People don’t want gadgets anymore. They want services. They want services that improve over time.
—Jeff Bezos, Founder, CEO, Amazon.com, Amazon Kindle Press Conference, September 6, 2012
Gadgets as we know them are dead. Companies building unconnected hardware products will face unrelenting market pressures from those that do, forcing them to compete on the least desirable attribute: price. When you buy an unconnected product, you are buying a quickly depreciating asset, whereas a connected version could actually appreciate in value over time. A disconnected product is obsolete almost immediately. A connected product stays fresh by participating in online communities comprised of digital content sources and other devices (see Figure 7.1). Connected products offer the opportunity for continual customer interaction and potentially new revenue streams. A disconnected product is a dead end. You sell it once, and you, the seller, have received all the economic value from it that you ever will.
Conversely, companies that put connectivity at the core of their products’ capabilities will discover significant new green fields for innovation. At the 2013 Consumer Electronics Show in Las Vegas, this concept emerged as one of the primary themes of the show. Forbes declared 2013 the “break-out ...