IBM Almaden Institute: highlights from conference on the data tsunami

New business models, the explosion of data, and new uses for technology topped the agenda at last week’s IBM Almaden Institute,  which brought together a group of very smart researchers and industry experts from around the globe. They talked about how to innovate by taking advantage of the rising tide of data; topics included “Life on an Instrumented Planet.” Here are some highlights from a handful of the talks at IBM’s research center in the hills above San Jose, Calif. I think the speakers did a good job of reaching high elevations in their talks.  This is the first of two posts on the conference.

Hal Varian, chief economist at Google, opened the conference with a talk about how components, complements and standards have become critical to innovation. Components are things like screws or microprocessors that are the essential ingredients for a more complex system. This was pretty elementary stuff, but Varian had some insights that you only get if you look at things from a high elevation.

Complements are things like DVD disks and DVD players. They both have to arrive in the market at the same time in order for the DVD market to take off. Varian says that coordination isn’t easy because such complements often involve companies in different industries with different business models. One of the fundamental drivers of coordination has been Moore’s Law, which holds that chip capacity doubles every couple of years or so, putting demands on improved performance across the entire technology spectrum.

Often, the value of one product is enhanced by the presence of another, like hamburger and ketchup or microprocessors and hard drives. Sometimes one complement tries to absorb another, like when Sony (consumer electronics maker) bought Columbia (movie studio) but that frequently results in poor results (AOL Time Warner).

Standards are great for the creation of product ecosystems, but it’s dangerous when one or two companies (Wintel) monopolize the supply of a standard component. If one partner in the ecosystem cuts prices, the entire group benefits. Revenue sharing turns out to be one way to get ecosystems to accelerate. For instance, DVD rentals didn’t take off right away because initially, Blockbuster had to buy movies from the DVD makers. They only became a hit when DVD makers gave Blockbuster the disks for free and then, in turn, Blockbuster gave back a share of the revenue every time a disk was rented. Hence, in today’s increasingly complicated world full of complex product ecosystems, innovations in business models may be key to making a product take off.

Kris Pister, founder of Dust Networks, talked about the progress made in the last decade by mesh networks based on a “smart dust” wireless sensors. He admitted that a lot of the early excitement around such networks was overhyped. As a professor at UC Berkeley, he pioneered the research from around 1997 to 2002. The goal was to create mesh networks with thousands or millions of nodes, each around a millimeter cubed in dimensions. Such nodes could be deployed in places such as grape vineyards where they could measure data, such as dryness or temperature, and pass it along to the next node via a short-range wireless signal.

Pister founded Dust Networks in 2002, and the company has been laboring to build the market ever since. The company provides the entire system, not just the nodes, or motes. By 2003, Pister’s company could get 2-millimeter-cubed wireless chips; battery life is now five years to 10 years and power consumption is as little as 4 milliamps. But the market, projected to be 700 million units a year in 2007, didn’t happen. Part of the problem was continuous changes to the Zigbee radio standard.

Dust Networks, meanwhile, tried to focus on getting to 99.9 percent reliability for mesh network data transfers. It got to