Joe Costello, former Cadence Design Systems CEO and current head of buildings-management device startup Enlighted, told attendees at DAC this week they could expect to see a burgeoning of chip designs driven by the Internet of Things (IoT). But the explosion will be followed by a brutal consolidation in each sector.
Although Costello argued "most of the hype around the Internet of Things is a bunch of bullshit", he added, "I believe it will be bigger than anything before."
It will drive much more engineering, Costello claimed: "The internet was a negative for the design industry. The number of components and vendors that will be successful has gotten smaller and smaller. The Internet of Things will be exactly the opposite. There will be a tremendous proliferation [of designs] caused by everything having different requirements.
"The most important thing is what thing you pick. That's where most people screw up," Costello said, pointing to internet-connected dog-food bowls and smartphone-controlled sprinklers as examples of 'things' that seem destined for failure. "We can learn from history and the dot.com boom when people said 'let's put a company on the internet." The result was the creation of flameouts such as Pets.com.
"The internet became the future of every company. That will be the future of the Internet of Things. It will touch everything," Costello said. "There will be companies like the Googles, Facebooks and Amazons. But it doesn't necessarily make for a separate company."
"With the IoT you have to pitch the right thing. But it's also about intelligence," Costello said, arguing that products such as Nest have got that aspect wrong. "When we remodelled our house we put in Nest thermostats. My wife said 'get rid of them'. She said they are terrible. 'If I want to change the temperature I have to find my phone and then find the app. By the time I do that I can walk through the hose and change them all by hand'."
Things so far tend "to make the humans sit and make decisions", he said. "You can create intelligence from gathering data and feeding back intelligent results to users."
"One of the most successful companies with IoT is General Electric. They turned a protective prophylactic business into a proactive business. In the jet engine business they save $1bn a year in service costs and the customers get better service.
Costello argued his latest startup, Enlighted, can use data captured from its building sensors to optimize not just the energy needed for lighting but the way the space is occupied – and prevent clients from having to rent more real estate.
"The data is the critical thing. People miss that in this business. Data is the crude oil of the Internet of Things. Make sure you get the right data and protect it like crazy because that's where the real value is.
"Several of the big AI and machine learning companies have come to talk to us. They say they want our data. But I tell them I'm not going to give that up. Screw you."
Issues with access to data will drive, in the opposite direction to the push for many different designs, a consolidation. "There won't be fifty or a hundred platforms for jet engines or real estate. You've got to be one of the five guys standing at the end. You've got to be gigantic if you're going to be a player in the end. So scale is absolutely one of the biggest things by far."
But at the beginning of the market cycle, there will be many suppliers. "I did a survey the other day. There are 27 IoT systems for lighting guys. It looks like the first round of America's Got Talent," Costello said. "[Some of it] is the most godawful shit you've ever seen".