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At Logic PD, the 'Internet of Things' means more than remote controls [Star Tribune (Minneapolis) :: ](Star Tribune (Minneapolis, MN) Via Acquire Media NewsEdge) Aug. 30--One of the buzz phrases of the moment in high-tech is the "Internet of Things" (IoT) -- most simply explained as hooking up items such as your garage door or thermostat to the Internet so you run them from your smartphone or computer. But the possibilities to transform products and businesses go far deeper. A Minneapolis company called Logic PD, with offices at a former Studebaker carriage factory in the North Loop, is at the edge of helping other companies figure that out. The designers and engineers at Logic PD have helped manufacturers around the Twin Cities area and the country develop products and bring them to market since the early 1960s. The company started as a spinoff from General Mills, when the food giant had a small business making kitchen appliances. Through the years, Logic PD has migrated from designing toasters to designing cabinets used on Control Data computers to creating the circuitry used in med-tech devices. Most recently, it helped a firm design a basketball that connects to the Internet. The basketball sat on a table executives gathered around to discuss their work. Q: How did this company get from pressure cookers to this basketball? Bruce DeWitt, chief executive: We've always helped bring people's products to market. Fifty years ago, it was toasters and pressure cookers. It was very mechanical back then. As products morphed over the years, it became more electronic. We had to move ahead of the product changes, and so we became very electronic-focused. We're experiencing what we call the next revolution. We're now 100 percent electronic, but we're moving into connected electronics. And so now, our mix is probably 60 percent connected electronics. Scott Nelson, chief technology officer: This is an electronic product today [pointing to the basketball]. I was at Honeywell, which spun off [defense contractor] ATK, and Bruce was at ATK. So Bruce and I both know a lot about a device called the inertial measurement unit. We put them on everything from missiles to airplanes. Bruce and I joke about putting an IMU into a basketball. DeWitt: So that's now part of what they call the Internet of Things, which is basically pulling data off some kind of product. That data then has some use and service. Nelson: We can do the electronics, but our legacy is two industrial designers out of General Mills. For 50 years, our business has had a continuous focus on users and user value. So we don't see the Internet of Things as being about machines talking to each other. It's really about changing people's experiences. Q: What had to happen in technology to get to the stage where data from a basketball can be sent around the Internet? Nelson: One of the big changes is companies are starting to think like GE did when it went from selling airplane engines to selling flight time. Anytime a company makes a transition like that, they have to know everything that is going on with their product. Jason Voiovich, vice president of marketing: The cost of connectivity was a key driver. The cost to connect has dropped so far to the point where I can connect a light bulb economically. When GE began selling flight power by the hour, which was a Harvard business case a dozen years ago, it cost a lot of money to connect that engine. But as a proportion of the total engine cost, the cost was very small. Back then, if I took that same connectivity to an ice cream machine in a SuperAmerica, that was too much money as a portion of the total cost. Nelson: Smartphones also made a big difference. These things are made in such huge volumes that they are driving the costs lower for glass, sensors, connectivity and software. There's an unbelievable amount of software development that these things created. DeWitt: There's always a push and a pull. The tech push was exactly what you guys said: the connectivity capabilities, the low-cost of transmission, the software. What's happening now is the pull. That's the business side of the model. People who have been product developers in the past are converting to the subscription economy. Many of them just had a product and they would sell it once and not get any recurring revenue. How can you help them boost their revenue after they got that product in place? The obvious answer is to use the data that's coming off the product as a subscription or value back to the customer. Q: Does that include the basketball? DeWitt: Absolutely. You sell this once. But then there's an opportunity to maybe charge $9.99 a month to someone to see all the shots they took, or $999 a month to a school or to ESPN. Where there's a product, there's usually data. But it's got to be done right. Not every product out there has data that is valuable to a customer. Q: If recurring revenue is new to a product company, doesn't that mean they have to make structural changes to handle it? Voiovich: Yes, instead of selling a product once, they need to sell like Netflix or Comcast. Most of these product companies are not used to a subscription business model. DeWitt: They come in here and say, "We need to connect our product to the Internet because everybody else is" or "Someone on the board told us to" or "We think it's smart." They get the idea that they're going to connect and get data from it. But they don't understand how to make money yet. Nelson: We think of every single IoT app as a piece of content the same that Hollywood would, except it's not just about entertaining. If the content isn't repeating value, customers will turn it off or they won't buy it again. That's the change we have to get our customers to understand. Evan Ramstad -- 612-673-4241 ___ (c)2014 the Star Tribune (Minneapolis) Visit the Star Tribune (Minneapolis) at www.startribune.com Distributed by MCT Information Services |