A Sky Full of Drones.

Last week the FAA (Federal Aviation Administration) published their rules and regulations for the oversight of drone usage within the United States. Many will and have argued that these rules are too restrictive for companies such as Amazon or Google to truly take advantage of the technology. The basic parameters of the guidelines set by the FAA:

• Drones must be less than 55 lbs in weight
• Can only fly during the day in good weather
• Must not fly close to airports
• Cannot fly faster than 100mph
• And must be within visible site of the operator

On the surface these restrictions severely limit the dreams of the likes of Jeff Bezos. One of the great opportunities for drones within the supply chain and particularly with the delivery side – is the ability to enhance the last mile portion. The last mile is always a challenge since you have to break down the orders to the individual level. Drones seem to offer a affordable and flexible solution – but not necessarily if the FAA rules are in place. This does not mean there are not some use cases that supply chains can take advantage of immediately:

• Asset monitoring – this is already taking place in agriculture, oil & gas, mining to name a few. Drones provide the flexibility for activities such as survey work, monitoring of assets, determining crop growth etc. In countries such as Australia, mining companies are already leaning heavily on the pilot-less aircrafts to assist with the activity on the ground. By some estimates the usage can save close to 90% of the $2000 an hour cost for a helicopter.
• Remote delivery: Logistics firms such as DHL have been able to expand their reach via drones. The ability to connect remote German islands in the North Sea has enhanced the remote locations with a more regular delivery service. Of course these drones are clearly flying outside of site lines of the operator.

These use cases are not necessarily replicable under the FAA rules. However I have to believe that as the technology continues to evolve the FAA will loosen their grip on the regulations. So what could we expect from more open drone rules? If and when the drone rules become more open here are some opportunities that supply chains might enjoy:

• Smaller window of delivery for certain items. Think of Kozmo.com with drones rather than people on bicycles. Companies from Amazon to CVS to Giant Eagle to Five Guys will be able to deliver a whole host of items to your door at the drop of a hat. Well maybe not that fast. But why couldn’t books or other items from Amazon be delivered within the hour? Or CVS deliver your prescriptions. Giant Eagle your groceries and Five Guys your cheeseburger. Once drones become a more viable delivery extension of the supply chain, look for businesses to take advantage of the new reach this provides into the home.
• Untethering the consumer from a physical address. Drones, coupled with the explosion of mobile, will allow delivery systems to ignore the limitations of roads and physical addresses. Today deliveries rely on infrastructure such as roads, as well as fixed addresses in order to manage delivery of goods. What happens when you have a drone that has far fewer restrictions? Couple this with a mobile device that is provides the digital location of the recipient. Your mobile can send the drone the exact coordinates, GPS, and the drone can then fly its way to your location. We will not longer have to worry about having a package delivered to our home or office…we can just tell it what time to deliver it to us as it hones in on your GPS coordinates.

I realize these changes are a ways off. But these are examples of how the supply chain will be expanded beyond the traditional links – loading dock, retail store to name a few. These types of digital disruptions will begin to turn  our homes into an extension of our supply chains.

Now I wonder where I should build my drone landing pad…

The 800lb supply chain gorilla continues to disrupt with payment services

Amazon announced today it was going to jump right into the deep end when it comes to physical, in-store payment systems. They have unveiled a mobile payment service for brick and mortar stores. Taking direct aim at other mobile POS systems – Square, Paypal as well as Google and Apple. From the reports, Amazon will look to undercut other mobile payment systems – taking 2.5% of transactions versus 2.7% for the likes of Square – to grow their market presence. They are giving merchants an introductory rate under 2% to build that beachhead (feels like a credit card invitation – 0% APR and then only a slight bump to 33%).

In the online world, Amazon already knows how to handle and secure credit cards. They are also well versed when it comes to mobile payments as their iOS and

Coming to a brick and mortar store near you…

Android apps’ success has demonstrated. The natural progression was to push into the brick and mortar space – where 90% of retail transactions live. In the near term I am not sure that Amazon will do more than offer a secondary maybe even tertiary option. Brick and mortar retailers could view the Amazon system as letting the fox into the hen house. It would be understandable if these brick and mortar players do not flock to embracing Amazon and their payment systems. But I am sure that the favorable financial set up will force a large number of players to give it some serious consideration. Whether or not Amazon is widely successful with this venture is secondary to what the eCommerce 800lb gorilla is doing with regards to their overall supply chain disruption.

A quick look at what Amazon has been doing to become the 800 lb gorilla in supply chain:

• Acquired Kiva Systems to add sophisticated robotics and automation to their massive distribution centers.
• Gobbled up the likes of fabric.com, CDNow, Zappos, Pets.com to constantly expand their ability to offer a wide array of inventory.
• Pushed out a tablet and now a mobile phone under the Fire umbrella. Both of which are really hand held sales terminals for Amazon to leverage.
• Started pushing last mile grocery delivery in certain markets with their AmazonFresh offering.
• Even leaking that they are thinking of delivering via drones.

This is in addition to their deep experience in the online retail world. Taken together and you have the 800 lb gorilla that is disrupting the supply chain jungle. Add to this the news of them pushing into the payment space and you see Amazon gaining access to POS data from brick and mortar, coupled with all the data they have on consumer online buying. Amazon is quickly aggregating vital data sources on how consumers buy, where demand is being generated and how it impacts the retail supply chain.

So now Amazon is dabbling in last mile logistics, continually working on more efficient warehouse management, putting portable POS systems in consumers’ hands and now putting POS systems in the retailers’ hands.

That 800lb gorilla might have added another 50lbs of lean muscle.

Xbox One, weak name but strong move to controlling the entertainment hub

This seems to be the year that the big video game console manufacturers decide to release new consoles. Microsoft went first yesterday, Sony is expected to follow this Fall. Unlike other technologies – smart phones, tablets, laptops to name a few – video game consoles have appeared very slow with regards to new generation releases. It has been 8 years since the XBox 360 and 7 years since the PS3…wow…to put that in perspective, 2007 is when the first generation iPhone was released. So 2013 will give us the opportunity to have two major generation upgrades in the gaming console world.

The Xbox One

The first console out of the gate – the Xbox One. From all reports it brings some new bells and whistles – voice activation, enhanced Kinect, centralized control of music/video/game etc. Of course it has some “negatives” such as no backward compatibility with video games…ugh. All expected evolutions for the console. What this is really about is the continued battle for control of the home entertainment hub. Microsoft said as much:

Indeed, Microsoft is totally explicit about Kinect (and Kinect-related IP) being the central part of its strategy in the console battle as well as in the wider war for the living room — far beyond other aspects of the hardware.

Microsoft, as does a host of other technology companies, sees the entertainment center as the next frontier a place where all their software, content and devices will converge. As much as we love our smartphones and tablets, the television still provides the powerhouse of displays. We still gather around the television and leverage it as the communal entertainment hub some even use it as their personal dance trainer. However no one has really taken the “lead” when it comes to this space. Cable companies are trying to leverage their control of the content to be their play. Microsoft and Sony both look to their gaming consoles as the conduit to the entertainment hub. Google has made forays into the actual hardware – Google TVs. Of course Google is also embedded with search and YouTube in many new smart TVs. While Apple TV has been around for a while but has yet to really get into the game – they do have a firm lock on the streaming content via iTunes. What about Amazon? They also have a massive library of content as well as a device – the Kindle – that can force their way into the conversation. Question for Amazon, do they make an investment in hardware to put themselves physically in the living room?

All these moves will be good for the consumer – allow for a host of choices. Of course the problem might arise if all these vendors go with a walled garden strategy. Where the choice we make in hardware is one we might have to live with for a long time or buy multiple platforms!

Groupons fall from the mountain top

Andrew Mason, the Groupon CEO, was let go this week due to continued poor performances for the company as well as a stock price that remains in the tank. How things change. One has to wonder, and obviously hind site is 20/20, how different things would be for Mason had he accepted the $6billion offer from Google. Rebuffing the search giant just stirred that hornet’s nest.

What is interesting to me is the following – Groupon never truly defined what they were. A technology company? A glorified email list? A social networking firm? A big coupon? Even Mason seemed to agree that they were not clear as to what they were. At the core, every company needs to understand what they are. Google is a search company, Amazon is eCommerce, ATT a communications player, GM a car company, Apple a consumer technology firm and so on. Define who you are and what you want to be when you grow up. Otherwise you are going to pull yourself in directions you do not and cannot afford to head in…A difficult discipline, no doubt, but one that has to be adhered to.

Of course it does not help that Groupon created and was competing in a space that had very low barriers to entry – creating by some accounts 500 copy cat companies. However that is not the only reason for where Groupon has fallen to.

Mason will join a long list of entrepreneur/CEOs who watched their idea start from nothing, rise to outrageous heights and then crash when expectations (or the public market) could not be satisfied.

Again easy to say now, but sometimes as Steve Miller would say – Go on take the money and run.

Welcome back Google! Apple puts Google Maps back on the map.

An Apple Map user walks into a bar, or is it a church, no wait it is an office, hold on it is a sporting venue….

One of the many jokes that were out there after the Apple maps debacle. As soon as the new mapping software came out, major issues started cropping up. And these were not “bugs” but fundamental and serious issues! Of course Apple had to scramble, refused to admit to the gravity of the error and to make things worse blocked Google Maps which had been the default map app on the iPhone up to that point. Of course everyone knew that Apple was trying to shut out one if their biggest competitors from the iPhone platform. Especially considering they are in a dog fight with that same company in the overall mobile space!

But today, all is well again in the world of mapping – Google maps is once again available on the iPhone. And yes, I downloaded it immediately. I actually tried to download it last night but wasn’t available until morning east coast time! By late morning, New York time, the word on the street was how much better and what a relief it was that the Google maps were back on the iPhone. There are even some rumors that it has vaulted to top of the down load list on for the AppStore.

So the question becomes, why did Apple embark on this adventure? Why did they challenge the incumbent. One that was much more versed in the map game (anyone remember when you didn’t see Google Earth when a news station shows you a location on the map of the world?) I realize the answer is simple – Apple could not allow one of their largest competitors own a major piece of real estate on the iPhone, just like YouTube which is no longer standard on the iPhone. They did what Microsoft did to Netscape. Unfortunately, they were not as successful…correction…it backfired. For now.

Apple wants to control what is on  your screen, what default apps we all use or at least think we have to use because it is the default. Similar to Microsoft that wanted you to use their web browser rather than the Netscape one that had been the default. So far so good. However, the difference is the following – during the browser wars we were limited in the applications we had. Whether writing, spreadsheets or presentations, there were not hundreds of options. Now we have, on average between 40 – 100, applications on our iPhones. So does owning the mapping application mean as much as Microsoft wanting to own the browser – no. Could Apple have conceded the mapping to Google, maybe provided their own Apple Map app, as an option? Sure. Why not test it, and make it robust so that the Statue of Liberty isn’t located miles from NYC. Then Apple could have slowly made the switch to their own mapping as the default.

I understand that in the long run, Apple needs to hold on to some core apps, needs to be able to data mine some of the information that goes through these apps. It just feels as if they went too fast. The public backlash and PR nightmare it created was not worth it for, what feels like, pushing through something that was not ready for prime time.