Using data by design

How next-gen electronics companies can power the digital economy

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The global electronics industry is the cornerstone of the digital economy and the Internet of Things (IoT). Electronic devices act as conduits for users’ digital experiences, which are now seamlessly enabled and updated in the cloud. The industry’s digital device success has also introduced its latest challenge: going beyond the device. Leveraging data to drive insights is key to delivering greater value. Doing so requires electronics firms to flawlessly integrate hardware, software, services and data while learning from and adapting to users. Through Digital Reinvention®, they can combine digital approaches and data by design to drive new capabilities, changing business from the ground up.

The dialogue of digital data

It’s well known that electronics have transformed the way humans interact, make and buy things, deliver medical care, bank and entertain themselves. A vast majority of today’s communications and interactions leverage electronics. Increasingly, most of these interactions are digital, enabling virtually every industry to create new, engaging approaches to customer and user experience.

Miniaturization and mobility dramatically changed the world’s perception of what a single-handheld device could do. Then, hardware devices became software centric, allowing more capabilities to be digitally accessible. Finally, software-as-a-service brought even greater potential, delivered at the touch of a button and rapidly executed in the cloud. Across industries, companies big and small had the potential for interactions that were at once digital, data rich and dialogue driven.

While electronics manufacturers pursue relentless reinvention for the marketplace, they must do the same for their organizations or risk the same marginalization as cameras and desktop computers, sales of which have dropped precipitously over the past few years.

A pervasive and exponential growth in network and computing power has contributed to a dramatic decrease in the cost of storing data. And today cloud computing delivers increased processing speed and functionality. These technology forces enable next-generation approaches such as IoT and artificial intelligence (AI) to put powerful insights in consumers’ hands, on countertops and in plant machinery. Intelligent machines – small and large – are reshaping the world and its capabilities.

However, the sheer volume of data has made it hard to separate signal from noise, hindering the discovery of insights and innovation. Complicating matters, extracting the optimum value from data needs to occur in “real time” as data is increasingly perishable. Indeed, some data has a freshness date: Knowing customers’ purchase intent while they’re shopping or detecting a faulty part before something goes wrong enables timely decisions and action.

So, technology provides the opportunity for organizations to derive more value from data, but electronics executives report that their ability to capitalize on it remains elusive. It’s time for electronics firms to go beyond devices, software or technology and reinvent themselves.

The impact of convergence: Fuzzy boundaries

Innovative products that enable new experiences provide opportunities for new business models. With some electronics firms realizing massive growth over the past 40 years, the innovators have successfully entered multiple adjacent or even distant industries, building new relationships and ecosystems.

For example, many semiconductor and microprocessor companies have venture capital arms watching the market and assisting fledgling entrants. Qualcomm Ventures has investments in more than 120 portfolio companies along the electronics continuum, with particularly strong focus in virtual reality, IoT, drones, automotive, cloud and mobile health. And with Samsung Bioepis, Samsung has entered pharmaceuticals, advancing an extensive pipeline of biosimilar candidates through process innovation.

Simultaneously, the last two decades have seen extraordinary growth of media industry super-platform providers with data-rich beachheads in advertising or commerce. During this decade, they began providing new services and offerings. By providing consumers free content-rich connected platforms, these providers can amass more customer data in days than some electronics firms could collect in a year.

They also put it to novel uses, answering questions and solving problems across their companies. Then, they decided to go further. Multiple digital platform and software players have become electronics manufacturers and content providers. Amazon, Google, Facebook and Microsoft have all joined Apple in producing devices and offering content.

What’s more, they’re continuing to push the boundaries of interactions, with voice and gesture recognition, and augmented reality/virtual reality features. These companies are extending their brand ethos, with electronics powering their interactions. They have never taken their eyes off the data and business models that drive their knowledge and fund their operations. In fact, they’ve continuously pushed forward in designing superlative experiences.

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Meet the authors

Reza Firouzbakht, Digital Strategy Leader, Electronics Industry IBM, Global Business Services

Scott Burnett, Director, Global Electronics Industry, IBM Global Markets

Cristene Gonzalez-Wertz, Electronics and Environment, Energy, and Utilities (EE&U) Research Director, IBM Institute for Business Value

Anthony Marshall, Senior Research Director, IBM Institute for Business Value