At the height of the personal computer revolution in the 1980s, several companies saw the boom approaching and tried to profit from it by writing the operating software and making the machines that would lead the charge.
The winners, of course, were Microsoft Corp. (MSFT) with its DOS software and Windows operating system, Intel Corp. (INTC) with the semiconductors that controlled the machines, and to a lesser extent Apple Inc. (AAPL) (Apple’s larger fortunes came in the post-PC era).
As for the others? Well, if consumers or businesses made big investments in software for other operating systems, they were out of luck. Those investments ultimately became useless, as software writers abandoned these platforms in favor of the eventual winners.
Fast-forward to today, and we have a similar situation brewing in the Internet of Things (IoT).
So who’ll be on the right side of this revolution?
Who’ll Win the Internet of Everything?
The same abandonment dynamic that plagued early adopters of PCs is already occurring in the market for controllers of the IoT.
We’ve discussed before how companies are creating “universes” that can control the mind-boggling array of devices that will be operated by a single interface.
But as with any technology, there are winners and losers.
The winners are yet to be determined. But one of the losers was outed this week.
End of the Road for Revolv
Revolv was an early home IoT “universe.”
It could control a home’s lighting, the Nest thermostat, Sonos speakers, and more. Indeed, it was perhaps the first true “universe” in that it could control devices from several manufacturers.
You’d think it would have significant “first-mover” advantage, right?
Well, it did. In 2014, Alphabet Inc. (GOOGL) bought Revolv for its Nest home IoT business.
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But it didn’t want Revolv’s customer list or even its current device. It just wanted some of the technology and the company’s employees – mostly engineers schooled in the technology that makes these systems work.
Nest was clear at the time of the acquisition that it didn’t intend to continue the Revolv product, but didn’t say what would eventually happen to it.
Now we know.
Nest is shutting down Revolv completely on May 15.
And the impact on Revolv users is far worse than it was for users of old computers during the growth of PCs.
That’s because even if a PC operating system or computer was discontinued, at least the physical device and any software would continue to work until the user decided on the next platform.
But Revolv depends on Nest’s cloud to operate; and so when Nest shuts down Revolv next month, Revolv’s “universe” will die with it, and existing devices will simply cease to function. It will basically become a useless brick sitting on customers’ tables.
Okay, so what? Technologies and companies come and go all the time, right?
What Can Consumers Learn From the Revolv Retirement?
Well, many tech analysts believe the prospect of a disappearing universe could signal a significant barrier to the adoption of home IoT devices and controllers. After all, who wants to pay for something that could be useless in 18 months?
I think that fear is baseless.
Nest is currently considering some form of compensation to existing Revolv users in order to contain the damage.
And since we love early adopters of new technologies, we hope Nest makes a generous offer to Revolv customers. But even if it doesn’t, this event won’t be anything more than a hiccup on the road towards the adoption of home automation.
- There are only around 1,200 Revolv customers.
- The tech sector has become so adept at keeping consumers on an upgrade cycle that many customers expect to replace their devices every two years anyway, even if their chosen “universe” remains intact.
- The Revolv device only cost around $300, so we’re not talking about a $3,000 computer or even a $600 smartphone.
That being said, Revolv’s story is a useful cautionary tale for potential customers of new technologies.
An increasing number of technology products depend on having connectivity to its maker’s servers, or to the internet and the cloud.
And given the ferocious competitive challenges in the technology marketplace, even market leaders can face a terrifyingly fast downfall if they get things wrong.
Two tips for you:
- Carefully consider the strength of any company that offers a connected service.
- Insist on interoperability – the ability to work with a variety of “universes.”
To living and investing in the future,