Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?

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ecosystem

  • 2 Often Overlooked Factors that Impede Adoption of New Technologies

    A lot of great new technologies are introduced into the marketplace, only to flounder and fail to be adopted by users. In many cases, users’ failure to adopt new technologies is due technology providers’ failure to consider two important factors: ecosystem completeness and switching costs.

    Ecosystem Completeness

    Every technology introduced into the market offers users a particular value-in-context; that is, the technology enables users to generate value under specific conditions.

    Take, for example, an cellphone. For users to be able to generate value from a cellphone, they must have

    1. An cellphone,
    2. A charged battery (e.g., access to electricity services)
    3. Connection services (including a phone number), and
    4. Other people to call.

    All four of these pieces must be present simultaneously for the cellphone to provide value to the user. Conversely, if any of those four pieces is missing, then the cellphone provides no value.

  • A Data-Generating System: A Framework for Data Assessment

    Suppose I gave you, the Data Analyst, a dataset of information on sales of Ford automobiles, and suppose I told you to use that dataset to predict total national sales of Ford automobiles for next 12 months. What would you want to know about the data you were given?

    If you were given data with information on past sales of Ford automobiles, and if you wanted to use that information to come up with a forecast of future sales, you would want to know, for example,

    • Which regions of the country were included in the data,
    • Which models of vehicles were included,
    • Which time periods of sales were included, and
    • Which regions, models, and time periods were not included in the data for which there were Ford sales. That is, which sales data are missing from your dataset.

    More generally, you would want to know where the data came from, which information the data include, and which information you need to make your forecasts are missing from the data. To do a good job in forecasting future sales, you would also want to know such things as:

    • Was the economy strong or weak when the data were collected? If the economy was strong in the past but it is expected to be weak in the future, then you would expect sales to decrease.
    • You would want to know if Ford automobiles were easily accessible to customers. That is, for people who wanted to buy Ford cars, were there Ford dealerships close by and with vehicles in stock? If Ford cars are expected to become more readily available in the future, then you would expect sales to increase.
    • You would want to know if people who wanted to buy a car had access to other brands of similar cars. If other brands of cars are increasingly available, then that might decrease future demand for sales of Ford’s automobiles.

    In other words, you want to know about the environment in which the data you have were generated and how that environment might differ from the environment you expect in the future, during the time your sales predictions will take place. You must align (your data and your analysis) between (the environment you have and the environment you want to predict).

    A data-generating system is a concept I created to describe the process and environment from which data are generated. Understanding this system tells you, for example, which data were generated, how, when, where, and why the data were generated, and other factors affecting what the data look like

    A typical data-generating system looks like this:

    data system

    There are five main components of a data-generating system

    1. The Content Provider provides content to Customers
    2. The Data Collectorcollects data from Customers. The Data Collector decides which information to collect, how to collect it, and from whom.
    3. The Customer “provides” or “generates” data, for example, by buying products, consuming content, or providing feedback.
    4. The Client or Data Analystuses data collected by the Data Collector from the Customer to perform analyses.
    5. The Context and Environment are all the factors in the background or setting that affect the information that ends up being collected by the Data Collector from the Customer.
  • Are Device – Content Systems Moving Towards Compatibility or Incompatibility?

    Public vs. Private Information on the Internet

    Does Hardware Drive Software, or Vice Versa?

    Why Have Past Consortia for Compatibility Failed, and Why Would DECE Now Succeed?

    So Are Device-Content Systems Moving Toward Compatibility or Incompatibility?

     

    There are two trends occurring in the digital world that seem to be at odds with one another.  The first is that towards incompatible hardware/device – software/content ecosystems and the other is towards compatible ecosystems.

  • Assessing the Ban of 500 and 1,000 Rupee Notes

    On Tuesday, November 8, 2016, India’s Prime Minister, Narendra Modi, announced that he would pull 500 and 1,000 rupee currency notes from circulation. The move is an attempt to nullify untaxed (“black”), corrupt, and counterfeit currency. Eventually, new bills will replace the old ones, but in the meantime, only low value notes will be considered legal tender. As The Indian Express, “Rs 500, Rs 1000 currency notes stand abolished from midnight: PM Modi” reports:

    In a major step to check black money, Prime Minister Narendra Modi on Tuesday announced demonetization of Rs 500 and 1000 currency notes with effect from midnight, making these notes invalid in a major assault on black money, fake currency and corruption. In his televised address to the nation, Modi said people holding notes of Rs 500 and Rs 1000 can deposit the same in their bank and post office accounts from November 10 till December 30.

    How reasonable a policy is this? That is, will it accomplish its purpose while minimizing collateral damage?

  • Attracting Mainstream Consumers to Medical Cannabis

    The US medical cannabis market is currently in its early stages of adoption: the market has gained some penetration, but not enough to warrant adoption by the early majority, that is, more mainstream users. My book, Winning the Hardware-Software Game, describes the technology adoption lifecycle in detail. A brief summary and illustration (Figure 1) of the technology adoption process taken from the book indicates:

    [T]he consumption lifecycle of a new innovation entails adoption by four general groups of users: (1) innovators and early adopters, risk takers, who are attracted to novel innovations that offer new and different features and capabilities; (2) the early majority, who are more deliberate in their purchasing decisions, requiring bug-free products whose value has been validated by early adopters; (3) the late majority, a skeptical lot, who demand low prices and large amounts of product support; and finally (4) laggards, the traditionalists, who adopt new innovations only when forced to do so.

    Figure 1

    tech adoption

    By understanding the wants and needs of majority adopters, we can ask: how must the medical cannabis market evolve to become amenable to adoption by more mainstream users?

    Our goal is to surmise the wants and needs of more mainstream adopters. We can achieve this, first, by considering how cannabis provides value to those adopters. Once we understand the value proposition, we can then determine how the market will evolve to increase value to users.

  • Cannabis Industry Rollouts: Lessons Learned from States’ Experiences

    Bart Schaneman from MJ Business Daily recently released, “2020 Cultivation Snapshot: U.S. Wholesale Marijuana Prices & Supply.” The information contained in the report helped cement certain insights I’ve had about the evolution of the cannabis market.

    Background info

    In addition to the myriad other laws and regulations, all states essentially have two basic requirements:

    • Transportation: Transportation between licensed suppliers (Growers, Processors, Testing Labs, Retailers) must be carried out by licensed Distributors
    • Lab Testing: All cannabis products must pass Lab Testing before being sold by Retailers

    There are thus two possible paths to market (see Figure 1):

    • Flower: 1 → 2A, if pass testing regulations, then → 3A → 4A
    • Everything Else: 1 → 2B → 3B → 3B, if pass testing regulations, then → 5B → 6B

    Figure 1

    1 mj supply chain vert 

  • Considerations for a Single-Payer Healthcare System in the US

    This analysis considers how the US healthcare system would change if we were to transition from the current multi-payer system to a single-payer system. The analysis first presents facts that will be important in considering what a single-payer system might look like. Then, given these facts, the analysis considers specific issues about the transition. 

     

    Facts

    1. Four factors affect a person’s risk of premature death.

    Behavior, genes, environment, and healthcare services are the four factors that Impact people’s risks of premature death (Kaiser Family Foundation) (see Figure 1).

    Figure 1

    1 impact factors on death 

    (i)  Behavior: 40%

    From Kaiser Family Foundation: “Health behaviors, such as smoking and diet and exercise, are the most important determinants of premature death.”

    According to OECD, “Health at a Glance 2015”

    While genetics is a risk factor, only about 5% to 10% of all cancers are inherited. Modifiable risk factors such as smoking, obesity, lack of exercise and excess sun exposure, as well as environmental exposures, explain up to 90-95% of all cancer cases.

    (ii)  Genes: 30%

    (iii)  Social and Environment: 20%

    Figure 2 (from Kaiser Family Foundation) displays specific social and environment factors contributing to health.

    Figure 2

     2 social determinants

    More from the OECD report:

    Recent analysis shows that, although overall spending on social services and health care in the United States is comparable to other Western countries, the United States disproportionately spends less on social services and more on health care.

    (iv)  Health Care: 10%

  • Creating Price Transparency for Outpatient Surgery Will Help Align Patient Expectations and Improve Patient Outcomes

    Current Doctor-Patient Communications Involve Miscommunications

    Suppose a patient damages his knee. He goes to see an Orthopedic Surgeon. The surgeon conducts some tests and concludes that the patient has torn his meniscus and needs arthroscopic surgery to fix it (see Figure 1)

    Figure 1

    1 mensicus

    Source:http://www.newhealthguide.org/Meniscus-Surgery-Recovery-Time.html

    After informing the patient of this, the patient then asks the surgeon, “How much will this surgery cost me?”

    The surgeon replies to the patient’s question with something akin to, “I have no idea,” or “I can’t tell you.”

    That simple statement goes a long way towards killing the patient’s trust of the doctor. And without trust, patients are less likely to comply with the doctor’s recommendations, which, in turns leads to worse patient outcomes, less satisfied patients, fewer patient referrals, and more billing disputes.

    And all this happens due to a miscommunication between the surgeon and the patient.

  • Electric Vehicles and Social Welfare

    Terminology/Technical Information

    Players in the Electric Vehicle Game

    Current Stages of Adoption of Electric Vehicles

    Advantages and Disadvantages of Electric Vehicles

    Energy Inputs and Emissions Costs of Electric Vehicles

    Should the Construction of Electric Charging Stations be Subsidized by the Public?

     

     

    A recent article in the WSJ, “U.S. Utilities Push the Electric Car” by Cassandra Sweet, notes that electric companies nationwide are seeking to charge electricity consumers extra fees to fund construction of electric vehicle charging stations by the electric companies. The rationale is that having more charging stations available will speed adoption of electric vehicles by consumers, thereby leading to fewer pollutant emissions, and thus higher air quality for everyone.

    Should all electricity consumers be required to pay the construction costs of electric vehicle charging stations?

    The answer to this question requires understanding the underlying distribution of the private and social costs and benefits associated with manufacture and use of conventional versus electric vehicles.

  • Has the Time for Electric Cars Finally Come?

    A recent article in the NYT, “Sites to Refuel Electric Cars Gain a Big Dose of Funds” by Nelson D. Schwartz,described the latest development in the evolution of the market for electric cars:

    Better Place, the closely watched start-up that hopes to create vast networks of charge spots to power electric cars, is set to receive a vote of confidence on Monday, in the form of $350 million in new venture capital.  Although Better Place will most likely require billions more in financing, this investment is an important step for the company...

  • Is Apple's Ecosystem Successful Because of or In Spite of Apple?

    Does Apple Dominate the MP3 Player & Smartphone Markets?

    Apple iPod & iPhone Sales Timeline

    How Did Apple Manage the Growth of Its Ecosystem to Create Value?

    Would Even More Value Have Been Created If Apple’s System Had Been Open?

     

    A recent article in Newsweek, “Think Really Different” by Daniel Lyons, laments the fact that Apple’s ecosystem is a closed system, which represents paradigm shift from the prior, open system the PC industry and post-Internet world had evolved into:

  • Is the Autonomous Vehicle Ecosystem in Balance?

    The Technology Triangle

    Years ago I attended a meeting on intellectual property (IP). One of the speakers, a sharp IP attorney named Pat Ellison, gave a talk, which greatly resonated with me. He said that a successful technology requires a balance between technology, business, and law, as represented by the triangle in Figure 1. (I recently contacted Pat about the origin of this idea and he said he was fairly sure that the idea was developed collaboratively with others, but he couldn’t remember who the other contributors were.) Very succinctly, descriptions for the requirements are:

    • Technology: The technology must work well.
    • Business: The technology must be cost effective, that is, is must able to be manufactured and sold for a profit.
    • Law: The legal and regulatory underpinnings of the technology, including intellectual property foundations and liability issues, must be sound.

    A successful technology will exhibit balance in each of the three areas in the sense that if any of the three is too weak – the technology doesn’t function well, the technology cannot be sold for a profit, and/or the intellectual property is invalid or ineffective or other regulatory issues have not been settled – then the technology will not become commercially successful.

    Figure 1

    balance1

  • Overview of Technology System Dynamics

    This is a presentation I’m preparing for “Tech Startup Conference: Artificial Intelligence” being held on September 26, 2017.

    1. Issues Covered

    • Adoption of New Technology Systems: What does it take for new technologies to become successfully adopted in the marketplace? Why do some technologies become adopted while others do not?
    • Value Creation: How do the components of the system combine to create value for the different players? Can the environment be changed so that the system will create more value?
    • Value Extraction: How much value does each player extract? In particular, are players extracting as much value from the system as they can?
  • Playing the Marijuana Market Transition Game

    Download PDF

    Timeline of US Marijuana Laws

    California Is Different from Other Legalized States

    Description and Implications of CA Legislation

    Marijuana Supply Chain Regulations and Realities

    Players of the CA Market Transition Game

    CA Market Evolution to Date

    Future Market Evolution

     

    California is currently transitioning from illegal and semi-legal markets for marijuana to legal markets. The black and grey markets for marijuana in California are enormous in both size and scope. For the State to successfully transition to a legal market, it must reign in the size and scope of black market activity. Will the State be able to do this?

    Key players in the Marijuana Transition Game include:

    • State and Local Governments
    • Marijuana Growers
    • Marijuana Distributors
    • Marijuana Dispensaries/Retailers
    • Recreational Users
    • Medical Users
    • Black Market Suppliers

    This analysis examines how the market has evolved to date and how we think the market will continue to evolve in the future.

  • Playing the Over-the-Top Content Game

    To download a pdf copy of this post, click on the attachment below.

     

    History of Cable

    Away from Cable and Toward Over-the-Top

    The Over-the-Top Game

    Issues and Strategies

     

     

    The recent announcement of the AT&T – Time Warner merger has generated a flood of press. There is much skepticism about whether the companies will be allowed to proceed with the merger. Regardless, the underlying trend that spurred the desire of the two companies to merge – the increasing prevalence of over-the-top content – will continue.

    Since the advent of broadband internet in the early 2000s, users have been increasingly dropping their cable TV services in favor of accessing à la carte content over the internet, from such providers as Hulu, Netflix, and Amazon Prime. Such over-the-top (OTT) content has been wreaking havoc on cable companies’ bottom lines. In response, cable companies have been increasingly buying up content providers and creating their own original content in order to better compete with OTT content providers.

    This analysis examines the OTT Content Game, in particular,

    (i) How will OTT content continue to evolve? and

    (ii) How will cable companies respond to the increasing prevalence of OTT content?

  • Playing the Platform Game

    The purpose of this analysis is to better understand the dynamics of internet platforms. The analysis considers the three basic types of platforms:

    • Vendors (WalMart, Apple, Pandora, etc.)
    • Social Media (Facebook, LinkedIn, YouTube, etc.)
    • Matchmakers (eBay, Uber, etc.)

    And will seek to address such issues as

    • Who are the different players in each type of platform game? 
    • How do the players' actions combine to generate value in each type of game?
    • Who extracts what value?
    • Which types of platforms and configurations have the greatest value potential? 
  • Playing the Virtual Reality Game

    Key Concepts

    Before we can understand the issues related to 360°, 3D, AR and VR technologies, we have to understand some key concepts.

    Immersion and Presence

    The goal of 360°, 3D, AR and VR technologies is to immerse users in an environment, so that they feel they have been “teleported” to this new locale and are actually present in this new world. Achieving immersion and presence requires that the brain be fooled by the senses into believing it is somewhere that it really is not.

    Here are descriptions of immersion and presence by some other sources:

    Reality Technologies:

    Total immersion means that the sensory experience feels so real, that we forget it is a virtual-artificial environment and begin to interact with it as we would naturally in the real world.



    Virtual reality immersion is the perception of being physically present in a non-physical world. It encompasses the sense of presence, which is the point where the human brain believes that is somewhere it is really not, and is accomplished through purely mental and/or physical means. The state of total immersion exists when enough senses are activated to create the perception of being present in a non-physical world.



    a sense of immersion (i.e. convincing the human brain to accept an artificial environment as real).

    iQ by Intel:

    … presence: “The unmistakable feeling that you’ve been teleported somewhere new.

    VR Lens Lab

    … presence. That is, the ability to take you somewhere other than where you really are, and trick your mind into believing it.

    Jonathan Strickland at How Stuff Works

    In a virtual reality environment, a user experiences immersion, or the feeling of being inside and a part of that world.

  • The Current State of Electric Vehicles Part 1: Electric Vehicle Battery Basics

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    The following are the essential factors at issue when considering batteries for use in powering electric vehicles:

    Amount of Energy that Can Be Stored

    The batteries of any given size that are able to store the greatest amount of energy in terms of both weight (specific energy) and volume (energy density) of the battery are the most desirable (efficient) to power electric vehicles. Perhaps the largest current disadvantage in terms of the state of battery development for electric vehicles (EVs) is the fact that currently EVs cannot go very far without having to have the battery recharged, creating so-called range anxiety. Lower battery range would be less of a problem if (i) there were more fueling stations around (currently there are very few refueling stations), and/or (ii) it didn’t takes so long to recharge the battery (20 minutes to several hours, depending upon the technology of the charger). Currently, EV manufacturers are working fiercely to increase both the specific energy and/or energy density of batteries for EVs so as to achieve greater vehicle range.

  • The Current State of Electric Vehicles Part 2: The Earliest Electric Vehicles (Hybrids) Used NiMH Batteries

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    The relationship between specific energy and energy density for various types of batteries are presented in Figure 1, which was taken from Justin Amirault, et. al. “The Electric Vehicle Battery Landscape: Opportunities and Challenges”

    Figure 1

  • The Current State of Electric Vehicles Part 3: Electric Vehicles Now Use Lithium-ion Batteries

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    From the beginning, the biggest problem facing all-electric vehicles has been their short range, that is, they cannot go very far without having to recharge their batteries. Since lithium-ion (Li-ion) batteries offer the greatest energy capacity and density of all the batteries, and thus the greatest potential for longer range, Tesla chose to use Li-ion batteries to power its first all-electric vehicle, the Tesla Roadster. As Tesla notes:

    Tesla battery packs have the highest energy density in the industry

    ...

    Nickel Metal Hydride (NiMH) batteries are commonly used in hybrid cars. However, a 56 kWh NiMH battery pack would weigh over twice as much as the Roadster battery. Instead, Tesla uses Li-ion battery cells which dramatically decrease the weight of the Roadster pack and improve acceleration, handling, and range.