Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Mobile Sensors, Context and Tech's Future: Q&A With Rob Scoble of Rackspace


The Startup Liaison Officer at Rackspace and author of 'Age of Context,' discusses the future of interconnected technology and full-context data.

While the year is coming to a close, there are a lot of important new data points coming out in the next two weeks as Adobe Systems (NASDAQ:ADBE), Accenture Plc (NYSE:ACN), Oracle (NYSE:ORCL), Red Hat Inc (NYSE:RHT), and Tibco Software Inc (NASDAQ:TIBX) all report earnings combined with the year-end crunch of meetings, lunches, and conferences before the quiet period. At my site, Fusion Analytics Investment Partners, my staff and I are expecting a rally in some of the enterprise laggards into year-end, as delayed deals close from Q3 and a year-end budget flush occurs. Recent optimism from the likes of Citrix Systems (NASDAQ:CTXS) and VMware Inc (NYSE:VMW) seems to support this, and so should Oracle, Red Hat Inc, Tibco and Accenture when they report. Unlike prior years, though, the secular concerns are louder than ever for enterprise legacy types, which may dampen any lengthy rally in these names.

To get a sense of where things are going in coming years, we recently held a conference call with Rob Scoble, Startup Liaison Officer at Rackspace (NYSE:RAX) and co-author -- with social media expert Shel Israel -- of a compelling new book: Age of Context: Mobile, Sensors, Data, and the Future of Privacy.

Like the book, our discussion touched on many relevant tech themes and developments at public companies such as Microsoft (NASDAQ:MSFT), Twitter (NYSE:TWTR), Broadcom Corporation (NASDAQ:BRCM), and Rackspace (NYSE:RAX). One of the more interesting items discussed pertained to Google's (NASDAQ:GOOG) potential to develop an Android-based contextual operating system. It seems to have a big lead already in this area and is best positioned to actually create a useful "contextual" experience. Scoble thinks the Mobile World Congress in February will be the venue where Google may introduce some killer Google Glass apps it has been "secretly" working on, as well as a more evolved software development kit (SDK) for Google glasses.

Below are the excerpts from my December 4 interview with Scoble that I found to be the most riveting.

Marc: What motivated you to write this book?

Scoble: Shel and I wrote a book about seven years ago called Naked Conversations about corporate blogging and its impact on business. That's the type of book we try to write, a 10-year book.

With this latest book, I started seeing a pattern about eighteen months ago: Wearables are going up exponentially; the amount of sensors on us and around us are going up exponentially; social and location data flows that are going up exponentially.

Any time you see an exponentially growing number you know you can create businesses out of it.

Then I started talking to people who were showing me early prototypes of things that I call "contextual," and they were showing how all of these things were being fused together to create a new kind of computing system.

We're going to see two things in the future: very personalized products, and software that's ahead of us. It also means two different things for businesses, too. First, as businesses, we're going to have to know everything, and secondly we're going to have to know our customers in far greater detail.

Marc: Where do you think we're going to see the biggest impact of this initially? Is it going to be the corporate/business side, or on the consumer side?

Scoble: I think the biggest impact is going to be on the consumer side, but businesses are already rolling along. Union Pacific (NYSE:UNP) is putting sensors under their rails to tell when railroad cars need to be repaired; GE (NYSE:GE) is doing the same thing with its jet engines and turbines.

I've seen a lot stuff going on in retail; Macy's (NYSE:M) just this week put low-energy Bluetooth radios in SF and NYC stores so that if you walk in with an iPhone with Shopkick on it, they know that you're in the store. And they're going to expand that to know what departments you're at, and in five years from now, the executives say they will be able to tell if you've touched a product or picked it up.

So this will be big in retail…but I'm not sure, I still think the biggest impact will be for consumers.

Marc: The companies that are going to be doing this, as they go out and build sensors and capture the data, doesn't that feed a little bit into what Rackspace is offering?

Scoble: Yeah, and I started seeing that new pattern and thought that could be a business plan for Rackspace. I talk to them a lot about what this stuff means for cities, cars, and for health. I'm already seeing the pressure on companies to do more data studying. Every corporation is getting a Hadoop cluster now, and most of the companies know they need to do this because they know they need to study their customers in far greater detail so they can add on more services.

Think about what Uber is doing to taxis, they didn't change the taxi; it's still a taxi. It's still the same cab ride, but now I can view where my driver is and his ratings, and that's huge.

It's not changing how taxis work; it's changing the data about taxis, and every company is going to be forced to do this. If you let your competitor show more data than you are, then all of a sudden that company -- whether it's a grocery store or a factory -- is going to get my
businesses because it's serving me in a new way.

Marc: So what Rackspace is doing is embracing Hadoop and allowing companies to build up the infrastructure really inexpensively?

Scoble: For Rackspace, we've already started making several strategy shifts. First of all, we open-sourced our cloud so that people and businesses can be more flexible - because if you have to wait for us or Amazon (NASDAQ:AMZN) to innovate, you're going to be waiting for a long time.

A lot of businesses still run on their own data centers; the public cloud is not for everyone. There's going to be certain businesses that won't be allowed to run on the public cloud for reasons such as HIPAA or other business constraints. So you need flexibility wherever you run it, and that's why we've made deep investments in the hybrid cloud to do that.

We've made immensely necessary performance improvements by retooling our data centers with all-flash memory and all-high-speed area connects, which means that our performance is a way bit ahead of the other guys.

Marc: Have you seen customers migrating away from AWS or even Google because of the lack of options or lack of robustness?

Scoble: Some of the bigger ones are moving from AWS to Rackspace, partly based on the robustness of its capabilities. AWS strongly believes in an all-public cloud model all the time, and we believe you should have a choice to own your own machine.

I don't sense that people are necessarily moving for costs, and if they are, they move to their own data center infrastructure-and that only works if you have a huge amount of traffic and if you have data center staff to keep it running.

Facebook (NASDAQ:FB) runs their own data centers, I think four of them, but for the average smaller start-up it doesn't make sense.

Marc: How did you get Marc Benioff to write the foreword to your book?

Scoble: I asked him a question at last year's Dreamforce conference about what he's doing with contextual computing - and I've known Marc for a long time, and I just try to skate ahead of him and see where he's going to take Dreamforce every year.

This year's theme was the connected customer which totally fits into this book, and he just liked the topic and liked my thinking and wanted to be involved with it.

Marc: You just finished this book several months ago, and obviously technology is such a fast moving area. Is there anything in the book that you look at and think "things have already changed?"

Scoble: Oh yeah. With the new iPhone that has a motion processor in it, and the new low-energy Bluetooth beacons turned on by iOS7. This has deep implications on a lot of things; they're small radios the size of a quarter, cost about $10, run for one to two years on a coin battery, and spit out radio frequencies into the air.

If I have an iPhone nearby, it can tell how far it is from that beacon. So let's say I put 10 of these into the Ritz, then all of a sudden the Ritz always knows where I am - so they can use this data to study my processes, hook it up to other databases, and study my behavior so that it can offer me better services and products.

Marc: Are you still wearing your Google Glass? Are there many people like you who have the longevity of use with the device?

Scoble: Oh yeah, I've been wearing them for about six months. There are about three to five thousand people that have them, not everybody wears them. I have friends that have them and they got tired of wearing them because everyone always asks to try them on. I actually like that; it's a conversation starter. Not many people have been wearing them for six months.

Marc: So you would rate this, based upon what I've read, you obviously love this device.

Scoble: I think it's life-changing, but it is in a weird place where they need to give it more utility where it's something that I can recommend to my wife. Just having a cell phone on your face and being able to take a picture, that's not enough.

Marc: Those are the killer apps for now, right? The photos and the communication?

Scoble: Yeah, and walking around with maps is really cool. When you turn your head the map turns, so you always know you aimed it the right way. And those are nice little features, but we need more than that.

First of all, we need Glass itself to get fixed. In several places it's weak and it breaks, so they need to come out with another hardware design. They need to fix the video quality on it - and then we need some developers to build some killer apps, beyond making a phone call and checking Twitter. Once they start developing really cool games and useful apps, then I can recommend it to regular people, but right now I would only recommend it to developers and the hardcore early-adopter geeks.

Marc: In your discussions with people and thinking about your whole views on the future, it seems like healthcare is an area that would really benefit a lot from all this connectivity. Any recent examples of conversations or companies that you've heard that are taking this to the next level?

Scoble: I just put on Facebook a company that makes a pill you swallow and studies you as it goes through your body and can study absorption rates and other things.

The cell phone industry, because of the R&D money will sell something like a billion cell phones this year, and so that causes R&D to be poured into sensors and cameras and all sorts of stuff.

At the same lab, I saw a camera that's 1x1 millimeters and fits on the tip of a wire, and surgeons are using these to put in human bodies and look around, but think about how the cost of those kind of cameras is going to go way down and the ubiquity of them is going to go way up.

You start thinking about other things you can do with those sensors, and it's quite extraordinary particularly in healthcare. So there are deep implications.

When you also think about how we sound when we're happy or sad, or how these devices can analyze our mood and make recommendations to improve our lives - these things are going to start looking at our brain processes certainly within the next 10 years and maybe even within the next two.

It's coming; that's the freaky part about it when you start thinking about how, not long from now, these devices will be able to see inside my head and know what I'm thinking - Google Glass can even tell based on my activity whether I'm drunk or whether I'm sober. So we're headed into a new age and that brings up new privacy concerns.

Marc: Do you think CES in a few weeks is going to be all about internet connectivity, sensors, is that going to be the big takeaway you think?

Scoble: Well I'm interviewing Gary Shapiro, who runs the South by Southwest, and I did my talk to the Consumer Electronic Association, and they thought it was right on. Certainly wearables is going to be hot in January.

I saw a company that is making shirts with sensors in them for weightlifters so they can tell how their workout is going. Another company makes sensors for tennis rackets, golf clubs, or baseball bats so you can tell if you're swinging correctly.

The world is changing because the cost of these things is coming down exponentially.

Marc: I'm just curious because it's Twitter week, but what's your take on Twitter? Do you feel it's a lot of pollution, or do you feel it's a useful tool?

Scoble: I think that's like arguing the Pacific Ocean is going away. It's one of those things I use every day and continually is still the fastest at getting me news and getting me a lot of people's opinions about the news that happens. I like where they're going with the filtering, they have a new discover tab on the mobile apps that shows you the hot things from people in brands you're following, and that continues to get better and better. So I can tell Twitter is investing a lot in this contextual world. They continue being the place to have the data-flows to study, because it's a system that's mostly public.

Marc: If there was one of these social media sites that you would be able to live without which one would that be?

Scoble: For me…there's none really. I'm thinking which one would I get rid of first. I'm thinking Google Plus and YouTube are almost the same thing, so I can't really get rid of that.

Facebook has everybody in the world addicted, so I can't get rid of that. Twitter has the best flows of the data we've seen, so I can't get rid of that. And LinkedIn (NYSE:LNKD) is where we all get jobs, so I don't know why I would get rid of it. It would be really hard, like asking me which limb to cut off.

Marc: Could Microsoft have a presence here or did they miss this completely and they're just going to live off some of the relationships they're trying to build underneath it all?

Scoble: Yeah…once the social network has happened, it's really hard to change people's behavior unless you bring something dramatically new to the table.

I don't know what Microsoft can do because it only has 4-10% market share in mobile. Because Apple (NASDAQ:AAPL) has the high-end customers, it certainly can push out new things and make people think differently of it. Google has 80% market share; they certainly can study the world in a new way and force people to use a social network like Google Plus.

I don't know how much they're going to push their way into the social networking world because our behaviors are set.

Marc: Well you worked at Microsoft so I have to ask you this question. What is your view on them right now? They've made this perceived desperate buy of Nokia, they're in a CEO turmoil moment, yet the stock is up 40% this year, more so than Apple, and if you had to play this out for the next year do you think they're going to break this up, spin the company out, do they bring in a new CEO to run its' businesses as usual?

Scoble: I don't know…Microsoft is an interesting company that's going to be really difficult for one person to run. I forget how many billion dollar businesses they have, but it's in the dozens.

Let's say it's 12 billion dollar businesses; I heard it's 18. I was in the car with a Microsoft executive last year, and between the two of us we couldn't even name all of its billion dollar businesses. That's how big of a business it is-and most of those businesses are like Microsoft Dynamic, which is a supply chain software, or Share Point, which is file sharing, or Exchange, which is corporate email, SQL server, which is corporate databases. Most of that is enterprise.

Intuitively, I think they should wrap all those enterprise companies into one, put them all in one place, and then give that group its own CEO; because one person could run those enterprise companies pretty well; because the sale cycles are long, the disruption can be seen coming for years.

I don't know about a breakup, because then you separate out the consumer side of the business. Part of Windows is enterprise, but part of it is being sexy and keeping ahead of Apple and Google with its Chromebooks. That's a different animal and that requires a different kind of person running that company. All the consumer stuff should be separated from the enterprise side.

But it's all too much for one person, though; I'm sorry, but even Steve Jobs couldn't do that job.

(See also: Tech Stock Analysis: Rackspace Inc. Is a January Bounce Candidate)
No positions in stocks mentioned.
Featured Videos