.
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“And when you're connected, you now have the opportunity to sell services. You get to interconnect your componentry to the internet. So think, for example, about a low-cost sensor is sitting out in the field. Now it has unlimited free connectivity into the cloud. The cloud now has extreme amounts of compute, and with that computation, you can now take information coming from the end node or from the edge, connect it to all of the other sources of information out there in the world, and make the most intelligent decision possible or provide a service to the end node so that your nest Is doing the ultimate decision making about when to turn your thermostat on and off based on knowing not only the weather forecast, but the historic information for how your house performs based on turning the temperature up and down to optimize for savings. So that, that is something that is not about the commodity component, but instead the ongoing services provided. So many people are able to charge a premium for that ongoing service.”
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