Most industrial manufacturers realize that the real money isn't in products but in services. Companies such as General Electric and IBM have famously made the transition: A large proportion of their revenues and margins come from providing value-added services to customers. But other companies attempting to do the same might miss the boat. It is not enough, the authors say, just to provide services. Businesses must now provide "smart services"--building intelligence (awareness and connectivity) into the products themselves. Citing examples such as Heidelberger Druckmaschinen's Internet-connected printing presses and Eaton Electrical's home-monitoring service, the authors demonstrate how a product that can report its status back to its maker represents an opportunity for the manufacturer to cultivate richer, longer term relationships with customers. Four business models will emerge in this new, networked world. If you go it alone, it may be as an embedded innovator--that is, your networked product sends back information that can help you optimize service delivery, eliminate waste and inefficiency, and raise service margins. Or, you may pursue a more aggressive solutionist business model--that is, you position your networked product as a "complete solution provider," able to deliver a broader scope of high-value services than those provided by the embedded innovator's product. In the case of a system that aggregates and processes data from multiple products in a building or home, you may be either an aggregator or a synergist, partnering with others to pursue a smart-services opportunity. An aggregator's product is the hub, collecting and processing usage information--and creating a high-value body of data. A synergist's product is the spoke, contributing valuable data or functionality. Woe to the company that takes none of these paths; it'll soon find its former customers locked in--and happily--to other smart service providers.

Tracking technologies--in products and services like TiVo and electronic toll collection--make people's lives a lot more convenient. But the public is understandably concerned about the privacy issues such technologies raise. No one is more aware of those issues than Dante Sorella, CEO of Raydar Electronics, which develops and sells radio frequency identification (RFID) tags and readers. So Dante is troubled when executives from one of his client companies approach him about integrating RFID technology into retail operations. KK Inc., a manufacturer and retailer of teen clothing, wants to embed flat RFID tags into the bills of its caps and visors. The tags would be activated at the registers with customers' purchasing data. When a customer wearing a hat next visited a KK store, the tag would be scanned by readers mounted at the entrance, and a video screen would greet the shopper. Armed with data about the individual's preferences, store personnel could steer her toward her favorite styles or appropriate sale items. Dante appreciates the technology behind the idea--and, of course, its business potential for Raydar--yet he can't help thinking that this particular application smacks of Big Brother. How should Dante respond to KK's interest in tagging the caps and visors? Commenting on this fictional case study in R0412A and R0412Z are Glen Allmendinger, president of the technology consulting firm Harbor Research; Lee Tien, senior staff attorney at the Electronic Frontier Foundation, a nonprofit organization that works to protect individuals' digital rights; Nick Dew, an assistant professor of management at the Naval Postgraduate School in Monterey, California; and R. Bhaskar, an associate of the Division of Engineering and Applied Sciences at Harvard University.

Tracking technologies--in products and services like TiVo and electronic toll collection--make people's lives a lot more convenient. But the public is understandably concerned about the privacy issues such technologies raise. No one is more aware of those issues than Dante Sorella, CEO of Raydar Electronics, which develops and sells radio frequency identification (RFID) tags and readers. So Dante is troubled when executives from one of his client companies approach him about integrating RFID technology into retail operations. KK Inc., a manufacturer and retailer of teen clothing, wants to embed flat RFID tags into the bills of its caps and visors. The tags would be activated at the registers with customers' purchasing data. When a customer wearing a hat next visited a KK store, the tag would be scanned by readers mounted at the entrance, and a video screen would greet the shopper. Armed with data about the individual's preferences, store personnel could steer her toward her favorite styles or appropriate sale items. Dante appreciates the technology behind the idea--and, of course, its business potential for Raydar--yet he can't help thinking that this particular application smacks of Big Brother. How should Dante respond to KK's interest in tagging the caps and visors? Commenting on this fictional case study in R0412A and R0412Z are Glen Allmendinger, president of the technology consulting firm Harbor Research; Lee Tien, senior staff attorney at the Electronic Frontier Foundation, a nonprofit organization that works to protect individuals' digital rights; Nick Dew, an assistant professor of management at the Naval Postgraduate School in Monterey, California; and R. Bhaskar, an associate of the Division of Engineering and Applied Sciences at Harvard University.