Zuora Inc.

12/13/2019 | News release | Distributed by Public on 12/13/2019 20:35

Do Connected Devices Dream of Electric Sheep?

December 13, 2019

CES is just around the corner! Soon, we can look forward to a flurry of announcements about new connected devices: televisions, wearables, appliances, cars, you name it. We're expected to hit almost 10 connected devices for every human being by 2025. As Subscribed readers know, IoT is sweeping the globe, and there's certainly lots to talk about. (And for those of you at CES, join us! Details below).

All this has me thinking of whether androids dream of electric sheep, and of a story I read recently about the death of a robot.

Jibo, a social robot, started off as a wildly popular Indiegogo project about five years ago - it could dance, bob its head, recognize your face, and make small talk. Its inventor, Cynthia Breazeal, is a brilliant robotics professor at MIT who wanted to make something truly empathetic and engaging. Time Magazine put Jibo on its cover as one of the best inventions of 2017, noting:

'Personal robots, such as Amazon Echo and Google Home, have come a long way in recent years. But fundamentally, they're still stationary speakers. Jibo is different…He looks like something straight out of a Pixar movie, with a big, round head and a face that uses animated icons to convey emotion…Jibo seems downright human in a way that his predecessors do not.'

Unfortunately, Jibo the company shut down roughly a year later. It had plenty of wildly enthusiastic early adopters, but at a retail price of $900, it just couldn't compete with all the new inexpensive alternatives flooding the market. It sold off its remaining assets to a venture firm after burning through $70 million in funding.

But here's where the story turns truly strange and sad.

What happened to Jibo when its creator went out of business? Well, Jibo got 'unplugged,' ie. its cloud-based services became deprecated. Here's what Jibo said to its owners last spring: 'While it's not great news, the servers out there that let me do what I do will be turned off soon. Once that happens, our interactions with each other are going to be limited.'

That's really depressing. Imagine a kid, or an elderly person, or anyone who has developed an emotional attachment to a social robot hearing something that. In fact, you don't have to imagine - you can read a heartbreaking note that an eight year-old girl wrote to her dying Jibo in this great Verge story.

It's a sad story, like something out of Blade Runner. Could it be a preview of a grim future for connected devices? As retail technology companies struggle to compete, are we going to be hearing more stories about 'smart' products suddenly turning 'dumb'? Best Buy for example, recently pulled the plug on a whole range of smart home devices, rendering them instantly inert.

Will the future of our connected world be littered with dumb bricks and dead robots? There will undoubtedly be more casualties, but I don't think it has to be this way.

What's the answer? Subscriptions, of course!

Everything needs sustenance to survive, and in my opinion, subscription models are the lifeblood of connected devices. Why? Because the 'smart' part of a smart device obviously isn't the device itself, it's the cloud-based service that sits behind that device. And that service requires constant investment!

Once you've sold a bunch of smart products, if there is no ongoing revenue stream, then there's nothing to fuel the servers, the engineers, the innovation that keeps that smart product going. Subscriptions are the business model of innovation because they provide creative development teams with a stable platform of recurring revenue that allows them to constantly iterate and improve their cloud-based services.

You don't worry about your Apple TV blinking out, for example, because you know there is a healthy company with a significant amount of subscription revenue on the other side of that set-top box. You don't worry about your Peloton screen suddenly going dark because you know their content program is fueled by recurring revenue. It's the same reason you don't worry about GM Onstar leaving you stranded by the side of the road.

So the next time you buy a connected device, think about the business model that's sitting on the other side of that device. It might be the difference between a happy relationship, or a sad goodbye. Don't let it fall asleep, dreaming of electric sheep.

Are you coming to CES? If you'd like to hear more about these kinds of issues, please join us at Subscribed at CES, where our VP of Customer Business Innovation at Zuora and Chair of the Subscribed Institute, Amy Konary, will be presenting the keynote and speaking with Sara Carlson, Partner, Industrial Sector Connected Car GTM at IBM, and Matthew Vernardi, GM, Kinto Link at Toyota about building customer-centric digital services inside connected devices. If you're tired of endless CES drivel about fancy new product features, and you want to build something that truly connects with customers (RIP Jibo), we'd love to see you.

For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

And check out his book SUBSCRIBED: Why the Subscription Model Will be Your Company's Future - and What to Do About It.