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Posts Tagged ‘Business Models’

Toyota Recall: Are the Feds Due for Business Model Changes?

February 24, 2010 Leave a comment

A thought occurred to me while listening to Rep. Henry Waxman during the recent congressional hearings on Toyota’s recalls – is the federal government due for some business-model change?

I’m referring to the Department of Transportation (DOT) and the National Highway Transportation Safety Board (NHTSB) in particular here, and the revelations this week that a potential cause of the sudden acceleration in certain Toyota models was due to defects in the car’s electronics system – and not from sticky brake pedals.  Waxman was laser focused on the issue, reminding me that we often drive our biggest and most expensive computer – our cars.

In fact, most newer cars feature sophisticated electronics systems that control most of the vehicle’s functions.  In Toyota’s vehicles, the technology is known as ETCS-i (Electronic Throttle Control System with intelligence).  ETCS-i replaces the mechanical link between the accelerator and the engine throttle with an electronics system; when the accelerator pedal is pressed, electronic signals are sent to the car’s electronics system which in turn regulates the engine throttle to allow gas or fuel to enter the engine (for more, check out this paper by Professor Raj Rajkumar of Carnegie Mellon University).

Toyota US President James Lentz insisted that the cause of the sudden acceleration problem was mechanical, not electric.  But the questions persist. The latest vocal voice on the topic is Apple co-founder Steve Wozniak, owner of “many models of Prius” that have been recalled.  He has pinpointed the problem to the software used in the recalled Toyota cars.

Transportation Secretary Ray LaHood was visibly defensive about his agency’s response to what has become one of the biggest recalls in automobile history and DOT has started looking into the electronics systems as a possible cause of the problem with recalled Toyota cars.  But some suggest that this is a matter of whether the DOT and NHTSB have the necessary resources to pinpoint problems of this type.  Certainly this is the view of the Joan Claybrook, a former NHTSB administrator, who insists that 18 investigators in the NHTSB’s Office of Defect Investigation are simply not enough to handle the over 30,000 defect complaints that the agency receives all year.

But a bigger question persists. Indeed, technological innovation is forcing a dramatic business model change in so many other industries – consider what is happening in healthcare or the newspaper industry for instance.  The US government however, continues to view technology as a separate “vertical.” This is best illustrated by how we approach privacy, with different statutes covering the use of information for health, financial or credit reporting purposes in the absence of a national privacy law.

With technology providing a renewed foundation for so many traditional industries, should the feds establish and fund an office of technology, dedicating to regulating the implementation of technology in important products, particularly those that could impact the health and safety of consumers?  Such an agency would work with industry-specific agencies – like DOT and NHTSB – to address defect complaints, while also having a unique perspective on how technological innovation is impacting our economy.  This agency could also house our efforts to define privacy in the electronic age, address cybercrime and set out minimum requirements for handling sensitive data (assuming of course, that we can get national laws passed in each of these key areas).

In this way, our regulatory system would more closely mimic the massive shift that technology is forcing in our industries today.  Business model change shouldn’t just be reserved for private industry.  As this latest recall shows us, the federal government could benefit from a little business model change too.

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The Future’s So Bright, I Need 3D Glasses

January 9, 2010 Leave a comment

While Aneesh Chopra, Julius Genachowski and other Obama administration officials took the spotlight in Last Vegas last week, the real star at this year’s Consumer Electronics Show was 3D.

  • On Monday, we learned that James Cameron’s 3D Epic Avatar reached the $1 billion mark faster than any other movie in history – 17 days.
  • On Tuesday, the Discovery Channel, IMAX and Sony announced that they were creating a domestic cable channel focused exclusively on 3D content.
  • And on Wednesday, ESPN delighted soccer fans all over the world by announcing that in June, it would start broadcasting in 3D, just in the time for the World Cup. Arriva!

Indeed, 3D was the star in last week’s other big CES story – the rebirth of the television set, now slimmer, internet-connected and of course, 3D-enabled (reviews and some cool photos on this anandtech blog post). The phenom got several people waxing poetic and peering into crystal balls – including Marc Cuban who was so inspired, he quoted Timothy Leary.

3D just might be one of the best gifts that content providers receive in 2010.  Viewing a 3D movie is a unique experience that cannot be replicated by a 2D version posted on hulu or YouTube. Assuming a good library of content and the right price, this technology has the potential to lure and keep viewers behind a content wall.  And manufacturers are excited too.  After all, if they can’t get you to purchase a $9000 TV , there’s always those nerdy glasses.

Coming to Grips with Reality

January 7, 2010 Leave a comment

One of the first tasks for government in the new millennium is a gargantuan one: regulating today’s Internet.  At least two federal agencies are taking the plunge, having announced their intent to create comprehensive frameworks that would ensure online privacy (FTC), and access to broadband capability (FCC) for Internet consumers. Both the FCC and FTC continue to conduct workshops and solicit comment on the relevant topics – and we should see an initial draft of these plans shortly.  For instance, Chairman Genachowski’s national broadband plan is now due for release on March 17.

How you feel about the Obama Administration’s invigorated Internet policymaking activities is probably closely related to your view on net neutrality.  Should the Internet be regulated? That question is now moot. The real question is whether effective regulation can even be designed at this stage in the Internet’s evolution.  And before we reach that answer, policymakers and regulators must confront the reality about consumers, business models and the role of data collection on the Internet today.

First, who is today’s Internet consumer?  Arguably, they are a driving force behind the evolution and adoption of Internet technologies and not just passive users.  Witness the recent explosion in mobile web usage (driven mostly by consumers’ need for “anytime, anywhere” access to information) for proof of this proposition.  Indeed, the consumerization of technology (web search, iPhone), has given rise to many of the tech policy issues we wrangle with today. Yet, there is little or no research on how individual consumers view important issues – like online privacy – and how these attitudes can vary depending on age and location (after all, internet consumers are not a homogenous bunch).  Policymakers should take the time to carefully study the Internet consumer– perhaps using technology to reach out directly – and to keep refreshing that research alongside development of any regulatory scheme. Citizen focused initiatives, like the FCC’s Open Internet website, are a start in the right direction.

Second, we must recognize that data collection is part of how today’s Internet works.  The most successful companies of the last decade were those that were able to use data or information in innovative ways, such as enhancing online searches (Google) or providing more relevant recommendations to online shoppers (Amazon).  Information enhances customer relationships; it also fuels targeted advertising – the lifeblood for many companies on the web. Internet policies should be constructed with these realities in mind.  In addition, research is truly needed on consumers’ attitudes towards data collection – is it the gathering or the sharing of information that’s the issue?

Finally, Internet business models are always changing.  The Internet is constantly forcing companies to rethink how they do business (check out Professor Doug Lichtman’s podcast, Can Content Survive Online, for more thoughts on this point). Business models die and are resurrected all the time -who ever thought that the walled garden would make a comeback? Policymakers and regulators must keep current with industry developments to remain both effective and relevant in this area.

Will reality be part of future policy making or regulatory activities?  Already, the first working week of the decade has provided an opportunity for comment:   Is TV Everywhere an authentication technology that secures premium content for subscribers or a collusive effort by media companies to restrain online media competition?