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Why Lyft and Uber Have Nothing to Do With Smart Cities
Author: Darlene Pope

I attended a "smart city" panel discussion last week and heard yet another speaker cite how Lyft and Uber are great examples of smart city initiatives. I don't know about you, but my definition of a "smart city" has nothing to do with whether you choose to ride in a licensed taxi cab, or a stranger's uninsured pink-mustached Prius… It has to do with intelligent systems and controls optimizing the city's (and citizens') energy consumption.

Not to mention the fact that Uber and Lyft will ultimately fail.

Market adoption of technologies or solutions cannot occur based on a short term appeal to fringe end-users. Think Segway -- the over-hyped, disruptive device that was forever going to change the face of transportation. Yet, with the exception of the gaggles of DC tourons and a few out-of-shape mall cops, it really hasn't changed anyone's lives.

For a solution to be successful, it needs to meet three major criteria. First, there has to be a demand. And I don't know about you, but I've never had an issue finding a licensed taxi to get from point A to point B. Further, as a woman, you couldn't pay me to get into a stranger's car in order to support the new "sharing economy" or "social media trend." Perhaps I'm also one of those who believe that all business should have to play by the same rules and pay their fair share of reasonable taxes (and I'm not a big government, tax-and-spend kinda gal).

Second, you have to be able to gain mass adoption in a reasonable amount of time. This means that there needs to be a demonstrative value to a large amount of customers. The explosion of the internet in the 1990s is a perfect example of mass adoption of a disruptive technology in a short amount of time.

So many great technologies fail because, for whatever reason, they don't appeal to enough buyers to pass that mass adoption test. For example, look at Nest. Disruptive technology, immediate value, and brilliantly simple. Yet Nest is installed in less than 1% of American households. It fails the mass adoption test due to the fact that there is a lack of perceived value to the majority of consumers. It doesn't matter that Google thinks Nest is worth $3.2 billion – what matters is what the other 99% of consumers think Nest is worth to them.

Don't get me wrong… I love Nest. Not only because it lowed my energy costs by 40% in the first month, in the middle of the polar vortex -- but it also empowered me to be able to freeze my mother-in-law out of my house through my iPhone from 3,000 miles away (not that I did, mind you – just saying that I could). Flash forward 3-5 years and I believe Nest – or a similar solution – will be in the majority of U.S. households, either through mass adoption by consumers or more likely by the utilities themselves. (Just make sure you realize that we're also opening ourselves up for the utility to turn down our air conditioning on a sweltering hot day in August when there's not enough capacity on the grid to cool everybody.)

And third, the solution has to be sustainable. It's got to be flexible and scalable enough to pass the test of time without becoming functionally (or practically) obsolete. Facebook passed the mass adoption test after completely skipping over the demand requirement – but will it survive functional obsolescence because of the lack of relevance or real value behind mass instantaneous communication? I don't really care that one of my former high school classmates just got a venti two pump skinny vanilla latte to get her day off to a good start (or that she'll also post a few times during the day to let everyone know how that's going).

But back to smart cities… There has to be a demand. And someone's got to come up with a solution to meet that demand that appeals to (and benefits) the masses over a long enough period of time for the market to work (i.e. for people to buy it) -- and ultimately lead to the success of the initiative.

The problem with cities is that they are big and cumbersome, and are made of up many, many different, disparate stakeholders. The speaker I heard last week praised several cities for "driving" smart city initiatives… yet it's not very common to see smart city initiatives that are actually driven by the city itself. Typically, the funding comes from the private sector – not the public sector (go back to the tax reference). And the driver of any initiative is directly tied to where the funding is coming from, which means there need to be more public/private "smart city" partnerships that benefit all stakeholders.

Smart cities require smart buildings. And in order to have smart buildings, you have to have demand, mass adoption, and sustainable value. So where do I see smart cities going in the next 5-10 years? Here are few predictions:
  • Continued advances in technology and the market itself will create more energy efficient "smart buildings," independent of government mandates, initiatives, or funding.
  • Private sector initiatives will continue to lead the "smart city" movement due to the massive amount of privately held assets that actually make up the "city".
  • There will be a marked increase in public/private sector partnerships driving and benefitting from joint energy conservation initiatives across multiple stakeholders.
  • Deregulation of utilities and competitive markets will help spur further innovations in smart grid technologies (think cheaper, better, more efficient distribution grids).
  • The "Internet of Things" (which many see as the backbone of smart cities) will fail the demand and mass adoption tests (sorry, Cisco, but most people are still a bit leery of everything being connected to the internet).
  • The "Internet of Some Things" (should I trademark that?) will grow as the value of the connectivity of each device, or group of devices, is demonstrated. And each device or system that becomes part of this IoST must pass the demand, adoption, and sustainability tests on their own. I see value in having my thermostat connected, but running data and analytics on my toaster provides no value to anyone.
We are still in the infancy of the "smart buildings" movement, which are a fundamental requirement of "smart cities". But I do think the adoption gap will continue to close as more and more tenants demand a smarter, more efficient work environment; building owners continue to adopt energy efficient technologies and solutions to drive costs down (albeit at a slower pace than any of us would like); and the financial benefits of smart buildings and smart cities are recognized by both public and private stakeholders… thereby making these initiatives sustainable over time.

Oh, and Lyft and Uber will be functionally (and practically) obsolete.

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About Our Sponsor: Pacific Controls Inc. (PCI) provides ICT enabled managed services and converged engineering solutions for buildings and infrastructure projects globally. PCI has pioneered the technology for Smart Cities in which buildings and infrastructure are managed centrally to increase sustainability, leveraging the ICT infrastructure of telecom operators around the world. Pacific Controls owns and operates the largest Data Center Campus in the Middle East offering end to end enterprise cloud computing solutions to global customers.

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