What Are Smart,Connected  Products?
Smart, connected products have three core ele­ments: physical components, “smart” components, and connectivity components. Smart components amplify the capabilities and value of the physical components, while connectivity amplifies the ca­pabilities and value of the smart components and enables some of them to exist outside the physical product itself. The result is a virtuous cycle of value improvement.
Physical components comprise the product’s mechanical and electrical parts. In a car, for example, these include the engine block, tires, and batteries.
Smart components comprise the sensors, mi­croprocessors, data storage, controls, software, and, typically, an embedded operating system and en­hanced user interface. In a car, for example, smart components include the engine control unit, anti­lock braking system, rain-sensing windshields with automated wipers, and touch screen displays. In many products, software replaces some hardware components or enables a single physical device to perform at a variety of levels.Connectivity components comprise the ports, antennae, and protocols enabling wired or wireless connections with the product. Connectivity takes three forms, which can be present together:•  One-to-one: An individual product connects to the user, the manufacturer, or another product through a port or other interface—for example, when a car is hooked up to a diagnostic machine.•  One-to-many: A central system is continuously or intermittently connected to many products simul­taneously. For example, many Tesla automobiles are connected to a single manufacturer system that monitors performance and accomplishes re­mote service and upgrades.

•  Many-to-many:  Multiple products connect to many other types of products and often also to external data sources. An array of types of farm equipment are connected to one another, and to geolocation data, to coordinate and optimize the farm system. For example, automated tillers inject nitrogen fertilizer at precise depths and intervals, and seeders follow, placing corn seeds directly in the fertilized soil.Some have suggested that the internet of things “changes everything,” but that is a dangerous oversimplification. The rules of competition and competitive advantage still apply.Connectivity serves a dual purpose. First, it al­lows information to be exchanged between the product and its operating environment, its maker, its users, and other products and systems. Second, con­nectivity enables some functions of the product to exist outside the physical device, in what is known as the product cloud. For example, in Bose’s new Wi-Fi system, a smartphone application running in the product cloud streams music to the system from the internet. To achieve high levels of functionality, all three types of connectivity are necessary.Smart, connected products are emerging across all manufacturing sectors.  In heavy machinery, Schindler’s PORT Technology reduces elevator wait times by as much as 50% by predicting eleva­tor demand patterns, calculating the fastest time to destination, and assigning the appropriate elevator to move passengers quickly. In the energy sector, ABB’s smart grid technology enables utilities to ana­lyze huge amounts of real-time data across a wide range of generating, transforming, and distribution equipment (manufactured by ABB as well as others), such as changes in the temperature of transformers and secondary substations. This alerts utility control centers to possible overload conditions, allowingadjustments that can prevent blackouts before they occur. In consumer goods, Big Ass ceiling fans sense and engage automatically when a person enters a room, regulate speed on the basis of temperature and humidity, and recognize individual user prefer­ences and adjust accordingly.Why now? An array of innovations across the technology landscape have converged to make smart, connected products technically and eco­nomically feasible. These include breakthroughs in the performance, miniaturization, and energy efficiency of sensors and batteries; highly compact, low-cost computer processing power and data stor­age, which make it feasible to put computers inside products; cheap connectivity ports and ubiquitous, low-cost wireless connectivity; tools that enable rapid software development; big data analytics; and a new IPv6 internet registration system opening up 340 trillion trillion trillion potential new internet ad­dresses for individual devices, with protocols that support greater security, simplify handoffs as de­vices move across networks, and allow devices to request addresses autonomously without the need for IT support.Smart, connected products require that compa­nies build an entirely new technology infrastructure, consisting of a series of layers known as a “technol­ogy stack” (see the exhibit “The New Technology Stack”). This includes modified hardware, software applications, and an operating system embedded in the product itself; network communications to support connectivity; and a product cloud (soft­ware running on the manufacturer’s or a third-party server) containing the product-data database, a platform for building software applications, a rules engine and analytics platform, and smart product applications that are not embedded in the product. Cutting across all the layers is an identity and se­curity structure, a gateway for accessing external data, and tools that connect the data from smart, connected products to other business systems (for example, ERP and CRM systems).This technology enables not only rapid product application development and operation but the col­lection, analysis, and sharing of the potentially huge amounts of longitudinal data generated inside and outside the products that has never been available before. Building and supporting the technology stack for smart, connected products requires sub­stantial investment and a range of new skills—such

Smart, connected  products require companies to  build and support an entirely new technologyinfrastructure. This “technology stack” is  made up of multiple layers,  including new product hardware,embedded software, connectivity, a product cloud consisting of software running on  remote servers,a suite of security tools,  a gateway for external information sources, and  integration with enterprisebusiness systems.